The song that made headlines in 2025 was the stunning duet of gold and silver that outperformed every major asset class. Both gold and silver had a phenomenal year, with gold increasing by over 65% and silver achieving a remarkable 155% return.
So, what’s in it for me? Most retail investors feel left out with none or minimal exposure to these two precious metals in their portfolio. The fear-of-missing-out (FOMO) factor, one of the most dangerous investing behaviours, is sure to creep in sooner or later among investors.
But wait. Assets don’t move linearly. There are dips, corrections, and crashes on the way. Gold saw prices crash by over 40% back in 2013. So, if you are mindful of the fact that asset prices can have a sudden reversal and crash big time and still want to go ahead and invest in them, the two questions matter: how much to allocate to gold and silver, and where to invest?
Asset Allocation Plan
Before you fix an amount to be invested in gold or silver or both, take a pause. See if you have a proper asset allocation plan in place.
What’s to be done for that? Depending on your short-medium-longer goals and your personal risk-taking capacity, you need to decide how much you need to allocate among various asset classes such as equity, bonds, gold, silver, real estate etc.
Remember, an asset allocation plan can be very personal, as financial goals may differ significantly among individuals.
Once you have that plan in place, it’s time to allocate funds for the precious metals. Most financial planners suggest a total exposure to gold and silver not exceeding 10-15% of one’s portfolio. Needless to say, but link your gold and silver investments to your long-term goals.
In a recent interview with Financial Express, Sankaran Naren, ED and CIO of ICICI Prudential Mutual Fund, touched upon the importance of asset allocation while giving the big picture strategy for investors in 2026. You can read the full interview here.
“The most important aspect for retail investors is to continue with asset allocation discipline, maintain a long-term perspective and avoid reacting to short-term market movements. Given that markets can be volatile and outcomes uncertain in the short run, a consistent approach focused on asset allocation helps investors manage risk, coupled with systematic investment plans with a long-term view, remains an effective way to navigate market cycles,” said Naren.
And, specifically for gold and silver investors looking to chase returns in 2026, Naren has a cautious call to make: “Precious Metals like gold and silver have done very well last year and investors need to be careful while making a standalone investment in precious metals,” said Naren.
Not only common investors but also the biggies are seeking answers about how much to invest in gold. Morgan Stanley CIO Michael Wilson’s take on allocation to gold stirred an age-old principle. Traditionally, investors have been holding a 60/40 portfolio, with 60% in stocks and the rest in bonds. Wilson recently talked about an investment strategy that includes a 20 percent allocation to gold, resulting in a 60/20/20 allocation.
In an interview with CNBC in October, Sprott director of ETF management Steven Schoffstall echoed Wilson, saying that a 20% allocation to gold and silver is likely to outperform the standard portfolio.
How to invest in gold and silver?
Now comes the second part of the story – where to invest in gold and silver. There are gold and silver exchange-traded funds (ETFs) called Gold ETFs and Silver ETFs, listed on NSE and BSE stock exchanges. Similar to mutual funds on several counts, they help retail investors to take exposure in these two precious metals.
Their USP – Gold ETFs and Silver ETFs are traded on stock exchanges, have gold and silver, respectively, as the underlying asset and the NAV is close to the real physical price of these two metals.
The ETF market in India is not deep enough to withstand demand-supply pressures and, therefore, at times, the ETF units may trade at a premium or discount. For such and other typicalities of ETFs, do read our in-depth coverage on ETFs here.
Gold and Silver Rates
In the international markets, gold trades around $4,377 per ounce, while the gold rate today in India is Rs 1,36,910 for ten grams of 24 carat.
Gold’s close cousin, Silver rate today in India is Rs 2,35,540, while in the international market, silver trades at $74. Gold is up by 88% in the last 2 years, while silver prices have grown by over 225% during the same period.
Returns over the Long Term
As a retail investor looking to invest in gold or silver, make sure it is for the long term. The extraordinary returns in gold and silver in recent years will not continue for sure.
Even in the past, history has shown that these two metals have shown deep corrections after reaching newer heights. Also, there are longer periods of lull when nobody is interested in them, and the price remains stagnant for years. What this means is the average return over longer time periods evens out.
Here’s how the gold price moved, leveling out the crests and troughs, over the longer time frame.
In the last 25 years, that’s a long enough period to sense the performance; gold’s compound annual growth rate (CAGR) is 11%. In the last 20 years, it is 12.5%, while in the last 15 years, the compound annual growth rate is close to 10%.
Gold’s 10-year CAGR is close to 15%, while the 5-year CAGR is almost 20%.
But, there were periods of no or negative return as well. The peak gold price of $700 made in the 1980s was not breached till September 2007, a dull patch that ran almost 27-years.
Factors Driving Gold and Silver Prices
The factors that pushed gold and silver higher will have to remain valid in 2026 and beyond for prices to reach higher levels. Gold prices are expected to increase when economic conditions dwindle, the US dollar is under pressure, US Fed rates fall, and geopolitics takes the front seat.
Some or all of these may keep the volatility high in the precious metals trade in 2026. The bigger cues could come from what the central banks and China are doing with gold.
Watchouts
For those who think they have missed out on the big rally in gold and silver, it is essential to get the basics right before jumping on the bandwagon. Have an asset allocation plan in place and stick to it irrespective of the short-term price movements.
Most metal market experts believe that both gold and silver will continue to shine in 2026. But, more than the predictions, base your allocations to them on your personal risk appetite and long-term goals.
Remember, reversals can be sharp, and we all saw that in the last week of 2025. Silver crashed over 10% from its all-time high levels in a short time, even though the reversal was equally fast.
The historic crash in gold happened in early 2013, when the price fell by over 40%. From a high of $1,800, the price crashed to under $1,000 by February 2016 and did not recover to the previous high till mid-2020.
Also, as and when global factors around geo-politics and economies improve, the rotation of money from gold and silver may begin into stocks or bonds. Silver is currently facing supply shortages, but news about increased mine production may dampen sentiments. Also, central banks have been a big driver of gold prices since 2022. What if there’s a big sell order placed by some central bank to raise cash?
So, keeping the headwinds in context, it is always best to take an informed buying decision and not jump-in to these metals without a plan in place.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.
