Comments on: Indian Rupee: Lost 60% versus Gold since 1999

By: Kaushik

Kaushik — Sun, 22 Apr 2007 14:35:26 +0000

Dr Dan: Think of it this way - in 2000, the rupee was worth “1 unit” of gold while the Sensex was at 5000. Now the rupee is worth “0.4 units” of gold, while the Sensex is at 14000.

Thus, in terms of gold, the Sensex went from 5000 (1 * 5000) in 2000 to 5600 (0.4 * 14000) in 2007. That’s a 12% increase OVER the entire period, not annually!

By: Dr. Dan

Dr. Dan — Sat, 21 Apr 2007 17:43:59 +0000

I dont understand this point at all. My bad !!

Could you pls tell me what is the ANNUAL return on GOLD from the 2000-2007 period

I think the 60% is over a 7 year period…which doesnt sound great ?

By: Kaushik

Kaushik — Fri, 20 Apr 2007 08:36:18 +0000

Well, the 2000-2007 annual return for the Sensex works out to ~16%. If you had invested in FDs, you would have made even lower annual returns, while suffering from the same extent of rupee devaluation.

By: Dr. Dan

Dr. Dan — Fri, 20 Apr 2007 08:19:49 +0000

Kaushik,

Wouldn’t a similar amount invested in FDs in India give u a superior return ?

60% over 7 years doesnt sound great isnt it ?

Please advise.