Gold vs NEPSE: Has Odds Stacked in Favour of the Yellow Metal Now?

Wed, Mar 29, 2023 5:43 AM on Stock Market, Exclusive,

-ShareSansar

Gold VS NEPSE - Has odds stacked in favour of the yellow metal now?

(Disclaimer: This analysis is for educational purposes only, not buy sell recommendation, through infamous analysis we only provide some significant data based on which you can take your decision).

We might have heard the Ad on TV “ Ghar Me pada ho Sona phir key ka rona” which indirectly amplifies the importance of Gold as an investment if we ask our wife, Sister & Mother what is one of the most loved things by them in the world, without a second thought they would shout GOLD.

We might have seen gold prices skyrocketing in the span of a few years in 2019 when the price was 60000 now the price is 107100 which can see seen as nearly 80% growth in price just in the span of 4 years, in compounding terms the compounded return in 15.60% which is absolutely crazy from the investment point of view.

Fig-1: Table of GOLD along with yearly and compounded return

Fig-1.2: Chart of GOLD along with yearly and return

We always hear the proverb “Comparison is the enemy of joy” and we investors loved the comparison, one thing that flows in our blood is the CBC-Comparison blood cell.

So, let’s compare GOLD with NEPSE.

In 2019 Nepse was at 1161 and in 2023 currently, NEPSE is at 1933 which is about 13.58% return in compounded terms, and in flat terms its about 66.46% return.

Some people might have done profit booking when NEPSE was at the speed of Usain bolt to reach 3200, which might add some more return to the investor.

We have held analysis on basis of an assumption that what if an investor had not sold any share and booked profit

Fig-1.3: Table of NEPSE along with yearly and compounded return

Fig-1.4: Chart of NEPSE along with yearly and return

Analysis:

We have seen a mammoth jump in both NEPSE & GOLD and the reason behind this is covid, due to covid the gold which is termed as the most secured investment got huge demand and due to which the price boomed like a rocket, and NEPSE to people got attracted due to lack of investment option and price of NEPSE was BOOM-BOOM.

In Layman’s terms, gold and the stock market have an inverse relationship as GOLD investment is considered safe, secured, and low fluctuating but the covid period was something else both the instrument had a good rocketing period and no one complained.

If we look return of both the return seems very close to each other, Where GOLD gained 15.60% compounded, the NEPSE had also seen 13.59%, GOLD won by 2% and in normal return where GOLD has a 79% return in 4 years, NEPSE had 66.50% here to GOLD has upper hand.

So, the crux is that GOLD has outperformed NEPSE only by a tiny margin. Overall, it seems that gold has been a strong performer in recent years, and its price has been on an upward trend. However, it's important to note that past performance does not necessarily indicate future results and that gold prices can be influenced by a wide range of factors, including economic conditions, geopolitical events, and investor sentiment.

The result could have been on the side of NEPSE in the regulatory body Like NRB, SEBON hasn’t issued notification had rules that had affected the NEPSE.

Below is the table & chart for comparison in a visual format.

Fig-1.5: NEPSE Vs GOLD-Table