Summary of this article
· Gold prices have spiked over 55 per cent in one year. As Dhanteras is considered an auspicious time to buy gold, silver etc., one should carefully consider the prices at this time and trade off between rituals
Dhanteras marks the beginning of the Diwali festival and is considered an auspicious occasion for purchasing new items, especially gold, silver, and utensils. In Hindu mythology, the day is considered auspicious to bring luck, wealth, and prosperity. Traditionally, people buy precious metals, but nowadays, many also purchase electronics on this day. However, this day holds significance in terms of investment also. Because of the ritual of buying gold or silver, people keep making their financial standing strong every year. Gold, a symbol of wealth socially, is a safe haven financially. It is one of the assets one can depend on in times of thick and thin as a solid support to offer financial security.
But, this year gold prices have risen significantly, a 57.36 per cent in one year, per goldprice website. Priced over Rs 1.25 lakh for 10 grams on October 10, it is not affordable to many. Amid this, if one wants to keep a trade-off between following the ritual and buying gold at such high prices, what could be done?
Here are some tips one may follow to invest in gold wisely and build lasting prosperity.
Diversify Beyond Physical Gold
Jewellery has traditionally been a preferred mode to buy gold, considered serving two purposes: wearing it on occasions, and investment for rainy days. But with technological advances, there are various other ways to invest in gold and keep the two purposes: Ornamental use and investment, separate. While jewellery comes with making charges, storage issues, and liquidity challenges, one can look for buying digital gold or gold exchange-traded funds (ETFs). Both digital gold and gold ETFs come with no need to possess physical gold. Plus, they are easily liquidable.
Allocate a Balanced Portion
Gold offers the essential stability to the portfolio as it helps protect against inflation and currency volatility, especially when the markets move downward. Gold provides an essential hedge against declining stock. However, experts recommend allocating 10 to 15 per cent of the portfolio to gold as over-exposure can weaken growth potential.
Monitor Price Trends And Market Outlook
As gold has increased by more than half in the last year, the growth rate has always been like this. Experts predict the rates are far from stagnation. Karan Aggarwal, Co-founder and CIO, Elever, a quant-based PMS and portfolio manager, says, “Looking at technical charts, the gold-silver ratio is above 80, which signals a growing appetite for both gold and silver in the market. Historically, the gold-silver ratio needs to fall to 50 for gold to enter a stagnation phase. Looking at sovereign risk events expected in the US, gold is a buy-on-dip for the next 6-12 months.”
On Dhanteras buying, he says, “Investors can continue with the ritual this year as well, but they must consider the risk that there might be some temporary correction at the end of 2026 on account of USD depreciation.” So, one must be careful while buying gold on Dhanteras, as there could be a correction in the coming year.
Opt For Systematic Investment
Buying gold in a planned manner through systematic investment plans (SIPs) in gold mutual funds and gold ETFs is increasingly becoming popular. SIPs minimise the risk of price fluctuations, and instead of buying gold at this time of the year, buying it through monthly SIPs could be a better and risk-mitigating way. Aggarwal says, “Primary role of gold is portfolio hedging and diversification with ideal allocation standing at 10 per cent.”
Understand Tax Implications
While buying gold, one should consider it as an investment and the taxation rules on sale. Whether it is digital gold, physical gold, or paper gold, the long-term capital gain (LTCG) tax is 12.5 per cent. If it is held for less than two years, short-term capital gains (STCG) will apply as per income slab rates.
However, Aggarwal cautions, saying, “With US sovereign debt crossing 100 per cent of GDP a few years back, the world is looking at a sovereign default crisis in the next 6-24 months, which can create asset deflation similar to the 2000 dot com crash and 2008 global financial crisis (GFC). Investors can follow ‘buy on dips’ to build a 10 per cent allocation of gold-linked assets to the probability of sharp value erosion in the stock market and real estate.”
While continuing the Dhanteras tradition, focus on how gold can strategically strengthen your portfolio: diversify across physical and digital gold, invest systematically, and maintain a balanced allocation for both ritual and long-term stability.
