Gold beats the Sensex in the long term? Ramesh Damani calls the belief ‘nonsense’

Veteran investor and BSE Member Ramesh Damani has debunked one of the most persistent claims in Indian investing circles — that gold outperforms equities over the long term.

Speaking to CNBC-TV18 at Motilal Oswal’s 30th Wealth Creation Study event, Damani called the belief “nonsense”, arguing that stock market returns are consistently understated because investors tend to ignore key components such as dividends, stock splits, bonuses, and valuation re-ratings that significantly enhance long-term equity wealth creation.

According to Damani, comparing gold and equities solely on headline price appreciation presents a misleading picture. “When you buy equities, you get splits, bonuses, and dividends. If you would have bought an ounce of gold in 1980 at $1,000, today it is $4,000 an ounce. All you have got is price appreciation in gold,” he said.

In contrast, Damani pointed out that an investment in quality companies such as Bharat Electronics (BEL), HDFC Bank or Dr Reddy’s Laboratories during the same period would have multiplied investor wealth several times over through a combination of share price appreciation and corporate actions.

“The splits, bonuses would have increased your value dramatically. The PE ratio would have inflated your wealth and the dividends would have added an extra 2–3% of returns,” he noted, adding that investors often “conveniently forget” these additional wealth drivers when making comparisons with gold.

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Damani further highlighted long-term data to reinforce the argument. “Over 150 years, gold has returned about 3%. Equities have returned 11–12% without dividends,” he said, emphasising that the compounding power of equities firmly positions them as the superior long-term asset class.

The veteran market watcher’s remarks come at a time when gold prices have been hitting record highs globally amid geopolitical uncertainty and rising safe-haven demand. However, Damani’s message to investors is clear: for those seeking sustained and meaningful long-term wealth creation, equities remain unmatched.

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