3 hours ago
Gold has consistently delivered positive returns in Indian Rupee (INR) terms, outperforming its long-term performance in US Dollar (USD) terms, according to a new report by Capitalmind Financial Services.
Over the decades, gold has never posted a negative ten-year return in rupee, while in dollar, it has seen two full decades of negative returns.
The report highlights that gold's ability to protect value has been particularly strong for Indian investors.
This is largely due to the rupee’s depreciation against the dollar over time.
In 1973, 1 dollar cost just ₹8.
Today, it's over ten times more.
“Gold’s history reveals its dual nature: an enduring store of value and a volatile investment prone to long drawdowns,” said Anoop Vijaykumar, Head of Research at Capitalmind. “Despite volatility in USD terms, it has been a relatively safer asset for Indian investors because of the rupee’s depreciation. The key is systematic rebalancing—not reacting out of FOMO.”
Why gold still shines?
The report expects gold to rally in 2025, driven by:
Geopolitical tensions
Weakening US growth
Rising fiscal deficits
A sharp rise in tariffs—145% on Chinese goods by the US and 125% retaliation by China—has intensified safe-haven buying. Meanwhile, the Chinese Yuan has hit a 19-month low against major trading partners’ currencies, further fueling demand for gold.
ALSO READ | This smallcase manager predicts a 7%–20% swing in gold prices by FY26
A smarter portfolio mix
Capitalmind found that portfolios with 5–10% gold allocation tend to outperform equity-only portfolios in terms of risk-adjusted returns.
A 50:50 portfolio of Gold and the Nifty 50, rebalanced annually, has outperformed standalone investments in either asset over the last two decades.
This performance reflects the Lindy Effect, where systems that have lasted a long time are more likely to endure and perform well in the future.
Lessons from history
Investors in the early 1980s, driven by gold's 1359% rally in the 1970s, were disappointed by two decades of losses. In contrast, those who entered in the early 2000s—after gold’s underwhelming performance in the ’80s and ’90s—enjoyed a 293% rally.
The takeaway: avoid emotional investing and rebalance regularly.
Rupee vs dollar returns
The report shows that from 1990 to 2002, gold returns in dollar were often negative. However, rupee returns mostly stayed positive during the same period.
On a five-year rolling basis, rupee returns beat dollar returns for the majority of the last 35 years.
This divergence began after India’s 1991 economic reforms, which led to a market-driven exchange rate. The rupee has since become more sensitive to global shocks, boosting gold’s appeal for Indian investors.
ALSO READ | India's gold demand soars to highest level in 8 years
