Gold and silver prices are in focus today. After the near-vertical rally, the prices have seen a reversal. Close on the heels of the sharp drop in the spot prices, Gold and silver ETFs have also plunged as much as 12%. The big question then is what portion of your yearly savings should be allocated to precious metals like gold and silver?
In this premium quarterly feature by Financial Express, we touched base with top fund managers and asked them how to invest Rs 10 lakh and the allocation that should be made for each asset class.
How much gold is ‘enough’ – Check your yearly asset allocation?
Brijesh Ved, who is the Head of PMS at Kotak Mahindra AMC, said that if one has to allocate Rs 10 lakh, then they should invest at least 10% in the precious metal. The current global geopolitical landscape, which is uncertain, makes it quite important to allocate to precious metals.
(A Rupee-based breakdown of Rs 1,000,000 across asset classes)
| Asset Class | Amount | % of total |
| Large Cap | Rs 4,00,000 | 40% |
| Midcap | Rs 2,00,000 | 20% |
| Small Cap | Rs 1,00,000 | 10% |
| Total Equity | Rs 7,00,000 | 70% |
| Debt | Rs 2,00,000 | 20% |
| Kotak Gold Silver Passive | ||
| FOF | Rs 1,00,000 | 10% |
| Alternate/ Precious Metal | Rs 1,00,000 | 10% |
Anand Shah, who is the Chief Investment Officer of PMS & AIF at ICICI Prudential Asset Management Company, suggests allocating a little more towards precious metals. He suggests allocating 15% of Rs 10 lakh towards precious metals. Shah advised equal exposure to debt and glittering metal, as gold serves as a strategic hedge against inflationary or currency pressure.
| Asset Class | % of Allocation |
| Large Cap | 50% |
| Midcap | 7% |
| Small Cap | 13% |
| Gold | 15% |
| Debt | 15% |
Just to remind our readers, the rupee is nearing the 92/$ levels. On January 29, the rupee opened at a record low of Rs 91.99 against the US dollar. Persistent dollar strength, elevated US bond yields, and continued foreign portfolio outflows kept it under pressure.
Motilal Oswal Private Wealth’s chief investment officer, Sandipan Roy, said that commodities could remain in a bull phase in the new year due to rising uncertainties, currency debasement, and de-globalisation, leading to realignment of global supply chains. “A volatile environment may also be more conducive to hybrid strategies such as dynamic asset allocation and multi-asset approaches.” However, he suggested allocating not more than 10% towards the precious metals.
| Asset Class | % of Allocation |
| Large Caps | 10% |
| Small and midcaps | 10% |
| Hybrid Funds | 20% |
| Emerging market | 20% |
| Debt | 10% |
| High Yield Credit | 20% |
| Commodities | 10% |
Silver vs Gold: The ‘volatility insurance’ thesis
However, within the precious metal space, what’s a better bet between gold and silver? Market veteran Ajay Bagga suggests allocating 5% of the portfolio towards Gold and advises allocating 10% in Silver. In his thesis on this strategy, he said the 15% allocation to gold and silver serves as a necessary volatility insurance. With silver entering a structural supply deficit and gold acting as a hedge against potential currency instability, these commodities provide a non-correlated safety net.
| Asset Class | Amount | % of Allocation |
| Large cap | Rs 3,00,000 | 30% |
| Midcaps | Rs 1,50,000 | 15% |
| Smallcaps | Rs 1,50,000 | 15% |
| US ETF (broad market) | Rs 1,00,000 | 10% |
| China ETF | Rs 1,00,000 | 10% |
| Silver | Rs 1,00,000 | 10% |
| Gold | Rs 50,000 | 5% |
| US Magnificent 7 (AI Focus) | Rs 50,000 | 5% |
2026 price targets: Can bullion hit $6,000?
The founder and managing director of DRChoksey Finserv, Deven R Choksey, maintained a strategy similar to what most other ace fund managers do. He advises limiting allocation to precious metals to 10% of the portfolio. “Gold (10%) acts as a portfolio hedge. With elevated geopolitical risk and potential rate cuts ahead, OCBC and UBS forecast gold prices rising to US $4,800–5,000/oz in 2026,” he said.
| Asset Class | Amount | % of Allocation |
| Large cap equity | Rs 5,00,000 | 50% |
| Midcap equity | Rs 2,00,000 | 20% |
| Equity Mutual Funds | Rs 1,00,000 | 10% |
| Commodities – Gold | Rs 1,00,000 | 10% |
| Fixed income/Bond Funds | Rs 1,00,000 | 10% |
Overall, investors treat gold as a hedge instrument, a strong cover against rising inflation, and depreciating currency value. Market veterans also highlighted gold’s importance as an asset in uncertain geopolitical times. However, most experts suggest limiting portfolio allocation between 10-15% for precious metals like gold and silver.
We will bring forth an update to the quarterly feature on how to invest Rs 10 lakh. Keep watching the space in April for the next update.
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.
