Over the past year, gold and silver have significantly increased investors’ wealth. While some entered the market driven by FOMO, others remain hopeful that the rally continues. Here’s what investors should consider before putting money into precious metals today.
With Dhanteras approaching, investors traditionally turn to gold and silver not only for their cultural significance but also for the financial security they offer. Over the past 12 months, these metals delivered strong returns, reinforcing their role as hedges during uncertain times.
Global events—from border tensions between India and Pakistan to conflicts in the Middle East and Eastern Europe, along with trade frictions and lingering effects of tight monetary policies—created volatility in markets. In this context, gold and silver emerged as safe-haven assets. Investors sought bullion as equities wavered and bond yields fluctuated amid rate uncertainty.
While the Nifty 50 posted modest gains of 3-4% since last Dhanteras, gold outperformed with returns exceeding 60%. Silver, often called “the poor man’s gold,” doubled investors’ wealth in just 12 months.
Gold prices surged, supported by central bank purchases and a weaker USD, making bullion more attractive globally. Silver benefited from both safe-haven demand and rising industrial use in solar panels, batteries, and electronics, providing structural support for its price gains.
Despite strong performance, signs of fatigue are emerging. Fund-of-Funds (FoFs) and large institutions are showing restraint, especially in silver. Both metals now trade in overbought zones, prompting warnings of short-term corrections. Silver, in particular, has moved ahead of fundamentals due to speculative positioning rather than physical demand.
Many FoFs are avoiding fresh silver exposure until valuations normalize. Silver prices have eased by around ₹5,000-6,000/kg from record highs. Gold also faces short-term risks; any rise in bond yields or delays in rate cuts by central banks could trigger profit booking.
Given that gold and silver are near overbought levels, Exchange Traded Funds (ETFs) provide a practical way to stay invested. ETFs allow investors to enter systematically, reducing the risk of buying at peaks, while avoiding storage, insurance, and liquidity issues linked to physical metals. For those seeking safety while participating in potential upside, ETFs offer a flexible way to hedge portfolios and maintain exposure amid possible short-term corrections.
Also Read: The rising clout of precious metal
As the festive season begins, gold and silver remain symbols of wealth, safety, and prosperity, appealing to both traditional buyers and modern investors seeking diversification. Over the past year, these metals have outperformed most asset classes, with gold delivering strong gains and silver doubling investors’ wealth.
However, after such a rally, tempered expectations are necessary. Prices may consolidate in the coming months if uncertainties ease or rate cuts progress slower than expected. This Dhanteras, the shine of precious metals reflects not just tradition but exceptional performance, reminding investors that even the brightest assets need cooling periods before their next surge.
Invest wisely this festive season, and may your Diwali be bright and prosperous!
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