Gold investing made simple: What not to do

While gold jewellery carries emotional and cultural value, it often makes for a weak investment choice. As one analysis points out, over decades jewellery has rarely matched the performance of equities. High making charges, wastage costs and low resale value typically eat into actual returns.

Beware of high premiums and limited liquidity

With gold at a record high recently (10 gramme of 24-carat crossing around Rs 1.20 lakh in October 2025), it becomes easy to pay too much. Experts caution that paying steep mark-ups, ignoring the cost of storage or buying large bars or ornaments that are hard to sell can hurt returns.

Keep your allocation modest

Gold is often used as a hedge, but relying on it as the main money-maker is risky. Analysts suggest that if gold forms more than 15-20 percent of your portfolio, you may be exposing yourself to downside if prices correct and you miss gains from other assets.

Choose the right form and understand costs

Not all gold options are equal. Physical gold means storage, security and purity issues. Alternative routes like gold ETFs, sovereign gold bonds (SGBs) or digital gold offer easier ownership but come with their own costs—tracking error, demat accounts or reduced liquidity. (Remember, there are no new SGB issues for 2025 announced by the Reserve Bank of India; however, existing SGB tranches from previous years are available for purchase on the secondary market.)

Avoid timing the market and track your reason

Many investors rush into gold when prices are rising and chase perfection rather than purpose. Specialists say you need to set clear goals—like diversification or inflation hedge—not treat gold like a quick-flip asset. Buying in instalments or via SIPs can reduce risk of catching the top.

Know the storage, tax and exit implications

Physical gold needs safe storage and adds cost. Digital or paper forms reduce that but still need transaction cost awareness. Also, unlike some assets that generate income, gold mainly depends on price appreciation, which can be volatile.

Bottom line

Gold remains a valuable part of a diversified portfolio—especially for inflation protection or shock coverage. But it will only serve you well if you buy wisely, keep allocation moderate, pick the right form, avoid overpaying and hold a clear exit plan. Done right, it’s a stabiliser; done poorly, it becomes a cost you live with.