BSE Sensex vs. Gold
With the BSE Sensex 30 market index in consolidation mode and gold prices in an uptrend, let’s take a look at their relative performance. I have used the US gold ETF (GLD) since Yahoo Finance does not track gold prices in Indian rupees. The 2-year chart that the Sensex has clearly outperformed gold by a 2:1 margin.
But if we look at year-to-date performance, gold has fared much better:
A similar scenario can be seen in Japan, where the Nikkei continues to hit all time highs, but the yen keeps weakening, and gold prices in yen are rising rapidly. A domestic stock market bull accompanied by a gold bull may simply mean a further devaluation of the local currency. Look at the Dow Jones - Gold ratio over the past few years to realize that the recent highs made by the Dow don’t look so good when priced in gold.
