Ahead of Dhanteras and Diwali — festivals that symbolise prosperity, light, and new beginnings — investors once again chose gold that has defined Indian wealth traditions for centuries. But amid the glow of gold coins and ornaments, Ashwini Shami, Executive Vice President and Chief Portfolio Manager at OmniScience Capital, reminded investors of a crucial truth: when it comes to long-term wealth creation, equities quietly outshine gold. “Gold embodies safety and sentiment,” said Shami. “But when we look at data spanning decades, equities have consistently delivered higher and more reliable real returns.”
According to OmniScience Capital’s recent study, “Gold’s Glitter vs. Stock’s Sparkle,” which examined 35 years of rolling return data from 1990 to 2025, equities have been the superior wealth creator by a wide margin. The Sensex 30 delivered an average annual return of 11.5%, significantly outpacing gold’s 9.5% based on Reserve Bank of India data. That two-percentage-point difference, Shami noted, “compounds dramatically over decades, translating into exponentially higher wealth.”
Rolling returns
To make the comparison more meaningful, the study used the Rolling Returns method, analysing over 6,400 one-year periods and 3,100 ten-year periods using Nifty50 and GoldBees data. “Rolling returns are far more accurate than simple averages,” Shami wrote in a column. “They show what investors actually experienced across multiple entry points, filtering out luck and timing biases.”
The results are striking. For three-year holding periods and beyond, the Nifty50 outperformed gold consistently, averaging 11.5% versus gold’s 8–10%. Even more compelling, equities provided 98.1% capital protection for investors holding three years or longer, compared to gold’s 84%. “In other words,” Shami added, “equities are statistically safer than gold over meaningful time horizons — a finding that challenges conventional wisdom.”
Gold investors, the study found, would need to stay invested at least seven years to reach a comparable 99% probability of capital protection, underscoring how equities deliver both growth and safety over time.
Gold’s true role
Despite its weaker long-term returns, Shami acknowledged gold’s rightful place in modern portfolios. “Gold provides psychological comfort and diversification during crises,” he said. “But it should complement, not compete with, equities.” OmniScience Capital’s research suggests keeping gold exposure within 10–20% of total assets, enough to hedge extreme volatility but not so much that it limits growth potential.
Interestingly, the firm’s analysis also challenges gold’s reputation as an inflation hedge. “Our data shows almost no correlation between inflation and gold prices,” Shami revealed. “Gold reacts more to macroeconomic forces — interest rates, the dollar’s strength, and central bank buying — than to consumer prices.”
Equities for prosperity
The findings hold true globally as well. Over the past 40 years, the S&P 500 delivered average annual returns of 9.4%, compared with just 5% for gold. Shami says this reinforces the universal case for equity ownership: “Across geographies, equities reward patience and participation in economic growth, whereas gold mainly protects purchasing power.”
Even as gold ETFs saw record inflows in September 2025 — ₹8,363 crore in India and $15 billion globally — Shami cautioned that these flows reflect short-term fear, not long-term strategy. “The opportunity cost of parking capital in gold is significant,” he said. “For investors with three-year-plus horizons, equities offer better capital protection, stronger real returns, and more effective inflation resistance.”
Shami concluded, “Festive gold buying is tradition — and that’s beautiful. But from an investor’s lens, real wealth isn’t forged by glitter; it’s built by growth. Equities, both Indian and global, remain the most powerful tools for compounding prosperity over time.”