The Case for Gold
Gold serves two purposes in a portfolio: inflation hedge and crisis insurance. Over very long periods (20+ years), gold's real returns (inflation-adjusted) are approximately 0–2% in India — but its correlation with equities during sharp market corrections is low to negative, providing a portfolio cushion.
How Much Is Enough?
Most financial planners recommend 5–15% of a financial portfolio in gold. At the lower end, it provides crisis insurance without meaningfully dragging returns. Above 15%, you are making a directional bet on gold prices rather than portfolio optimization.
How to Hold It
Sovereign Gold Bonds (SGBs) remain the most efficient vehicle — they pay 2.5% annual interest, and capital gains on maturity (8 years) are fully exempt from tax. Gold ETFs and gold mutual funds are liquid alternatives with no interest but also no lock-in. Physical gold has high making charges and storage costs — not recommended as an investment vehicle.