Why Gold still shines as a Safe haven investment?
- Editor
- Sep 23
- 4 min read
by KarNivesh | 23 September, 2025
Gold has fascinated humanity for over 5,000 years. Across wars, recessions, and financial crises, it has always held its place as the ultimate store of value. In today’s world—marked by inflation, currency fluctuations, and geopolitical tensions—gold continues to prove its worth as a reliable safe haven. For Indian investors, gold is more than just an asset; it’s a mix of cultural tradition and financial security.
This blog explains why gold remains such a powerful investment option in 2025, how it has performed recently, what risks exist, and how you can include it in your portfolio.
What Makes Gold a Safe Haven?
A safe haven asset is one that investors turn to during uncertain times. Stocks may crash, currencies may weaken, but gold generally retains its value. Unlike paper money that can be printed endlessly, gold is scarce, making it naturally valuable.
Gold has three unique qualities:
Universally accepted – Gold is trusted worldwide.
Highly liquid – It can be quickly converted into cash.
No counterparty risk – It doesn’t rely on any government or company to retain its value.
This is why, when economies wobble, investors move toward gold.
India’s Golden Opportunity in 2025
As of September 22, 2025, the price of 24-karat gold in India is ₹1,11,564 per 10 grams. This sharp rise reflects not just inflation but real investor demand. The surge has been fueled by global central bank buying, concerns about currency devaluation, and geopolitical tensions.
For Indian households, where gold already has cultural importance, this trend highlights gold’s growing financial role as well.
Why Gold Still Outperforms
1. Strong Protection Against Inflation
Gold is one of the best hedges against inflation. When the value of money declines, gold usually holds or increases its worth. In India, where inflation often pressures the rupee, gold offers critical protection.
2. Better Performance Than Equities
In recent years, gold has outperformed the Indian stock market.
1 year: Gold returned 50.1%, while the Sensex fell 1.2%.
3 years: Gold delivered 29.7% annually, compared to the Sensex at 10.7%.
5 years: Gold achieved 18.5%, against the Sensex’s 15.2%.
10 years: Gold grew at 12.9%, higher than the Sensex’s 10.6%.
This clearly shows why gold is considered “portfolio insurance.”
3. Central Banks Are Buying More Gold
Globally, central banks have been buying over 1,000 tonnes of gold every year for three years straight. They want to reduce their reliance on the U.S. dollar.
India’s Reserve Bank of India (RBI) now holds 879.58 tonnes of gold (as of March 2025), up nearly one-third from 2020. Gold now forms 12% of India’s net foreign assets, underlining its institutional importance.
4. Diversification Benefits
Gold doesn’t move in the same direction as stocks or bonds. When markets fall, gold often rises, balancing portfolios. Experts recommend allocating 5–15% of your portfolio to gold.
5. Global Liquidity and Acceptance
Gold can be sold anywhere in the world. In crisis times, this easy liquidity is a big advantage over other assets.
Ways to Invest in Gold
Indian investors today have many options beyond just buying jewelry. Here’s a comparison:
1. Physical Gold
Best for: Traditional investors.
Minimum investment: ₹5,000–10,000.
Pros: Tangible, culturally valued, no counterparty risk.
Cons: Storage, making charges, lower liquidity.
2. Gold ETFs (Exchange Traded Funds)
Best for: Modern investors who prefer convenience.
Minimum investment: Around ₹1,000.
Pros: High liquidity, low costs, no storage hassle.
Cons: Requires a demat account, annual fees.
3. Digital Gold
Best for: Beginners and small investors.
Minimum investment: As little as ₹1.
Pros: Fractional ownership, easy to buy/sell online.
Cons: 3% GST, platform dependency, evolving regulations.
Risks and Limitations
Gold isn’t perfect. Investors must be aware of its downsides:
No passive income – Unlike stocks or bonds, gold doesn’t pay dividends or interest.
Price fluctuations – While safer than stocks, gold can still be volatile in the short term.
Storage costs & security – Physical gold requires safekeeping.
Tax implications – Capital gains tax applies:
Short-term (less than 3 years): Taxed as per your income slab.
Long-term: 20% with indexation benefits.
3% GST applies on physical gold purchases.
Expert strategy
Financial experts suggest varying allocations depending on conditions:
Conservative portfolios: 5–10% in gold.
Moderate inflation: 10–15%.
High inflation: 15–20%.
Crisis hedge: 20–25%.
Even global experts agree. For example, Morgan Stanley’s Chief Investment Officer recently recommended a 60/20/20 strategy—with 20% in gold to hedge against inflation.
Future Outlook for Gold
Several reasons suggest gold’s strength will continue:
Monetary policies – Central banks worldwide are keeping money supply loose, which increases inflation risks and boosts gold’s appeal.
Geopolitical tensions – Wars, trade disputes, and global conflicts push investors toward gold.
Price forecasts – J.P. Morgan Research expects gold to average around ₹3,06,375 per 10 grams (converted from $3,675/oz) by late 2025 and possibly touch ₹3,33,750 per 10 grams (from $4,000/oz) by mid-2026.
This means Indian gold prices may continue to climb.
Practical Steps for Investors
Beginners: Start with digital gold or Gold ETFs for ease and low entry cost.
Experienced investors: Use a mix—physical gold for long-term security and ETFs for flexibility.
Retirement planners: Keep gold as a defensive asset, especially since market downturns often align with retirement risks.
The Bottom Line
Gold’s history as a 5,000-year-old wealth protector is no accident. It remains a shield against inflation, currency devaluation, and global uncertainty.
For Indian investors, the appeal is doubled: it’s both a financial safety net and a cultural tradition. Whether through jewelry, ETFs, or digital platforms, gold continues to provide stability that no other asset can match.
The lesson is simple: Don’t treat gold as a growth engine, but as portfolio insurance. It may not give explosive stock-like returns, but when markets stumble, gold shines the brightest.
In a world filled with economic shocks and political instability, gold doesn’t just glitter—it provides the confidence every investor needs. And in 2025 and beyond, its role in Indian portfolios is only becoming more important.
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