Planning to invest in gold and silver now? 5 things to know

With market volatility high, interest rate forecasts changing, and investors flocking to safe-haven assets, gold and silver are attracting significant attention. As you review your investment portfolio, the crucial question arises: What is the optimal allocation for gold and silver in a truly balanced portfolio?

Gold continues to hold its place as a reliable strategic asset for medium- to long-term portfolios. According to a recent Motilal Oswal report, the fundamental outlook for gold remains solid. The metal continues to be a reliable strategic asset for medium-to long-term portfolios, backed by its historical role as an inflation hedge and geopolitical tensions.

1. Stay invested or accumulate gradually

The report advises that investors who already hold gold can continue doing so, while new investors may consider building exposure through SIPs. "Investors who already hold gold may continue to do so, while those looking to build exposure should consider accumulating through SIPs or a staggered approach to reduce timing risk," the report stated.

2. Use small SIPs to build long-term value

Ronak Morjaria, Partner at ValueCurve Financial Services, suggests that small SIPs in gold can help build a meaningful corpus. "Small SIPs in gold can help you build a decent corpus in the long term, 5-7 years+, which can be sold later if you plan to buy jewellery for yourself or the purpose of a child's marriage planning", said Ronak.

He adds that no more than 10% of regular savings should be directed toward gold, as it typically delivers returns that match or slightly exceed inflation.

3. Silver offers potential, but with high volatility

While silver shares some characteristics with gold, its behaviour is very different. Motilal Oswal notes that "silver may be accumulated gradually, but only by investors with a higher risk appetite."

4. Exposure limits are crucial for silver

“Silver, being very volatile in nature, should be considered as an investment only for investors who have a high-risk appetite, as one can witness huge drawdowns during their investment journey,” he says.

5. Experts recommend limiting total precious-metal allocation

Most personal finance experts agree that gold and silver should collectively make up no more than 10% of an investor’s portfolio.

"If you are investing in gold & silver, both put together, one should not have more than 10% exposure," said Morjaria.

This ensures that precious metals serve as tools for diversification and inflation protection without adding unnecessary instability to overall returns.

As an investor or someone interested in buying gold, keeping an eye on the daily gold prices is crucial. The price of gold in India fluctuates daily due to various factors, impacting both buyers and sellers in the market.