Gold, silver, and equities: How investors should allocate amid market volatility

Gold's glitter is timeless, but this festive season it’s also priceless. With the yellow metal's prices touching record highs and silver following suit, investors are weighing their options: buy, wait, or look elsewhere.

CNBC-TV18 spoke to Feroze Azeez, Joint CEO at Anand Rathi; Chirag Sheth, Principal Consultant of India at Metals Focus; and Kunal Shah, Head of Commodities Research at Nirmal Bang, to get their views on asset allocation.

Feroze Azeez said asset allocation should balance growth and protection. “If you are going to have debt in your portfolio, at least half the debt of your portfolio should be in gold,” he said. Pointing to historical returns, he added that while gold can outperform Nifty in the short term, over longer periods equities generally win. He suggested that long-term investors should allocate “at least 75–80% in equity for long-term monies, and the residual divided between debt and gold, 50–50.”

For short-term holdings, Azeez noted gold’s strong performance. “If you look at the one-year best return ever in the last 15 years, rolling, it has been 58% for gold and -21% is the worst,” he said. He emphasised that gold is more of a trading instrument or a debt replacement than a long-term equity substitute.

Turning to silver, Kunal Shah highlighted supply pressures and growing demand. “The supply side is continuously getting weaker, and at the same time the demand side is getting stronger and stronger with solar,” he said.

He noted that major silver mines in Mexico are likely to be exhausted by 2026, creating a “perfect storm in commodities” that makes predicting price moves difficult. However, Shah remains optimistic: “The trajectory for silver for the next one to two years is still going to be very bullish. And whatever corrections, dips, or profit-taking we see over time, those should be used as buying opportunities.”

Chirag Sheth said silver remains the most compelling commodity, supported by both demand and supply trends. “Essentially, in the last 8 to 10 years, there has been about 500 million ounces of drawdown of silver stocks. So, you are really seeing demand pick up, especially because of the new usages—photovoltaic, EVs, and defence equipment,” he explained. He also emphasised gold’s role as a safe-haven asset amid global uncertainty, saying, “Having a negative view on both gold and silver would be hara-kiri.”

Looking at the equity market, Azeez said equities and gold complement each other and can be balanced to manage volatility. He noted that despite recent corrections, there is pent-up potential in Nifty. “Whenever Nifty was negative, I took the 12 negative months of Nifty, and in all those 12 negative months, gold was positive. So, I'm trying to create the hypothesis that they are negatively correlated assets, and they complement each other,” he said.

With Diwali around the corner and market volatility continuing, investors may find that a balanced mix of equities, gold, and silver—guided by historical trends and demand-supply fundamentals—could be the way forward.

Watch accompanying video for entire discussion.