When good advice meets Indian gold

The responses to the latest Editor’s Note, Your gold doubled. That is the problem, not the prize, arrived with a pattern that became recognisable quickly. Almost every reader agreed with the principle. Then came the second paragraph, and the complications started. The word that threaded through nearly every reply, in some form or another, was "but."

There was broad agreement, and it lasted about one sentence.

Reader after reader wrote to say that yes, the rebalancing argument made sense, that yes, a hedge grown beyond its original allocation had stopped doing its job. Then the second paragraph arrived: SGB maturities, tax on early exit, physical gold with receipts long since misplaced, a rally that does not look finished, cultural attachments that no portfolio theory quite accounts for. The agreement was real. So was everything that followed it.

That tension, between accepting a principle and finding it genuinely difficult to execute, is what the responses revealed.

When the instrument itself gets in the way

The most immediate objection was not philosophical. It was structural, and it came from several directions at once.

Krishnaraj Venkatachalam, in the highest income tax bracket, wanted to know the tax implications before he moved an inch. Several SGB holders wrote with variations of the same concern: selling before maturity would cost them the capital gains tax exemption that had made the instrument attractive in the first place. Premature sale attracts long-term capital gains tax. Hold to maturity and the gain is tax-free.

Gaurev Katoch laid this out in the most detail. He had been buying SGBs systematically from every tranche since around 2022, accumulating enough that they formed roughly 10 per cent of his portfolio. The gold rally had taken that to around 20 per cent. He understood the rebalancing argument completely. He agreed with it. And he could not execute it without handing over a meaningful portion of his gain in tax, when doing nothing for another four to six years would cost him nothing at all. "I know hope is not a strategy," he wrote, with admirable self-awareness, "but I have accepted this risk." His workaround: stop all fresh investment in gold and redirect new money into equities, trusting the portfolio will gradually find its own balance.

It is a reasonable approach. It also assumes equity will outpace gold over the coming years, which is precisely the kind of forecast the editor's note said nobody can make reliably. But for someone sitting on a large, tax-free gain in an instrument designed to discourage early exit, it may be the most rational option available.

Abhay Khandeshe raised a related problem from a different angle. He holds physical gold, bars and coins bought a few years back. The receipts are gone. Who buys it back, and how does he account for it on tax? He suspected this was a problem shared by more readers than would admit it. He was probably right.

The argument from culture

Prasad Kango is a 51-year-old doctor. In 2004, when his daughter was born, gold was around Rs 5,000 per 10 grams. He decided to buy 10 grams on her birthday every year, so that by the time her wedding came he would not need to liquidate other assets. He managed it consistently until around 2013-14, when rising prices made it harder to maintain. Holding whatever he had accumulated was not about optimising a portfolio. It was about making sure something was there when it was needed. "Selling gold to adjust any portfolio is out of the question," he said. "Only the super-duper rich can do that."

He was not disputing the editor's argument. He was describing a reality that the argument did not fully account for.

Jai Hardaha made the same point in more structured terms. The article assumed, he wrote, that gold was acquired as a deliberate financial decision, a percentage chosen in a calm moment. For most Indian households, that is not how gold enters the picture. It accumulates through weddings, festivals and gifts across generations. It carries family memory, emotional meaning and social significance that sit entirely outside any spreadsheet. "Gold in India is not merely an investment product," he wrote. "It is also a cultural asset, a form of savings, and an intergenerational store of value." By that reading, telling someone to trim their gold is a little like telling them to sell the dining table because furniture prices have risen.

Ajay Mathur took a slightly different route to the same destination. His suggestion: simply do not count culturally acquired gold as part of your active investment portfolio at all. Treat it as a separate category, one you accumulate over decades for specific life events, and you will naturally hold less of it as a financial instrument. "You'll automatically buy less then," he said. It dissolves the rebalancing question by refusing the framing that creates it.

These are not arguments against financial discipline. They are arguments that the editor's note was written for a specific kind of investor, one who holds gold deliberately in an ETF or SGB, and that this may not be the only kind of Indian gold holder. For many readers, it is probably not even the most familiar kind.

Why fix what is working?

Beyond the tax and cultural complications, a smaller group of readers challenged the rebalancing logic itself. Their challenge was sharper and harder to dismiss.

Rahul Punjabi put it most directly. He has been adding SIP money to equity for years without the portfolio rebalancing naturally. A single equity position in his portfolio, originally less than 5 per cent, has grown past 17 per cent without being trimmed, even as he has added fresh money elsewhere. Gold has performed. Equity has not kept up. "The fundamental question then you're brought to is," he wrote, "why interfere with what's working and rebalance to what isn't."

It is a fair question. The editor's note answered it: rebalancing is not a prediction that the winner has peaked, it is a refusal to let concentration build quietly without your consent. But the honest follow-up is that this requires a sustained belief in the original allocation, and that belief is hard to maintain when the evidence in front of you keeps suggesting you were wrong about which assets would perform.

Arun Narayanan pressed further. Gold doubled for reasons, he pointed out. Geopolitical instability, sustained dollar weakness and central banks buying gold at a pace not seen since the 1970s. None of those conditions have resolved. If the underlying case for the hedge strengthened, perhaps the allocation should reflect that. He made the case for 15-20 per cent gold in the medium term, not as a departure from discipline but as a response to genuinely changed circumstances.

Karthick Subramanian agreed with the rebalancing principle but wanted to slow it down. Mechanically selling gold now to buy equities that are under pressure from the same macro forces that lifted gold felt, to him, less like discipline and more like trading one problem for another. He proposed a phased approach: move the proceeds first into short-duration debt, then rotate into equity on a confirmed pullback. It is a more sophisticated version of the instinct Gaurev Katoch had with his SGBs. 

Sandeep Kota stepped back from the gold question entirely. The real lesson, he said, was about concentration risk in any outperforming asset. The same argument applies to equities, technology stocks, real estate or a single successful company. "The underlying message is a universal portfolio management principle rather than a gold-specific one." He is right. The editor's note used gold as the occasion for making a broader point, and several readers caught that.

The ones already doing it

Not everyone wrote to push back. A quieter group wrote to say they had already begun, or were now beginning.

Manohar Peravali runs a family wealth management office for an ultra-high-net-worth family in Hyderabad. Before the rally, they had deliberately allocated up to 10 per cent of the portfolio in commodity assets. When that grew past 20 per cent, they rebalanced without agonising over it. "We chose to rebalance the portfolios and stick to our lane rather than worrying about more upside from thereon." He wrote to say he was glad to see the same principle stated plainly in a public note.

Sukanya Hazarika's story was more personal and, in its honesty, more relatable. She started a gold SIP at Rs 1,000 a month in 2020, gradually raising it to Rs 25,000 as she tried to keep the allocation in proportion. When gold became the runaway winner in her portfolio, she scaled the SIP back to Rs 7,000. No redemptions. Just a quieter approach to fresh investment. "I think of them as gold I chose not to store in a locker," she wrote. "They sit there as a quiet backstop, a form of assurance that is more psychological than transactional." Then, with the kind of candour that is rare in financial correspondence: "I am just not sure anymore whether I am doing the right thing. Am I?"

That question was running beneath many of the other responses too, even the ones that didn't state it directly.

Pallavi Agrawal asked it precisely. Her allocation had not drifted from its original target, so she had no immediate decision to make. But she wanted to know what the trigger should be. If 10 per cent becomes 12 per cent or 15 per cent, do you act immediately, or is some drift acceptable before rebalancing? 

The responses, gathered together, tell the story of an idea that is easy to accept and genuinely difficult to execute. Almost no reader thought the editor was wrong. What they found, when they tried to apply the advice to their own situations, was that the specifics made it considerably harder. The instrument they held. The tax treatment it attracted. The cultural context in which the gold was acquired. The question of where the proceeds should go. These were not excuses. They were real variables, and a general principle cannot resolve them in advance.

The editor's note said the remedy was dull and faintly painful. The responses confirmed both. What they added is that dull and painful is also, quite often, personal in ways that a general principle does not anticipate. The work, it turns out, is in the translation.

Credits

Krishnaraj Venkatachalam, Gaurev Katoch, Abhay Khandeshe, Prasad Kango, Jai Hardaha, Ajay Mathur, Rahul Punjabi, Arun Narayanan, Karthick Subramanian, Sandeep Kota, Manohar Peravali, Sukanya Hazarika, Pallavi Agrawal

Also read: The morning briefing everyone wants to buil

This article was originally published on June 17, 2026.