What % of Your Portfolio Should Be in Gold? How to invest in Gold?

Added: 2026-06-07

[00:00:00]In the last few years, gold prices have completely shocked the world. While everyone was focused on equity as an asset class for wealth creation, gold returns have outperformed equity return across 5 year, 10 year, 15 year and 20 year period. The reason is because gold is a hedge against uncertaintity. So whenever geopolitical uncertaintity rises globally, investors and even central banks start increasing allocation towards gold because gold is considered a safe asset during periods of instability and in last few years the world has witnessed crazy geopolitical uncertaintity. Although after a massive runup in 2025, gold prices have cooled off in last few months. But interestingly, despite such a massive rally, the debate around gold is becoming bigger than ever. Some people believe that gold is still in the early stage of a long-term bull market and can eventually touch $10,000 levels by 2029.

[00:00:55]Today, the gold prices are around $4,500 levels. Whereas other believes that gold has become overheated after a recent rally and may remain flat for years. So the real question is no longer should you buy gold or not. The bigger question is what percentage of your portfolio should be allocated towards gold 10 20 30% or more. So in this video we'll try to understand is gold really a good long-term investment if yes how much exposure should you have in gold and what is the smartest way to invest in gold in today's world.

[00:01:28]One of the biggest debate in investing is whether gold is actually a good long-term investment because unlike equities, gold does not generate earnings, dividends, cash flow or business growth. Still, gold has managed to preserve wealth across centuries and continues to remain one of the most trusted assets globally. So to really understand whether gold deserve a place in a long-term portfolio, we need to understand both sides of the argument.

[00:01:54]So the biggest argument in favor of gold is linked to the US economy that is currently facing unprecedented debt levels. Around 2008, US debt was around $9 trillion. Today it has crossed $38 trillion. Now you may ask why should gold care about rising US debt? Because in order to manage such massive debt, the US central government has to keep printing more and more money. But that is not sustainable. It creates a massive inflation problem. For example, after COVID, US Federal Reserve injected trillions of dollar into the system and interest rates were pushed near zero.

[00:02:31]This resulted in crazy rise in real estate prices, housing prices, commodity prices and so on. In short, it resulted in people losing purchasing power. And this is precisely where gold becomes attractive because gold cannot be printed by a central bank just like USD.

[00:02:49]Then second very strong argument in favor of gold is the dollarization trend. We all know that gold is the international currency and every country is dependent on it. However, in the last few years, several major geopolitical events have made many countries uncomfortable with excessive dependence on US dollar system. For example, after Russia Ukraine war began in 2022, US froze a large portion of Russia's foreign exchange reserves held in dollar-based financial system. And that's where every country realized how vulnerable they are to the US financial system. So today every country is trying to reduce its dependence on US and this is where gold became important again. In fact the major reason behind the crazy growth in gold prices in last few year is because central banks around the world have significantly increased their gold reserves. Now this does not necessarily mean that dollar would collapse but even a gradual reduction in global dependence on dollar asset can structurally support gold demand over long period. Then third argument in favor of gold is gold tend to perform well when the world faces geopolitical uncertaintity because during uncertain time investors avoid taking aggressive risk. the increase allocation in safer and liquid instrument and that's where gold comes into picture and the world today is facing a massive geopolitical instability beat Russia Ukraine war USChina rivalry for global dominance recent US Iran war middle east conflict China Taiwan issue and so on and now many investors believe that such geopolitical instability is the new normal where countries would continue to fight for global dominance and control over commodities like oil rare earth metal energy and so on. So considering all these reasons, gold bulls are convinced that it can continue to outperform in the coming years. However, there is other side of the story as well. Some people argue that gold is certainly an important asset class from portfolio diversification point and act as a hedge against currency volatility and geopolitical instability. But too much exposure in gold may not be a wise decision especially when gold has already rallied significantly in last few years. Their argument is gold is a non-productive asset. It does not generate cash flow, earnings or dividend. So when you allocate capital to gold, you are essentially parking money in an asset whose return depend entirely on price appreciation. The second argument is related to cycle positioning. Gold has already seen a strong multi-year rally driven by inflation fear, geopolitical uncertaintity, central bank buying and liquidity expectation. Historically after such strong run gold often enter long consolidation phases where real returns are muted. So the risk is not that gold collapses but it underperform for a long time after a big run. Their point is today many investors are chasing gold after the runup. But even if there is some stability in the world, gold can see good profit booking or consolidation for a long period. So now that we have heard both side of the argument, the questions still remain.

[00:05:50]What should you do with gold? continue to increase exposure in gold or not and if yes, how much gold allocation is enough? Let's discuss.

[00:06:00]Well, gold should certainly be a part of your portfolio. But don't simply chase gold because it has rallied and generated very high return in the past.

[00:06:08]You should invest in gold because it is the best asset class to hedge the portfolio during uncertain times. And let's be honest, geopolitical instability is the new normal in today's world. So from a portfolio construction point of view, increasing gold exposure in a structured and disciplined way can make sense. Don't rush to buy lumpsum.

[00:06:27]An SIP based approach works best. Just systematically try to buy the dips in gold. Of course, it also depend upon where you are in your allocation journey. I think gold can certainly have 10 15% exposure in the portfolio. And if you're a conservative investor and want higher protection against volatility and macroshocks, allocation can extend closer to 20%. So think from an investment point of view, not from a trading point of view. Now as far as gold prices are concerned, unfortunately nobody can predict anything with confidence. Everyone is trying to speculate about gold prices because unlike equity where you can say it is overvalued or undervalued, gold has no such parameter. So instead of trying to predict gold price for next year, try to focus on building a good portfolio with fair allocation towards gold in a systematic manner. Now the next question is what are the options to invest in gold. Let's discuss it.

[00:07:24]The most traditional route to invest in gold is physical gold that include your jewelry, coins and bars. Here you have direct ownership of gold and jewelry also has a lot of cultural significance in India. However, purely from an investment point of view, the problem with jewelry is higher making charges.

[00:07:41]You end up paying between 5 to 25% making charges on jewelry. Yes, gold coin do not have high making charges.

[00:07:48]But still there are small making charges between 1 to 5% on coin. Then another concern with physical gold is storage.

[00:07:55]Keeping gold at home has its own set of storage risk from theft. You can keep them in bank's locker but you have to pay annual charges for that. Then second option is gold ETF. These are listed on stock exchanges and directly track domestic gold prices. The underlying asset is physical gold held by the fund.

[00:08:13]ETFs offer high liquidity, transparent pricing and low cost of holding making them one of the most widely used instrument for long-term investors who want clean exposure to gold without physical handing. However, the key limitation with ETF is you can't take physical delivery of gold. But now there's a third option that gives you the best of both worlds. It is gold vault by Dhan our partner in today's video. So when I dig deeper into gold vault I found that it is trying to solve a key problem where combines the best of both world that include real physical gold ownership and convenience of financial instruments like ETF. So basically gold allows you to buy real gold at live MCX prices. So you get the best rate of gold at zero markup cost.

[00:08:57]Of course, you get 999 purity and the gold is actually backed by physical boolean stored in vaults operated with semi-registered exchange infrastructure and approved custodial framework. And the best part is you can also request doorstep delivery of your gold anytime.

[00:09:13]Your gold holdings will be converted into physical form. In simple terms, gold vault sits between gold ETF and physical gold. When you invest through gold vault, you are not buying jewelry or coins. Instead, you're buying gold electronically at best exchange link prices. After the purchase, the equivalent quantity of gold is allocated to you and held in institutional wallet storage. So, you get exposure to real gold without having to physically store it yourself. At the same time, it also gives flexibility. You can offer physical delivery instead of just holding a financial unit. Basically, you get the convenience of digital investing and backing of physical gold. And finally, since gold vault transaction go through MCX and exchange clearing system, the pricing and settlement are handled by regulated market setup instead of relying on a private company's promise. This makes it more transparent and reduces the risk of platform failing to owner your gold compared to informal or regulated gold products.

[00:10:13]So if we conclude, gold has held importance for thousands of years in human history. Especially in India, gold carries a very strong cultural and emotional value. Unlike paper currency which governments can print endlessly, gold is limited in supply. Hence, whenever geopolitical uncertaintity rises globally, investors and even central bank start increasing allocation towards gold because gold is considered a safe heaven asset during periods of instability. So, gold should certainly be a part of your portfolio. But remember that gold is not meant to compete with equity. It is meant to balance equity risk. So instead of asking should I invest in gold now or not the better question is have I built enough protection in my portfolio for the kind of world we are living in because if you look at history gold allocation has never worked because of perfect timing. It has worked because of discipline and consistency across cycles. That's why most long-term investors don't treat gold as a trade.

[00:11:11]They treat it as a structural allocation. something that they keep steady maybe rebalance occasionally but don't try to time aggressively whether it is 10% 15% allocation or slightly higher depending on risk appetite the idea is same gold is there to reduce portfolio stress not to maximize return and when you connect everything we discussed global debt central bank behavior geopolitics currency cycle and interest rate gold start making sense not as a speculation but as a response to uncertaintity so the conclusion is simple you No need to predict gold. You just need to decide how much uncertaintity you want your portfolio to absorb. Because in the end, wealth creation is not only about how much you earn in good times. It's also about how much you are able to preserve when conditions are not in your favor. Now, you tell me in the comment what percentage of your portfolio is in gold and which is your preferred investment option for gold. Thanks for watching this video. If you find it useful, do share within your circle. I'll see you next video. Till then take care.