Last Updated on April 22, 2026 by teamtfl
“People don’t need extraordinary insight or intelligence. What they need most is the character to adopt simple rules and stick with them.”
– Benjamin Graham
In April 2013, when I wrote the original version of this post, gold had just fallen sharply from its 2011 highs and my inbox was flooded with one question: “What should I do with my gold funds?”
Today, gold is trading around Rs 1,58,000 per 10 grams. The investors who asked me that question in 2013 and stayed with their asset allocation have done well. The investors who made decisions based on where prices were heading – trying to predict, exit, re-enter – mostly didn’t.
That is really the entire lesson. But let me explain why.
⚡ Quick Answer
Nobody knows where gold prices are heading – not me, not analysts, not central banks. Gold’s value in a portfolio is not about predicting its price. It’s about what it does during a crisis when everything else is falling. Hold 5-10% in gold as part of a disciplined asset allocation. Don’t increase it when prices rise. Don’t cut it when prices fall. That’s it.
Why Everyone Has an Opinion on Gold (and Why It Doesn’t Help You)
Gold attracts more confident predictions than any other asset class. Everyone has a view. In 2011, almost every analyst was bullish on gold – and prices were near peak. By 2013, when I wrote the original post, the same analysts had turned bearish. Prices then roughly doubled again over the next decade.
In the comment section of my original gold post, I received dozens of forecasts – from readers predicting $1,200 per ounce, to others predicting $3,000+. Both turned out to be wrong in the timeframe predicted. The only person who was consistently right was the one who said “I don’t know, and I don’t need to know – I’ll just hold my allocation.”
This is not a failure of analysis. It is the nature of gold. Unlike a company, gold has no earnings, no dividends, no management team, no product improving over time. Its price is driven by a complex mix of global currency dynamics, geopolitical risk sentiment, central bank policy, inflation expectations, the rupee-dollar exchange rate, and Indian seasonal demand. No single person can hold all of this in their head and consistently predict the outcome.
Gold touched Rs 1,93,096 per 10 grams in early 2026 – its highest ever – driven by global rate cuts, geopolitical tensions, and aggressive central bank buying worldwide. Central banks added over 1,000 tonnes of gold to their reserves in 2023 and maintained strong buying through 2025. J.P. Morgan’s Global Research has been tracking this trend closely. None of this was predictable with confidence even 12 months earlier.
What Gold Has Actually Delivered Over Time
Let’s look at real numbers, not predictions.
Gold’s 10-year CAGR in India from 2014 to 2024 was approximately 11%. For comparison, Nifty 50’s CAGR over the same period was approximately 11.6%. Over 5 years (2019 to 2024), gold delivered around 17% CAGR against Nifty’s approximately 17%.
This surprises people. Gold is widely thought of as a conservative, low-return asset. In India, over the last decade, it has kept pace with equities. This is partly because the rupee has depreciated against the dollar over this period – since gold is globally priced in dollars, a weaker rupee translates into higher INR gold prices even when global dollar prices are flat.
But here is what those return numbers don’t show: the journey. Gold had extended periods of flat or negative real returns – most of the 2013 to 2018 period, for example, saw gold underperform badly. Equity investors who panic-sold into gold at the 2011 peak because “gold always goes up” spent years watching their decision underperform a simple equity SIP.
The Pattern I’ve Seen Repeat Every Cycle
In 25 years of practice, I have watched the same sequence play out with gold every 8-10 years. Prices rise sharply. Media coverage intensifies. New gold funds launch. Agents start pitching gold SIPs. Retail investors flood in near the top. Prices plateau or fall. Retail investors exit in frustration. Prices then quietly recover and eventually make new highs – but by that point, the same retail investors have missed the move entirely.
The investors who made money in gold were not the ones who timed these cycles. They were the ones who bought a fixed allocation and held it through both the euphoria and the boredom.
The Right Reason to Hold Gold
The reason gold belongs in a retirement portfolio has nothing to do with its return potential. It has everything to do with what it does when equity markets crash.
In March 2020, when Nifty fell 38% in a matter of weeks, gold rose. In 2008, when global equities collapsed, gold held its value. In early 2022, when global bonds and equities fell together – a rare and uncomfortable event – gold provided a cushion. This negative or low correlation with equity is gold’s entire contribution to a portfolio.
Think of it like a spare tyre. You don’t carry a spare tyre because you expect to use it. You carry it because when you need it, nothing else will do. The investor who sold their “underperforming” gold allocation in 2019 found in March 2020 that they had removed exactly the part of their portfolio that would have mattered most.
At retirement age, this becomes even more critical. A 60-year-old drawing down from their corpus cannot afford to wait five years for equity to recover from a sharp fall. Gold – held as 7-10% of the portfolio – reduces that sequence-of-returns risk. It is not there to earn the highest return. It is there to ensure the equity allocation doesn’t have to be sold at the worst time.
Which Form of Gold Makes Sense in 2026?
Physical gold – jewellery or coins – carries making charges, storage risk, and resale friction. For investment purposes, it is the least efficient form.
Gold ETFs are efficient and liquid. They track gold prices closely with low expense ratios and can be bought and sold on the exchange like any stock. The tax treatment is the same as debt mutual funds – gains are taxed at slab rate regardless of holding period, following the 2023 Budget changes.
Sovereign Gold Bonds (SGBs) were the most tax-efficient option – capital gains were tax-free on maturity – but the government has not issued new SGB tranches since February 2024. Existing SGBs continue to trade on secondary markets (NSE/BSE), where they are available at prices that may be at a premium or discount to spot gold, depending on demand.
For most investors building a new gold allocation today, Gold ETFs are the practical choice. They are liquid, transparent, and simple.
My View on Gold Prices – Then and Now
In 2013, I wrote: “I have no clue where gold prices are heading.” In 2026, my view is the same. And I am increasingly convinced that having no clue – and saying so honestly – is the correct position for any advisor or investor to hold.
The investors who have done well with gold over the last 25 years are not the ones who predicted its price. They are the ones who decided on an allocation – 7% of portfolio, say – rebalanced annually back to that target, and otherwise ignored the noise. When gold ran up sharply, they trimmed. When it fell, they added. They bought more when prices were lower and less when prices were higher. They did this automatically, without any prediction required.
Trees don’t grow to heaven. That was true in 2011 when I first used that phrase about gold. It was true in 2013. It remains true now – at any price level. The question is never “will gold go up?” The question is: “Does gold belong in my portfolio, in what proportion, and do I have the discipline to hold it through the cycles?”
Most investors who answer that third question honestly find that the discipline is harder than the allocation decision.
The right question is never “where is gold going?” It is “does my portfolio need what gold provides?”
A retirement portfolio should hold assets for what they do during a crisis, not just what they return during a rally.
In my experience, the investors who fret most about gold prices are the ones holding too much of it. When you hold 5-7% of your portfolio in gold – the right amount for most people – whether it goes up 20% or down 15% in a given year barely moves your overall wealth. You can hold it calmly precisely because the position is sized correctly.
That calm – that freedom from needing to predict – is the real return gold offers.
You don’t need to know where gold is going. You just need to know how much of it you should own.
Asset allocation is the answer to questions nobody can predict.
Building a retirement corpus that handles market cycles requires the right mix of assets – not perfect predictions.
That is exactly what we help clients build at RetireWise.
Your Turn
What percentage of your portfolio is currently in gold – and did you arrive at that number through a deliberate decision, or did it drift there based on price moves? Would love to hear your experience in the comments.
I believe that we have enough indicators that gold is now a bubble . Why to ride on bubble? Why not to switch to debt till the volatility ends?
Hi
I want to know about inflation indexed bond issued by RBI. How the principal amount will be calculated at the end of 10 years.
i bought gold etf by sip when it was 1500 and stopped till 2000 because i couldn’t afford anymore.
moment it hit 3000..i sold all..my family thinks i am genius..
if it was gold jewellery i am selling same my family will think i am drinking gambling and no money so i am pawning it off..
Nice article, Hemant sir,I personally feel it is better focuses on maintaining the asset allocation and keep on balancing my portfolio
Hi Pradeep,
Thanks for sharing.
Hi,
If you think Gold as a commodity, then I agree that you should have very little in your portfolio. But in India, Gold has a different view rather than just commodity. If the whole world is selling gold, people in India are buying physical gold. Hence Gold will ever have its sheen. I agree that it might not give returns like equity over the long term, but again in India it will not be just seen as mere commodity.
So my view is Gold should be part of one’s portfolio but definitely be higher percentage than your % allocation for commodity.
Regards,
PB
sir, i have not So much money to invest in gold fund but i have some money to invest in silver, .plz tell me the future in this .i want to recover from inflation rate with some profit.
Nice article, Hemant. I have a basic question. Even if I buy gold coins & bars from banks, where do I sell it if I require urgent money ? Banks do not buy it back. The seller is at the mercy of Jewellers wherein rates are not constant. What is the ideal solution?
Hi Chandrashekhar,
Buying gold coins from banks is very expensive way to invest in gold – better stick with some local jewellery or ETFs.
Hi Hemant
In the past I used to buy a gold coin from bank every year near Diwali. Now I am investing only in Reliance Gold Savings Fund via monthly SIP. I treat it just like SIP in equity fund and never look at the price of the gold.
The rise and fall of gold prices depends on the supply and demand. As long as the demand is high, prices will be high. Nowadays gold is being bought by institutions like banks etc rather than general public leading to the high demand. When public too starts buying, the demand will only rise. Also the fall in dollar is too a deciding factor in the high price of gold.
As such i believe for long term, it is not a good option but for short term gains who knows the prices may go sky high. But it is good to maintain atmost 15% of your portfolio for gold.
Rgrds,
Hi Jithin,
I already mentioned in starting of the post that we are not smart enough to enter & exit at the perfect time – asset allocation is the better strategy.
Hi hemant
I think gold shouldbe an alternative investmen
t used only as a last resort and best worn as ornament.
I also think paper gold is slightly better than real gold.
What do you think ?
Hi Mousumi,
For investment paper gold looks better – hope we are not missing something.
sir, i want to buy silver commoddity for holding. but i read from advisory sites that it will go down to approx 32000then to buy. will it happen?
No Clue Naveen.
Dear Sir,
I will like to share the following information about the foreign reserve holding of each country and the amount of gold they are holding as a part of there foreign reserve. Figures presented down is approximate value only.
S No. Countries Foreign reserve in dollar percentage of gold
1 Greece 7.3 billion 82%
2 Portugal 22 b 90%
3 Spain 50 b 30%
4 Italy 175 b 72%
5 France 179 b 70%
6 Slovakia 2.5 b 68%
All the countries mentioned above are high dept on there account. Definitely if they start selling there gold the gold price will come down but let us see other way
On Other side
1 China 3.3 trillion only 2%
2 Japan 1.25 trillion only 3%
3 Saudi Arabia 627 b only 3 %
4 Russia 527 b 9%
5 Switzerland 522 b 11%
6 Taiwan 403 b 6%
7 Brazil 373 b only .5 %
8 South Korea 307 b 1%
9 Hong Kong 304 b 0%
10 India 290 b 10 %
My question is to all the readers is if all these countries with lesser quantity of gold holdings start buying than in which direction the gold will move. In this era of currency war where all the central banks are trying to keep there interest rate low will steal your wealth without being noticed much. Gold is a real money whereas all currency has no real intrinsic value.
Imagine a person having a bag full of money, which he received after retirement, could buy only a packet of bread. This is a real incidence you search on internet.
See the hyper inflation state in Zimbabwe few years back, that time gold was the only form which people were accepting for shopping’s in Zimbabwe. Again search on internet for whole story.
This is the time to buy gold, if you miss these time then you will miss forever.
This type of correction has happen in past also but after that correction it has rallied much faster.
Don’t compare 1981 crash of gold prices since that time they removed the backing of gold for dollar as reserve currency.The same story will not repeat again and again, confidence on dollar is losing. Euro is also not good.
Gold and silver will only rock that time.
Hi Rajnish,
Thanks for sharing.
is it good time to invest in gold funds?
Better buy physical gold.
Hi Hemant,
A pretty useful post, yet again.
I personally feel it is better not to take a view on the price itself and focus on maintaining the asset allocation and keep on balancing it unemotionally. Most opinions suggest having 5% – 10% of gold in your portfolio. What is not clear to me is whether it should just be a ‘gold portfolio” or a “previous metals portfolio”..meaning a combination of gold, silver..or even platinum. Not sure about India, but those residing outside of India do have options available to invest in the ETFs of these commodities. If the ultimate idea is to 1) diversify, and 2) with asset classes that have less or no co-relation with the core class, then is it advisable to split between these three commodities ? Of course there is some ‘industrial’ play as well in case of silver and platinum, but just wondering if having all three would not provide both – a better stability and better returns – to the portfolio over mid-to-long term..? I do not have a study or an article to support this though.
Would appreciate having your / readers’ views.
Why you are believing on dollar, even though Fed is printing a hell lot of dollar.
See the headline inflation data for every country. Also keep in mind those data are not 100 % correct as it contains component which people have stopped consuming for long time. Sine the demand for those particular goods is not much so that factor price will not change much. I want to make the point is that, actual inflation >= headline inflation.
Suppose you deposited 100 rs in bank @ 10% interest rate. but if the inflation is 12% than your Fd is actually being robbed at a 2% pa, means you are becoming poorer by 2% every year.
Now still you have faith on fiat currency. But on other hand Gold which is true money you are doubting on it. Why?
Note: Government can print money ( in case of paper money)
Government can increase number of zeros in case of digital money
but to generate gold government will have to mine and processes to extract gold. Which involves a lot of money. So it is not easier to have gold without any effort. Long back 1,00,000 was a very big amount now its value is not that high. Same situation will happen for 1,00,00,000 after 20 to 25 years.
Your gold will protect your wealth for longer.
Thanks Hemant for your valuable guidence. Pl keep it up. The entire is being benefited by your suggestions.
Rgds,
Thanks Avijit.
What i Think about Gold Prices
A nice Article. But to my mind it comes we are collecting Gold from what angle exactly. I have 2 daughters and it comes to my mind a twin strategy approach. I will accumulated Gold ( in terms of ETF) to the extent i guess i need to make jwellery for them. Lets say a ball park figure of 1 Kg of Gold. I will accumulate in small quantities till their marriageable age. ( Preferably in ETF form) and not bother much even if i am not making amazing return because that accumulated Gold can be used for actual enjoyment.
As Hemant says a small percentage invested in Gold out of your portfolio is a good bet because unlike Shares and MF, Gold can be actually used in an Indian context by making equivalent Jwellery. To my mind since there is a physical usabability of this Metal, its a good investment. But it should not form a significant part of your portfolio.
As for prices of Gold or that matter any asset can never be guaged or timed. After all its just a metal and in need hierarchy it only has a luxury value so it times of necessities going by basic demand elasticity concept, Gold might fall to absymal depths or in terms of currency crises rise to astronomical heights just like any other asset class ( eg Real estate bubble in Japan and susbequent burst)
Cheers
Amit
Why you are believing on dollar, even though Fed is printing a hell lot of dollar.
See the headline inflation data for every country. Also keep in mind those data are not 100 % correct as it contains component which people have stopped consuming for long time. Sine the demand for those particular goods is not much so that factor price will not change much. I want to make the point is that, actual inflation >= headline inflation.
Suppose you deposited 100 rs in bank @ 10% interest rate. but if the inflation is 12% than your Fd is actually being robbed at a 2% pa, means you are becoming poorer by 2% every year.
Now still you have faith on fiat currency. But on other hand Gold which is true money you are doubting on it. Why?
Note: Government can print money ( in case of paper money)
Government can increase number of zeros in case of digital money
but to generate gold government will have to mine and processes to extract gold. Which involves a lot of money. So it is not easier to have gold without any effort. Long back 1,00,000 was a very big amount now its value is not that high. Same situation will happen for 1,00,00,000 after 20 to 25 years.
Your gold will protect your wealth for longer.
Hi Hemant Sir,
I am investing in Reliance Gold saving fund a SIP of 1000rs/month. since 2 years shall I continue or stop my SIP, I also have SIP in equity which are going well. Just wanted to ask about GOLD saving fund.
thanks in advance
Hi Hrishikesh,
I have no clue – stick to your asset allocation.
Hi,
I’m looking for tax saving options (already meet the requirement under 80C). One advice I was given is to consider ICICI Elite Life as an option – the claim is 100% of the returns are tax free under 10(10d). Additionally, the investment is done in debt instruments (100%) with the option to move part of the funds to equity monthly to give the benefit of interest rates plus SIP in equity.
Charges are supposed to be same as mutual funds with an additional mortality charge which will get adjusted against the compounded returns earned (lock in period of 5 years). I’ve read your articles that say don’t mix insurance and investment – however, confused about this one as it seems like a good deal.
Would appreciate any advice you can give me on this.
Dear Surana,
Elite life and Elite wealth are very low charge structure products and when compared with mutual funds with a time horizon of 10 years and more they will give better returns than mutual funds.
Regards
Chinmay Jhaveri
Mobile No
9899300000Typical insurance selling by an insurance guy…
Please stop fooling around.
Hi Hemant
A useful post.
Thanks Anil but why don’t you share your view on this matter.
Nice article but it does not shed light on some KEY items:
1. What drove price of GOLD higher now (in past decade) as well as during 1970-1980s?
2. We keep hearing GOLD is in a bubble and NO DOUBT it is in one BUT will it burst so soon? and what might break this bubble!!!
3. Can GOLD go even higher up to $3000-3200/oz, YES you read it right.
1. Price of Gold kept rising (in last decade) primarily because below reasons:
a. Increase in instability in western countries now spreading slowly to Global areas like a contagion
b. Federal banks (started with US and Japan) across the globe are printing money like crazy which causes inflation in long run
c. Currencies NOT holding their purchasing power
d. Financial crisis in US due to housing bubble burst
Whats new now?
e. Now its NOT just US but entire Euro-zone is in financial crisis which will have global consequences
f. ECB and FED continue to print money along with Japan and Australia may join them soon
g. Euro is losing its credibility day-by-day and Dollar is not holding its value either
BUT then why did the GOLD prices fall?
1. Cyprus said they will sell their GOLD reserves which ONLY amounts to half billion worth
2. Goldman issued a letter to their investors to liquidate their GOLD holdings
3. Technical support was broken which initiated STOP LIMIT/LOSS orders causing further sell-off
In short, fundamentals that drove the price of GOLD higher are still intact and most likely after stabilization prices of GOLD will head higher and this time it will be massive but exhaustive rally which could happen over next 2-3 years. During same time we might witness collapse of Euro followed by collapse of housing bubble in China and India.
Imagine more like a financial Armageddon across the globe where Gold and Dollar will be king.
Wait, Isn’t GOLD and Dollar suppose to move in opposite direction?
YES, but extreme times calls for extreme actions. Gold is a hedge against instability NOT necessarily inflation while Dollar is a hedge against trust in country and its currency. That does not mean Dollar is a good currency but its mere less worse amongst other major currencies.
Hope this makes sense 🙂
Thanks for sharing.
Makes a LOT of sense. Thanks for the writeup! 🙂
I totally agree with you. We are in time of currency war. Praying that it should not become a real war after few years.
Wait for $1200 per oz price in 12 month max and invest… you may be lucky if it is an inflation beating investment. above it is a guarenteed way to lose your net worth.
Hi Shinu,
I have no clue about this as my second hand crystal gazing ball is not working properly 😉
Already the debacle of last week is reveresed and gold rates are on the uptrend again.I would suggest to invest 70% in Gold Funds(not ETFs) ,25% in physical Gold and 5% in Gold mining company funds and hold on till 2020 unnerved and undeterred by whatever is happening now and also in coming 7 years.Gold is bound to give good returns in longtime around 2020 and later.
Hi Chirantan,
I don’t agree with you but is your current portfolio look like this “70% in Gold Funds(not ETFs) ,25% in physical Gold and 5% in Gold mining company”
hi Hemant. nicely timed article,as always. You can tell if its a bubble- by the mad frenzy of retail investors (or should I say gamblers).
BTW, i do not understand the logic behind the saying that gold should form
5%-10% of one’s portfolio. Should gold at all be a part of portfolio of REALLY LONG TERM investor? Could you shed some light?
Hi Dr Kuntal,
An asset class which has less or negative correlation with core assets can be used to reduce volatility of overall portfolio & sometime can generate better returns.
Keep it Simple. Just think of it as an ornament and that you can use it for your emergency. Come On, you have loads of investment options.
Hi Mugun,
Good to hear your views… “you have loads of investment options” 🙂
Thanks Hemant 🙂