Title – Investing in Gold vs Investing in Stocks
Authors –
- Janhavi Vijay Kolhe
- Juhi Kumari
- Pratiksha Thakur
Introduction – This survey delves into investor perspectives on gold versus stocks, exploring key factors influencing investment decisions. Understanding these perceptions is crucial for nuanced wealth management recommendations.
Objective – To assess and analyze investor perceptions regarding stability, returns, hedging capabilities, volatility, and flexibility in gold versus stocks.
Literature Review –
- The consensus in the literature suggests that gold stands out as a reliable instrument for diversification and a safe haven during extreme stock market conditions, supporting the hypothesis that “Gold investment is more advantageous than stock investment.
- Lucey (2011) and Jaffe (1989) emphasize gold’s role in portfolio diversification and its efficiency as a hedge against inflation. Capie et al. (2005) and Baur (2011) highlight gold’s significance in hedging against dollar debasement and its unique volatility. Overall, the literature underscores gold’s multifaceted advantages, affirming its pivotal role in diverse investment portfolios.
Data Collection –
- Stability: Gold is a more stable and secure investment compared to stocks.
- Returns: Stocks offer better profit potential than gold.
- Hedge: Gold is a more effective hedge against economic uncertainties compared to stocks.
- Volatility: The ups and downs of the stock market outweigh the stability of gold.
- Flexibility: Stocks are more adaptable for adjusting to changing financial goals compared to gold.
These were the 5 questions asked in Google form to student and for every question standard deviation, standard error, mean and t-stat were calculated.
Data Analysis –
|
Sr. No |
Mean |
Standard Deviation |
Standard Error |
T- Stat |
Result |
|
1. |
3.32 |
1.34 |
0.13 |
4.62 |
Agree |
|
2. |
3.37 |
1.30 |
0.13 |
2.84 |
Agree |
|
3. |
3.43 |
1.16 |
0.11 |
3.71 |
Agree |
|
4. |
3.25 |
1.28 |
0.12 |
1.94 |
Disagree |
|
5. |
3.15 |
1.32 |
0.13 |
1.13 |
Disagree |
Conclusion –
- Stability: Gold is a more stable and secure investment compared to stocks.
- T stat is 4.69 which means we accept the null hypothesis and T is more than 1.96 which means people agree Gold is a more stable and secure investment compared to stocks
- Returns: Stocks offer better profit potential than gold.
- T stat is 2.86 which means we accept the null hypothesis and T is more than 1.96 which means people agree Stocks offer better profit potential than gold.
- Hedge: Gold is a more effective hedge against economic uncertainties compared to stocks.
- T stat is 3.71 which means we accept the null hypothesis and T is more than 1.96 which means people agree Gold is a more effective hedge against economic uncertainties compared to stocks.
- Volatility: The ups and downs of the stock market outweigh the stability of gold.
- T stat is 1.94 which means we reject the null hypothesis and T is less than 1.96 which means people disagree The ups and downs of the stock market outweigh the stability of gold.
- Flexibility: Stocks are more adaptable for adjusting to changing financial goals compared to gold.
- T stat is 1.13 which means we reject the null hypothesis and T is less than 1.96 which means people disagree Stocks are more adaptable for adjusting to changing financial goals compared to gold.
Reference –
- Gold Versus Stock Investment: An Econometric Analysis, International Society for Development and Sustainability (ISDS) (2012).
https://isdsnet.com/index.html
- Gold and the Stock Market: 3 Essays on Gold Investments, AMS Dottorato – Institutional Doctoral Theses Repository (2020).
https://amsdottorato.unibo.it/5693/
