Gold As A Hedge: Why Diwali Is The Right Time To Buy

Noida-based Satish Singh remembers the first time he truly noticed the power of gold. His father had always kept a few gold coins tucked away in a steel almirah, a relic from a time when people didn't trust banks or the stock market. As a teenager, he thought it was old-fashioned - just shiny pieces in a box.

Then came March 2020. The pandemic sent global markets tumbling, and equity investments were bleeding value. In the middle of all that uncertainty, his father opened the almirah. To his surprise, their gold had gained nearly 28 per cent that year. It wasn't just metal; it was insurance, a quiet, reliable guardian who thrived when everything else panicked.

That moment shifted his perspective. Gold wasn't just about tradition; it was protection. And Diwali, he soon realised, wasn't just festive; it was strategic.

Gold: A Shield Against Inflation

Most investors overlook this simple truth: gold doesn't just hold value - it preserves purchasing power when everything else erodes. Over the past five years, while inflation hovered around 5–6 per cent annually, gold prices in India rose from roughly Rs 35,000 per 10 grams to nearly Rs 62,000. Savings accounts earning 3-4 per cent interest. In real terms, they were losing money.

"Gold's strength isn't explosive growth—it's calm reliability," says Sanjiv Bajaj, Joint Chairman and MD at Bajaj Capital. "When markets wobble, when inflation bites, when currencies falter, gold doesn't panic. It's the steady hand in a turbulent portfolio."

Why Diwali Works

Gold prices often stabilise or dip slightly around October–November. Jewellers stock up for festivals, making charges become competitive, and discounts appear. Historically, gold purchased during Diwali quarters has delivered positive returns in 11 of the past 15 years when held for a year or more.

For the young professional, this meant combining tradition with timing: honouring his father's legacy while being smart about entry points.

Beyond Jewellery: Smarter Gold Options

Physical gold charms us with its tangibility, but it comes with costs, such as making charges, storage worries, and resale hassles.

Satish realised there were smarter ways to invest in gold without losing money to making charges or worrying about storage.

Digital gold lets him buy tiny portions, even for just a few hundred rupees, stored safely in insured vaults, ready to sell anytime.

Sovereign Gold Bonds (SGBs) were another option: government-backed, earning a steady 2.5 per cent interest every year on top of gold's price growth, and completely tax-free, if held for eight years. It felt like giving his money both freedom and security: gold that worked quietly, behind the scenes.

"The metal matters less than the method," Bajaj notes. "Invest Rs 50,000 in SGBs, and you've already avoided the hidden costs of jewellery from day one."

The 10–15 per cent Rule

Gold should anchor, not dominate, your portfolio. Financial planners recommend a 10-15 per cent allocation. It cushions falls, preserves wealth, and balances equities when markets fluctuate.

Each Diwali, Satish now invests Rs 25,000 in SGBs for his daughter and Rs 25,000 in equity funds. One safeguards, one grows. One honours tradition, the other builds a future.

Gold doesn't promise overnight riches or flashy returns. But when storms come - and they always do - it's the asset that lets you sleep peacefully.

This Diwali, don't just buy gold because it's customary. Buy it because it protects, preserves, and quietly grows the dreams you care about most.