Rush to Gold and Silver? Experts Warn Investors to Be Cautious

Gold and silver prices have surged sharply in recent days, prompting many investors to consider selling stocks and shifting funds into precious metals. However, experts caution that making investment decisions based solely on recent price rallies can be risky.

Recent Price Surge
The rise in gold and silver has been remarkable. On Tuesday, gold of 99.9% purity in Delhi jumped ₹7,300 (4.6%), reaching a record ₹1,66,000 per 10 grams (all taxes included). Silver surged ₹40,500 (12.3%) in a single day, climbing to ₹3,70,000 per kilogram. Over the past seven days, gold prices have increased by nearly 9%.

Why the Spike?
In 2025 alone, gold delivered a 75% return and silver 120%, while the Nifty provided a modest 10% return. Lighthouse Canton’s Investment Head Pradeep Gupta noted that current gold and silver levels were unimaginable a few years ago. Global uncertainties and market turbulence have significantly contributed to this rally, with potential for further gains in the near term.

Risks of Switching from Stocks to Metals
Experts warn that selling equities to invest solely in gold and silver can be a risky move. Pradeep Gupta emphasizes that asset allocation should never be based solely on recent gains. “Shifting funds from stocks without considering fundamentals, risk tolerance, and proper valuation can lead to significant losses at the wrong time,” he said.

Guidance for Investors
Subhendu Harichandan, Executive Director at Anand Rathi Wealth, explained that gold and silver typically move in cycles and often perform well when the stock market slows down. Unlike equities, returns from precious metals largely depend on supply and demand. Silver, in particular, has historically been volatile—over the past 16 years, it has delivered negative returns 50% of the time. Harichandan cautions that buying gold after a sharp rally can result in poor timing and potential losses.

What Lies Ahead?
Gupta believes that investors moving away from stocks is likely a temporary phenomenon. Once market growth resumes, investors are expected to return to equities. Wealth managers recommend that institutional investors keep only 5-15% of their portfolio in precious metals, as allocating more could overly concentrate the portfolio in a single asset class.

Conclusion
While gold and silver can act as a hedge during stock market volatility, experts urge investors to avoid chasing short-term gains and maintain a balanced, well-researched approach to asset allocation.