Why This 'Useless Asset' Is Saving Portfolios

Today’s Market Update

The weekend saw another round of Trump’s tantrums where he threatened to impose 100% tariffs on China. In response, China hit back saying it would stop exporting rare earth minerals, metals, and other critical items to the US. But as has been the pattern, within 48 hours, Trump softened his stance and declared that China was a friend again.

The markets narrowly escaped a potential scare even though US markets fell around 3.5% on Friday. This kind of policy flip-flop creates major trouble for short-term traders who find it difficult to stay on the right side of the market amid such unpredictability.

Leaving that aside, the Indian market looks quite strong. The setup on the charts also seems healthy and we’ll discuss that further. The major story doing the rounds right now, however, is in the precious metals space. There is a massive shortage of silver. Silver producers are saying they have nothing left to deliver. There are even rumors that silver is being airlifted from London to the COMEX in the US because of short delivery issues.

• Nifty was slightly down by 0.23% from the previous session. But considering the two strong sessions before this, it’s not something to worry about.

• Nifty Jr was down 0.17%, midcaps were flat, and small caps were still in the green with a 0.29% gain.

• The Bank Nifty closed flat but looks strong on charts, maintaining its inverse head and shoulders pattern which could take it up to around 58,000.

• Gold was the big mover of the day, up 1.33%. The official price stands around ₹73,200 per 10 grams, though there’s a premium on top of that.

• Silver premiums are even higher, ranging between ₹15,000 to ₹25,000 per kilogram, yet deliveries remain unavailable.

Other Market Triggers

• Among key movers, Tata Motors lost 2.68%. FMCG stocks like Hindustan Unilever, ITC, and Tata Consumer Products were weak.

• IT names such as TCS, Infosys, and Wipro also slipped, while ONGC and Coal India saw declines.

• On the other hand, Adani Ports, Bharti Airtel, NTPC, Bajaj Finance, and Axis Bank posted small gains.

• In the Nifty Next 50 space, losses were seen in Dmart after results, while Jubilant Engravia stood out with an 8.4% rise following a strong quarterly performance.

U.S. Market Update

• In global markets, US indices were hit hard on Friday, with NASDAQ down 3.56%, Dow Jones 1.9%, S&P 500 2.7%, and Russell 2000 also falling.

• But in context, the last 12 months have still been strong with NASDAQ up 21% and Dow Jones up 6%, so the correction doesn’t look alarming.

What to watch next ?

• Many people keep saying gold has gone up too much and will fall. Of course, one day it will. Everything in the market moves in cycles. But that doesn’t mean one should avoid participating on the upside. It’s like saying, “One day I’ll die, so why live today?” You can still make profits before the fall and protect your gains when trends reverse.

• The goal should be to have bigger gains than losses, not to avoid opportunities out of fear.

• Nifty, despite all the global turmoil, is just 4% away from its all-time high of around 26,200.

• That’s just one good day or a gap-up away. Anything can happen — even a positive global headline could send markets surging.

• Those waiting on the sidelines might miss the move of the year or even the decade. The charts are clearly telling us that despite all the bad news, the market remains resilient.

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What To Read This Week ?

👑 Gold's 25-Year Reign: Why This 'Useless Asset' Is Saving Portfolios

📈 The Golden Dominance: A Quarter-Century of Outperformance

Recent data from DSP Netra presents a fascinating, and perhaps controversial, finding: Gold has dominated equity markets globally over the last 25 years.

This analysis compares gold returns in local currency against local equity market returns, measuring the differential known as gold's excess return over equities.

The results are stunningly consistent, showing a positive excess return for gold across the board.

Pointers: Gold’s Excess Returns (25 Years, Local Currency)

• Developed Markets: In nations like the US, UK, Japan, France, Canada, and Australia, gold returns have exceeded equity market returns.

• Emerging Markets: The trend holds true across diverse emerging economies, including Turkey, Argentina, Brazil, South Africa, China, Mexico, and India.

The key takeaway from this global data is clear: on a standalone return basis over this specific long-term period, no equity market has consistently been able to beat gold's return.

The Indian Stock Reality Check

While global data sets the stage, the performance in India provides a stark local illustration. Comparing the returns of the NSE 500 Index against gold returns over 20 years reveals a challenging truth for stock pickers:

• Gold's 20-Year Return: Approximately 14.5%.

• NSE 500 Stocks Outperforming Gold: Only 35% of the stocks within the NSE 500 managed to beat gold’s return.

This means a staggering 65% of stocks in India's broader market index have failed to match the returns offered by the simple, non-income-producing asset—gold. Similar underperformance is noted for other global benchmarks like the S&P 500 or FTSE 100, though the specific numbers may vary.

🛡️ Busting the 'Useless Asset' FUD

For decades, influential value investors, most famously Warren Buffett, have propagated the "FUD" (Fear, Uncertainty, Doubt) that gold is a useless, unproductive asset that belongs outside a portfolio because it generates no income.

The data over the last 25 years directly challenges this narrative. Gold should not be viewed as a pure return-generating asset to compete with equity, but rather as an essential complement.

In the current volatile economic environment, its role as a hedge and store of value is becoming even more important.

Key Learning

Gold is not a competitor to equity but a mandatory complement in a diversified portfolio. Its long-term, superior performance against a majority of individual stocks (even within major indices) demonstrates that the traditional condemnation of gold as a "useless asset" is financially short-sighted.

It functions as a non-correlated crisis hedge and a store of value that preserves wealth when productive assets fail to deliver real returns.

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