Hold that gold rush

Summary: Amid gold and silver’s spectacular rally, many investors are rethinking their portfolios out of fear, not conviction. This piece urges caution — asset allocation should evolve gradually, not reactively — and reminds readers that discipline in equities, not impulsive shifts to gold, drives long-term success. What to do about gold and silver now? Is the domestic equity market rewarding enough to invest hereon? Which parts of the market, which sectors, large, mid or small caps, should you invest in? When will FPI flows come back? What about the external environment, US markets, the AI ‘bubble’, geopolitics, et al? I travel two to three weeks a month, covering anywhere between eight and 12 locations in India. This is what is at the top of the minds of most mutual fund distributors and advisors, and of course, this is being asked and discussed on behalf of clients. Some of this falls within the realm of prediction, while some of it is about understanding our current position. What past experiences and instances have taught us, what to take from them and what to leave out, and then, keeping all this in mind, what we can make of the current environment. For everything that involves prediction, I have written multiple times that it is futile to predict because macroeconomic trends are never predictable, and even worse, how markets respond to them is even more unpredictable. So let’s dive in. What about gold and silver now? This is where the FOMO is. Should we still buy in? They have beaten equity over some time horizons and given comparable returns over some longer horizons as well. I distinctly remember a journalist friend writing an article around 2013, concluding that equity had been trounced by the humble PPF and even questioning the need to invest in equity. Whether it is a business, a human being, an asset class or a machine, there will always be a day