Gold Versus Stock Market; Has Gold Generated More Profits?

It was around one year and nine months ago, a narrative emerged in Nepal’s investment landscape suggesting investors and traders to sell gold and shift their funds into the stock market. The debate quickly gained momentum among investors and traders.

Many market participants were much bullish at the time, arguing that investments in stocks would yield much profits than gold.

In Nepal, gold prices and the stock market often move in opposite directions. When the stock market goes up, gold often sees a downtrend, and vice versa. One supporting factor appears to be investor behavious--during bull periods, investors shift their funds from gold into the stock market in pursuits of higher returns.

However, looking back over the one year and nine months, gold has easily beaten the stock market in terms of profit generation.

According to data from the Federation of Nepal Gold and Silver Dealers' Association, fine gold was sold at around Rs 140,000 per tola in May, 2024 while NEPSE index stood at approximately 2130 points. At present, gold was priced at around Rs 306,500 per tola while NEPSE index hovered at around 2672.

During the period, gold generated a return of around 117% while stock market gained about 26%. Gold's compound annual growth rate stood at roughly 57% compared to NEPSE's annualized return of around 14%.  

In between the period, gold peaked at Rs 339,300 per tola while NEPSE index climbed slightly above 3000 points.

A decade perspective

While gold significantly outperformed stocks in terms of profit generation, a decade long scenario makes the picture much clear.

In May 2026, gold was traded at approximately Rs 53,300. At its current price of Rs 306,500 per tola, gold delivered a return of approximately 472% over the past one decade, generating a CAGR of around 20%.

In comparison, NEPSE index stood at around 1262 points in May 2016, while it closed at around 2672 at present. The index surged by around 112% over the same period, generating the annualized return of around 8%.

Inflation adjusted returns

Over the one year and nine months, gold significantly outpaced Nepal's average annual inflation rate of 3.45%, generating a whopping CAGR of roughly 57%, while NEPSE managed to stay above the inflation rate with around 14%.

In the period, gold's real return was around 53%, and NEPSE generated a real return of approximately 11%.

Over the past decade, gold comfortably beat the country's average inflation rate of 5.45%, delivering an annualized return of roughly 14% above inflation. NEPSE generated a return of around 3% above inflation every year.  

Practical challenges in gold investment

Stock market analyst Ramhari Nepal observed that gold has generated a massive return over these periods, easily outperforming the NEPSE index. He however highlighted practical challenges for Nepali investors to invest in gold.  

Nepali investors have limited access to gold biscuits or bars, forcing them to opt for jewellery, which include additional making charges of over 20%. It indicates that to earn meaningful profits, gold price must go up beyond the international market price to balance these additional charges.

Furthermore, he noted that selling gold and silvers in the market can be often difficult, citing an incident wherein one of his friends faced difficulties  in selling his silvers to a local jewellery shopkeeper.

Additionally, the lack of paper gold trading or gold-backed financial instruments in Nepal has compounded the difficulty, according to him.

Despite gold’s strong performance, he praised the stock market for its liquidity as investors can easily buy and sell stocks in the secondary market.