Gold or Sensex: Who crashed, who earned more in 10, 15 and 25 years?

Gold prices are trading at $4,123 in foreign markets, while they are trading at ₹126,090 in Indian markets. At the beginning of the year, gold was trading around $2,600 in US dollars and just under ₹80,000 in Indian markets. 

Gold's performance in 2025 has sparked a debate among investors. Is investing in gold a better option than stocks? In my opinion, this question is moot. We'll explore the reasons later.

First, let's examine why investors are comparing gold returns to stocks. Here, we compare Sensex returns in rupees with gold returns in US dollars, based on the compounded annual growth rate. Historically, the rupee has depreciated by approximately 3% annually against the US dollar.

Golden performance of gold

So far in 2025, gold has completely outperformed the stock market. The Sensex and Nifty have gained 8% and 9.5% respectively in the current year. 

Gold, on the other hand, has delivered a 58% return so far. This growth hasn't happened suddenly. In calendar year 2024, gold saw a 27% return, while in 2023, gold delivered a 13% return. 

You could argue that this sample size is quite small for gold's performance. So, let's compare the mid- to long-term returns of gold and the stock market.

Gold vs. Stock Market Comparison in 5 Years

First, let's look at 1-, 3-, and 5-year returns. Gold's recent performance has forced investors to pay attention. In the past year, gold has gained a whopping 61 percent, while the Sensex has gained only 9 percent. 

Expanding further, over the past three years, gold has returned 32 percent, while the Sensex has returned 11 percent. Comparing 4- and 5-year returns reveals a similar story. Over the past four years, gold has returned 23 percent, while the Sensex has returned 9 percent. 

Over the past five years, gold has returned 16 percent, while the Sensex has returned 14 percent. Comparing returns reveals that gold has eclipsed all gains in the past five years.

Gold or stock market, which is ahead in the long term?

Over the last 25 years, gold has delivered a CAGR of 11.5%. Over the same period, the Sensex has delivered a CAGR of 13%. This is a difference of 1.5%, which translates into a substantial amount in long-term currency terms. 

Over the last 20 years, gold has delivered a return of 11%, while the Sensex has delivered a return of 12%. Over the last 15 years, gold has delivered a return of 7.7%, while the Sensex has delivered a return of 10%. Over the last 10 years, gold has delivered a return of 12.7%, while the Sensex has also delivered a return of 12.7%.

This clearly shows that returns from both gold and equities over 10, 15, 20, and 25 years have been similar and competitive. Note that this is a point-by-point performance, not rolling returns, which would have provided a better comparison.

However, there's a caveat for gold investors. Gold has shown stability over long periods and even been underwater for long periods. In November 1980, gold was at $600, remained below that price for a long time, and only returned to $600 in March 2006, after 25 years of negative returns.

Is gold a good investment option?

Now, let's examine whether gold should be considered a better investment option than equities, as it has delivered comparable or even better returns than riskier assets. 

As history shows, gold as an asset class performs well during uncertain times. Gold's recent strong performance is primarily due to current economic and geopolitical risks. Over the past three years, central banks have shown increasing interest in purchasing gold, driving prices higher.

In short, in the short to mid-term, gold returns have far exceeded equity market returns, while in the long term, its performance has been comparable to equity markets. 

As most financial planners recommend, it is ideal for retail investors to invest 10 to 15 percent of their investment portfolio in gold. And, when it comes to owning gold, investing in gold ETFs proves to be a less expensive option than buying physical gold.