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Is gold a better investment than stocks?

Which is a better investment- a share of Infosys or a gram of gold? I will discuss this interesting comparison between these two very different investments class. Let us choose the golden company of India, Infosys Technologies. Lot of people became millionaire due to its stock. Infosys is well admired by millions of Indians for its growth, integrity and stability. Similarly, millions of Indian buys gold for all sorts of purposes because they believe in gold. At the broader level, a comparison between these looks similar. Let’s take a micro look at their performance in terms of price. Below is a graph which plots the stock price of Infosys and price of gold per gm for the year 2008. We can see that at the beginning of 2008 both the prices were more or less same; however, 12 months later, we can see that Infosys average trading price for December 2008 was Rs. 1,240 while the average gold price was Rs. 1,404. Though both lost money over the twelve months, both losses in Infosys stock was much higher. Infosys lost about 18%, BSE Sensex shed over 60% of its value while gold lost only 8%. Shall we assume that investing in gold was/is a better than investing in Infosys stock?

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