If you are looking for a safe and profitable investment option for 2023, you might be wondering whether to invest in gold, silver, or Sensex. All three assets have their own advantages and disadvantages, and their performance depends on various factors such as global events, economic conditions, and market trends.

In this article, we will compare the returns, risks, and outlook of gold, silver, and Sensex based on the data of the last five years. We will also provide some expert tips on how to choose the best investment option for your goals and risk appetite.

Gold: The safest and highest-returning asset

According to the data from World Gold Council, gold has delivered a whopping 100% return in the last five years (from January 2017 to December 2021). The price of gold increased from Rs 28,623 per 10 grams in January 2017 to Rs 57,246 per 10 grams in December 2021.

The main factors that boosted the demand and price of gold in this period were:

 

• • The Covid-19 pandemic and its impact on the global economy and health

• • The unprecedented stimulus measures by central banks and governments to support the recovery

• • The rising inflation and interest rates in the US and other developed countries

• • The trade tensions between the US and China

• • The geopolitical conflicts such as the Russia-Ukraine war and the Afghanistan crisis

According to Ajay Kedia, director of Kedia Advisory, these factors are likely to continue in 2022 and increase the risk to the global economy. Therefore, he expects the demand and price of gold for investment to increase further. He advises investors to allocate 10-15% of their portfolio to gold for long-term wealth creation.

Silver: The versatile and high-potential asset

Silver is another precious metal that has multiple uses and benefits. Silver is not only used for jewellery and coins, but also for industrial applications such as electronics, solar panels, batteries, medical devices, and automobiles. Silver is also a hedge against inflation and currency devaluation, as it tends to move in tandem with gold.

According to the data from Silver Institute, silver has given an impressive 85% return in the last five years (from January 2017 to December 2021). The price of silver increased from Rs 40,446 per kg in January 2017 to Rs 74,811 per kg in December 2021.

The main factors that influenced the demand and price of silver in this period were:

 

• • The strong growth in industrial demand for silver due to the recovery in manufacturing activity and the adoption of new technologies such as electric vehicles (EVs) and autonomous cars

• • The robust investment demand for silver due to its affordability and attractiveness as an alternative to gold

• • The supply constraints due to the Covid-19 related disruptions in mining and refining operations

• • The speculative activity by retail investors and traders in the silver market

According to Kedia, these factors are expected to persist in 2022 and boost the demand and price of silver further. He believes that silver has a high potential to outperform gold in the long term due to its versatility and scarcity. He suggests investors to allocate 5-10% of their portfolio to silver for long-term growth.

Sensex: The risky but rewarding asset

Sensex is the benchmark index of the Indian stock market that represents the performance of 30 large-cap companies across various sectors. Sensex is a reflection of the health and growth of the Indian economy, as well as the sentiment and expectations of investors.

According to the data from BSE India, Sensex has given a respectable 73% return in the last five years (from January 2017 to December 2021). The index increased from 26,595 points in January 2017 to 46,006 points in December 2021.

The main factors that contributed to the rise and fall of Sensex in this period were:

 

• • The structural reforms by the government such as GST, demonetization, bankruptcy code, etc.

• • The corporate earnings growth and recovery after the Covid-19 induced slowdown

• • The foreign portfolio inflows into the Indian equity market due to the attractive valuations and growth prospects

• • The monetary and fiscal stimulus measures by the RBI and the government to support the liquidity and demand

• • The global events such as the US-China trade war, the US elections, the Brexit deal, etc.

According to S Ranganathan, Head of Research, LKP Securities, these factors are likely to shape the performance of Sensex in 2022 as well. He expects the outlook for the Indian stock market to be positive in the long term, driven by the strong domestic demand, the vaccination drive, the reforms agenda, and the earnings growth. He advises investors to invest in quality companies with strong fundamentals, good governance, and sustainable growth potential. He also cautions investors to be prepared for volatility and uncertainty due to the global factors.

How to choose the best investment option for 2022?

As you can see, gold, silver, and Sensex have their own merits and demerits as investment options for 2022. The choice depends on your risk profile, time horizon, and financial goals.

If you are a conservative investor who wants to preserve your capital and protect it from inflation and uncertainty, you might prefer to invest in gold. Gold can provide you with stability and safety in times of crisis.

If you are a moderate investor who wants to balance your risk and return, you might opt for silver. Silver can offer you both growth and diversification benefits in a dynamic environment.

If you are an aggressive investor who wants to maximize your return and capitalize on the opportunities, you might go for Sensex. Sensex can give you exposure to the best companies and sectors in India that have a bright future.

However, it is not advisable to put all your eggs in one basket. A smart investor would diversify their portfolio across different assets and asset classes to optimize their risk-reward ratio. A diversified portfolio can help you reduce your overall risk, enhance your returns, and achieve your financial goals.

Conclusion

Gold, silver, and Sensex are three popular investment options for 2022. Each of them has its own pros and cons, and their performance depends on various factors. The best investment option for you depends on your risk profile, time horizon, and financial goals. However, it is wise to diversify your portfolio across different assets and asset classes to optimize your risk-reward ratio. A diversified portfolio can help you reduce your overall risk, enhance your returns, and achieve your financial goals.

Silver has also jumped up to 85% since 2018.

Gold is the first and silver is the second among the safest assets. Yet it has given higher returns than the ‘riskiest’ Sensex.

Asset	10 August 2018	10 August 2023	Returns
Gold	29,486	58,947	99.91%
Silver	37,862	70,111	85.17%
Sensex	37,869	65,688	73.46%

Smallcap Equity Returns The highest has been up to 111%

Smallcaps are the riskiest among equities. Midcaps are slightly better in this regard and Sensex is the least risky.

BSE	10 August 2018	10 August 2023	Returns
Sensex	37,869	65,688	73.46%
MidCap	16,211	30,469	87.95%
SmallCap	16,784	35,398	110.9%

According to the survey of private survey agency Axis My India, 53% people in the country invest in gold. At the same time, a report of Paytm says that only 3% people invest money in the stock market.