Gold, silver ETFs surge: Is it time to shift money from equities to precious metals? Here's what analysts say

gold and silver investment options

• Gold and silver ETFs surged up to 5 percent, mirroring gains in precious metals
• Analysts advise gradual rebalancing, not a major shift from equities to metals
• Precious metals viewed as safe assets during market volatility and geopolitical risks

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Gold and silver ETFs surged up to 5 percent on January 28, mirroring the sharp rise in precious metals. Analysts have commented on whether it is time to take money out of equity markets and increase exposure to precious metals.

Elevated valuations in several markets, particularly in the AI and tech sectors, along with concerns about rising debt and earnings sustainability, mean equities are facing tighter conditions than they have in recent years, said Ross Maxwell, Global Strategy Operations Lead, VT Markets.

What makes gold and silver so attractive?

The analyst further said that alongside this, Indian markets are facing the impact of wider macro issues with slowing growth signals, persistent geopolitical risk, and uncertainty around the path of interest rates. All of this combined makes gold and silver more attractive as defensive assets for investors, he said.

"Gold and silver also continue to look attractive. With real yields showing signs of peaking and central banks maintaining strong gold purchases, precious metals are benefiting from their role as stores of value. Silver adds an additional layer, given its industrial demand tied to energy transition and electronics," Maxwell said.

The rally is fueled by a perfect storm of factors heightened geopolitical risks which includes Middle East tensions and tariff threats under US policy shifts, said Abhinav Tiwari, Research Analyst at Bonanza. “This has positioned precious metals as a classic safe haven play,” he added.

What should investors do?

While safe-haven demand and industrial catalysts remain supportive, experts caution that this is not the optimal entry point for fresh allocations.

Investors should keep in mind that the decision should not be driven by recent price movements, but by how these assets behave and where they fit in a long term portfolio, said Subhendu Harichandan, Executive Director, Anand Rathi Wealth.

For investors, a lot will depend on portfolio objectives, time horizons and balance, Maxwell said. Gradually reallocating a portion of equity gains into gold or silver ETFs can help hedge downside risks, inflation surprises and policy missteps, according to the analyst. “However, making a more substantial shift away from equities assumes a sharp correction that is not yet clearly established yet,” he added.

Siddharth Maurya, Founder & Managing Director at Vibhavangal Anukulakara, said that although gold and silver ETFs are surging to fresh lifetime highs, it would be premature for investors to shift a large part of equity capital to precious metals at these levels.

“During times of volatility, metals serve as excellent portfolio diversifiers and thus, perform well but in the long run, equities are the main contributors to wealth creation. Therefore, a balanced strategy, first of all, maintaining a core equity exposure and then, gradually adding gold and silver through small, phased purchasing on bottoming, helps one stay on the right side of risk management and one's long, term plans as opposed to just following the recent peaks,” he said.

Chasing the recent velocity of gains risks buying at near-term peaks, while patience and strategic rebalancing will serve long-term goals better, according to the analyst. With gold and silver prices witnessing a sharp surge, investors in precious metals may consider booking partial profits at current levels rather than making fresh allocations, said Swapnil Aggarwal, Director, VSRK Capital.

With prices at all-time highs, there is significant risk in entering at these levels. It is prudent to book partial profits and prioritize gold over silver, said Jiju Vidyadharan, Senior Director, Crisil Intelligence.

Tiwari from Bonanza has highlighted different investment strategy for different kinds of investors:

• Investors who don’t have any exposure to precious metals: These investors should consider gradually adding 5-10 percent via ETFs to hedge against ongoing uncertainty, inflation, or dollar weakness.

• Investors who are heavily invested in equity markets: A partial rebalance by trimming overperforming stocks to fund metals allocation can improve risk adjusted returns without abandoning growth potential.

• Cautious investors: If you are concerned about near term froth, you should monitor for corrections strong rallies often see healthy pullbacks before resuming. Avoid leverage or over concentration, the analyst said.

Diversification remains the timeless principle. Equities offer long term compounding tied to corporate earnings, while precious metals provide insurance against systemic risks, Tiwari added.

Ajit Mishra, SVP of Research at Religare Broking, concluded by saying that gold and silver are not substitutes for equities - they are portfolio stabilisers. “With equities still driven by earnings growth and metals acting as a hedge against global uncertainty, currency volatility, and geopolitical risks, the right approach is not switching, but rebalancing. Investors should maintain a diversified asset mix across equities, debt, and precious metals, using metals as a strategic allocation rather than a tactical trade,” he said.

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