Gold Investment Reality Check: While gold is traditionally seen as a safe and reliable investment, especially during times of stock market volatility, recent trends have sparked a gold-buying frenzy among investors. With gold prices approaching ₹1 lakh per 10 grams, many believe it's the perfect opportunity to invest. However, Chartered Accountant Nitesh Buddhadev has issued a word of caution: don’t let the current price rally mislead you into assuming gold always offers explosive returns.
In a detailed LinkedIn post, CA Buddhadev explained that investors should avoid making hasty decisions based on short-term trends. He emphasized that while gold has delivered strong returns in the past few years, that hasn’t always been the case. In fact, there have been long periods where gold delivered almost zero returns — and that’s a reality many new investors tend to overlook.
To support his warning, Buddhadev presented historical data from 2012 to 2019, a span of eight years where gold remained mostly stagnant. In 2012, gold was priced at ₹31,050 per 10 grams. Fast forward to 2019, the price had only marginally increased to ₹35,220. That’s an overall gain of just ₹4,170 — or around 13% in 8 years. When averaged out, the Compound Annual Growth Rate (CAGR) stood at less than 1.5% per year — far from the spectacular returns people often associate with gold.
He also pointed out a similar trend between 1992 and 2002, when gold rose from ₹4,334 to just ₹4,990 per 10 grams — another period with less than 1.5% annual returns.
So what changed after 2019? Buddhadev explained that the sudden surge in gold prices wasn’t a random spike. It was triggered by a series of global events that drove demand for safe-haven assets. The COVID-19 pandemic, the Russia-Ukraine conflict, rising inflation concerns, and aggressive gold buying by central banks all contributed to gold’s dramatic rise.
These factors created a scenario where investors rushed to buy gold, pushing prices sharply upwards. But as CA Buddhadev rightly notes, "every big spike is often preceded by a long flatline" — meaning investors should expect both booms and dormant phases in gold’s performance.
According to Buddhadev, gold still holds value in an investment portfolio — but only as a diversification and hedging tool, not as a consistent return generator like equities. He recommends allocating just 5% to 12% of your total portfolio to gold. Over-investing based on recent gains can backfire when the market stabilizes or corrects.
In essence, Buddhadev urges investors not to be blinded by gold’s current shine. A ₹1 lakh price tag may sound impressive, but historical trends prove that gold is not immune to long stretches of flat performance. Informed and balanced investing — not hype-driven decisions — is the key to building long-term wealth.
Conclusion: Gold isn’t a magic money-maker — it’s a strategic asset. Use it wisely, diversify smartly, and don’t let short-term excitement derail your long-term financial goals.
