A comprehensive study by OmniScience Capital examining 35 years of market data from 1990 to 2025 found that the Sensex delivered an average annual rolling return of approximately 11.5%, significantly outpacing gold’s 9.5% returns based on RBI gold prices. That 2% differential may sound modest, but compounded over decades, it translates into substantially different wealth outcomes.
The superiority becomes even more pronounced in recent periods. Using GoldBees and Nifty50 data, for holding periods of three years and beyond, Nifty50 consistently delivered superior average returns of around 11.5% compared to gold’s 8–10% range. The dataset—spanning more than 6,400 one-year rolling periods and over 3,100 ten-year rolling periods across 18 years—provides robust statistical evidence.
Yet the most startling finding challenges the entire premise of gold as a “safe” investment. According to Ashwini Shami, Executive Vice President and Chief Portfolio Manager at OmniScience Capital, “When it comes to long-term wealth creation, equities shine brighter.”
Is gold really that safe?
Nifty offers a remarkable 98.1% probability of capital protection for holding periods of three years or more. In plain English: equity investors with a three-year horizon had an exceptionally high chance of not losing their principal investment.
Gold provided only an 84% chance of capital protection over the same three-year window—a 14-percentage-point shortfall. To achieve comparable safety levels exceeding 99%, gold investors needed to remain invested for at least seven years, reaching a 99.3% probability of capital protection.
“This finding fundamentally reshapes the risk-return conversation,” Shami explains. “Equities, often perceived as riskier, actually offer superior capital protection over meaningful investment horizons when compared to gold.”
Gold does have a place in portfolios, though. During periods of extreme market stress and geopolitical uncertainty, it provides psychological comfort and diversification benefits. Yet that role should be carefully calibrated. Over long investment horizons, equities are demonstrably superior at both preserving capital and generating significant returns above inflation. According to Shami, gold’s role is best kept as a modest hedge, ideally not exceeding 10–20% of a portfolio. Beyond this allocation, investors may be sacrificing potential returns without gaining proportional risk protection.
What experts are recommending now
The consensus among asset managers has crystallized around a clear principle: reduce what’s already run hard, and increase what’s been left behind.
Pankaj Pandey, Head of Retail Research at ICICI Direct, frames it bluntly: “A thumb rule to decide on the asset allocation is to allocate less to an asset class which has significantly outperformed and delivered above long-term average return in the recent past. Recently, gold, silver and Indian debt have outperformed while Indian equities have underperformed significantly.”
His allocation strategy reflects this logic: 5% to gold (the lower band of his 5%-15% range), 5% to silver given the sharp run-up, 10% to debt, and the remaining 80% to Indian equities. Pandey believes “Samvat 2082 may see the return of Indian equities and outperform other asset classes.”
Samco Securities takes a more cautious stance. Apurva Sheth recommends allocating 25% each to equity, gold, and debt instruments, with the remaining 25% held in cash. The rationale is particularly telling on silver: “Looking at the current silver valuations, that looks stretched. We suggest 5% allocation. It is advisable to take a pause and let the silver prices cool down a bit, let the premium in the physical and Silver ETF narrow down and then resume your exposure in the metal.”
Green Portfolio PMS has advised clients to invest 10% in gold ETF and 20% in silver ETF, with the rest in stocks—a more aggressive equity tilt.
Rupesh Patel, Senior Fund Manager at Nippon India Mutual Fund, emphasizes earning power: “Considering improving outlook for earnings growth, moderated valuations and relative underperformance of Indian equities as compared to most of global markets, Equities will get substantially higher allocation. I will keep some exposure to gold and silver as hedge against the risk of any large dislocation in global financial markets and currency devaluations.”
Gold and silver have indeed rallied sharply—up more than 50% in USD terms in 2025, driven by heightened geopolitical tensions, central bank buying, industrial demand for silver, and strong investment inflows through ETFs. According to Gautam Sinha Roy, Chief of Equity and Fund Manager at ICICI Prudential Life Insurance, “While it is difficult to call out a definitive top in precious metals amid ongoing global uncertainty and monetary easing, equities remain the preferred asset class for long-term investors due to their income-generating potential and growth prospects.”
Sinha Roy’s recommendation mirrors the broader consensus: “Investors may retain some allocation to gold and silver as a hedge against global and currency risks, but should increase their relative weight in equities, especially in regions and sectors positioned for cyclical recovery in demand and earnings.”
The record highs in gold and silver are real, and they reflect genuine global uncertainty. But they also represent the culmination of a multi-year run that has already priced in much of the safe-haven demand. Meanwhile, Indian equities have underperformed and now offer both better valuations and superior long-term wealth creation potential.
The data is clear: equities don’t just deliver higher returns—they offer superior capital protection for meaningful time horizons. Gold’s role should be a hedge, not a holding. Silver’s recent run-up suggests caution is warranted. And the message from India’s top portfolio managers is consistent: this Diwali, the smart money is rebalancing toward equities, not away from them.
The glitter may have captivated the market, but the sparkle of equity returns over decades remains unmatched.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)