Gold price and Reliance Industries share have captured the imagination of investors in 2020 despite belonging to different asset classes.
A year, which majority of investors would like to forget due to substantial losses in their portfolios, has seen gold price and RIL share scaling all-time highs due to renewed investor interest.
While the yellow metal has risen 35.2% since the beginning of the year, RIL share price has clocked 37.9% returns during the period. Gold that stood at Rs 39,000 on December 31, 2019 closed at Rs 52,874 on August 17. It hit a lifetime high of Rs 56,191 per 10 gm on August 7, 2020.
Similarly, RIL share closed at Rs 1,500 on December 31, 2019. On August 17, RIL share ended at Rs 2,091 on BSE. The share of Mukesh Ambani-led conglomerate hit its all-time high of Rs 2,198 on July 27, 2020.
Amid concerns over rising coronavirus cases around the globe, investors have been reducing exposure to equity market and turning to gold, which is a safe haven. Interest in gold also increased after central banks globally embarked on unprecedented financial stimulus to combat the COVID-19-related economic headwinds. This caused investors to use gold as a hedge against inflation and currency debasement.
Today, Gold September Futures were trading at Rs 53,598 per 10 gm. It was trading at less than Rs 40,000 in the beginning of the year. Gold also caught investors' attention after Warren Buffet, the fifth-richest person in the world, dumped bank shares and invested in a gold miner in the second quarter.
Warren Buffett, known for his criticism of gold as an investment asset, stunned investors after investing in a gold-mining giant Barrick Gold Corp.
Overseas, Comex gold has risen almost 36% to touch an all-time high of $2,063 per ounce hit on 5th August 2020, from lows of $1,517 per ounce, registered on 31 December 2019. The rise of the dollar against the rupee has also influenced gold's rate, increasing its retail price in the domestic markets.
Reliance Industries has been investors' safest bet amid a volatile stock market. RIL Chairman Mukesh Ambani, the only Asian tycoon in the top 10 richest people in the world, has set an example by raising capital in the midst of a pandemic. RIL sold over 33% stake in its Jio Platforms unit to marquee investors and tech majors such as Google and Facebook to raise Rs 1,52,056 crore.
Since the beginning of the year, Sensex has dropped 7.13% while Reliance Industries shares have risen 38% in the same period. While Sensex has gained 2.58% in one year's period, RIL stock has risen almost 66%.
The stock had hit it all-time low of Rs 867.82 on March 23, 2020. Since then, India's most-valued company-RIL has seen its stock jump 153% to its all-time high of Rs 2,198.7, on July 27, 2020. In the same period, gold price has risen 26% from Rs 41,226 per 10 gm on March 23, 2020, to Rs 52,135 on July 27, 2020.
Of late, gold and RIL stock have been witnessing some profit-booking from their all-time high levels. However, both assets are still among top choices of investors who are skeptical about the ability of big economies to control the rising number of coronavirus cases across the world.