'For gold, the driver is debt; for silver, it's climate'

Summary: As gold and silver scale new highs, Nippon India Mutual Fund’s Vikram Dhawan decodes the real forces behind the rally — rising global debt and climate-linked risks. He explains why these metals are less about returns and more about resilience, and how investors should position them within a long-term portfolio. It has been a bumper year for precious metals. Gold has rallied more than 61 per cent over the past year, while silver has outshone even that, posting a 66 per cent return. Such moves have naturally caught investors’ attention, but what’s really driving this surge? As part of our ‘The Index Investor’ series, we spoke with Vikram Dhawan, Head of Commodities at Nippon India Mutual Fund, to dig deeper. Dhawan explains that central banks’ gold buying isn’t just a recent frenzy but a trend in motion for nearly a decade, triggered by rising global debt and a gradual reset in asset allocation. Until this imbalance plays out fully, he believes the rally will likely continue in the future. In this exclusive interview, Dhawan also shares how investors should approach gold and silver today, why they matter in a portfolio and how their role is as much about resilience as it is about returns. Below is the edited excerpt from our conversation. Gold and silver have been on quite a rally this year. What do you think is behind the surge, and how do you see it lasting? There is a global reset in asset allocation, which has been underway for some time with central banks. I’m sure your readers are aware that central banks have been buying gold for quite a while. It’s not just the past few years that central banks have been increasing exposure to gold. If you go way back to 2016-17, that’s when the surge actually began. To share a few data points — central banks, on average, buy about 400 tons of gold every year. That’s the 25- to 30-year average. However, over the last three years, they have averaged between 1,000 and 1,100 tons per year. So, you can imagine the leap in the quantum o

This article was originally published on November 01, 2025.