- Date : 01/06/2023
- Read: 3 mins
Can gold beat inflation? Unveiling the timeline as the gold rate drops. Prepare to be amazed by the secrets of its conquest!
In the midst of recent market fluctuations, the gold rate has taken a considerable dip, reaching its lowest levels in over two months. As the price of 24-carat gold hovers around Rs 6093 per gram, and 22-carat gold is priced at approximately Rs 5585 per gram, investors are left pondering an intriguing question: How much time will it take for gold to overcome this setback and emerge triumphant against the relentless grip of inflation? Despite the current decline, experts remain optimistic, predicting a gradual recovery of gold prices in the months to come.
Can gold actually beat inflation?
Inflation is the benchmark by which the success of any investment is measured, and this principle applies universally to all asset classes, including gold. Fortunately, historical data reveals that gold has consistently surpassed inflation rates over the long run, solidifying its position as a reliable investment choice. It’s worth mentioning here that gold was and continues to remain a favoured investment option among Indians.
Read article: Is it a gold rush? Gold prices are rising. What should investors do -buy, sell or hold?
How long does it take for gold to beat inflation, and how much return can one expect?
Based on the findings of FundsIndia's 'Wealth Conversations Report,' gold has consistently delivered returns exceeding inflation over extended periods of 10-15 years. Investors seeking wealth creation through gold can anticipate long-term returns of inflation plus 1-3%. Nonetheless, it is crucial to acknowledge that gold frequently undergoes prolonged periods of subdued returns before bouncing back to previous peak rates.
What are the historical instances where it took a significant amount of time for gold to reach a new peak after hitting its previous peak?
As an illustration, let's consider the price movements of gold over different time periods. In the case of 1980, gold reached its peak and then experienced a significant period, spanning approximately a decade, before reaching a new peak again. Similarly, during the period from 1996 to 2003, gold faced a similar situation where it took a span of eight years to surpass its peak price from 1996. Furthermore, between 2012 and 2019, the yellow metal encountered a comparable scenario, requiring approximately seven years to exceed its peak price from 2012 and continue its upward trajectory. These examples serve to highlight the intermittent periods during which gold's price struggled to surpass previous peaks, but ultimately demonstrated resilience and resumed its ascent.
Given below is a pictographic representation showing price movement between 2012 and 2020
Source: gold.org
Read article: Factors affecting gold prices in India
While the recent dip in gold prices may cause concern for investors, historical data suggests that gold has consistently outperformed inflation rates over the long run. Experts remain optimistic about a gradual recovery of gold prices in the coming months. However, it is important to note that gold frequently undergoes prolonged periods of subdued returns before bouncing back to previous peak rates.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax advice.
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In the midst of recent market fluctuations, the gold rate has taken a considerable dip, reaching its lowest levels in over two months. As the price of 24-carat gold hovers around Rs 6093 per gram, and 22-carat gold is priced at approximately Rs 5585 per gram, investors are left pondering an intriguing question: How much time will it take for gold to overcome this setback and emerge triumphant against the relentless grip of inflation? Despite the current decline, experts remain optimistic, predicting a gradual recovery of gold prices in the months to come.
Can gold actually beat inflation?
Inflation is the benchmark by which the success of any investment is measured, and this principle applies universally to all asset classes, including gold. Fortunately, historical data reveals that gold has consistently surpassed inflation rates over the long run, solidifying its position as a reliable investment choice. It’s worth mentioning here that gold was and continues to remain a favoured investment option among Indians.
Read article: Is it a gold rush? Gold prices are rising. What should investors do -buy, sell or hold?
How long does it take for gold to beat inflation, and how much return can one expect?
Based on the findings of FundsIndia's 'Wealth Conversations Report,' gold has consistently delivered returns exceeding inflation over extended periods of 10-15 years. Investors seeking wealth creation through gold can anticipate long-term returns of inflation plus 1-3%. Nonetheless, it is crucial to acknowledge that gold frequently undergoes prolonged periods of subdued returns before bouncing back to previous peak rates.
What are the historical instances where it took a significant amount of time for gold to reach a new peak after hitting its previous peak?
As an illustration, let's consider the price movements of gold over different time periods. In the case of 1980, gold reached its peak and then experienced a significant period, spanning approximately a decade, before reaching a new peak again. Similarly, during the period from 1996 to 2003, gold faced a similar situation where it took a span of eight years to surpass its peak price from 1996. Furthermore, between 2012 and 2019, the yellow metal encountered a comparable scenario, requiring approximately seven years to exceed its peak price from 2012 and continue its upward trajectory. These examples serve to highlight the intermittent periods during which gold's price struggled to surpass previous peaks, but ultimately demonstrated resilience and resumed its ascent.
Given below is a pictographic representation showing price movement between 2012 and 2020
Source: gold.org
Read article: Factors affecting gold prices in India
While the recent dip in gold prices may cause concern for investors, historical data suggests that gold has consistently outperformed inflation rates over the long run. Experts remain optimistic about a gradual recovery of gold prices in the coming months. However, it is important to note that gold frequently undergoes prolonged periods of subdued returns before bouncing back to previous peak rates.
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax advice.
