Gold vs. Other Precious Metals: Should You Diversify Beyond Gold In The New Hindu Financial Year?

Due to its stability as well as its ability to hedge against inflation, gold has long been a mainstay of investment portfolios. Nonetheless, diversifying into other precious metals, including palladium, platinum, and silver, may increase resilience, according to the changing financial landscape. In recent years, gold has been a fantastic investment class. As central banks throughout the world diversify their holdings away from the US dollar and invest in other assets, such as gold, the price of gold has increased dramatically. Indeed, it would be accurate to state that gold is now their most favoured asset class. But will diversifying beyond gold into other commodities, such as silver, copper, aluminium, platinum, uranium, and nuclear energy, would be wise from an investor's point of view? Let's find the answer here by taking the suggestions from market analysts.

How adding a mix of precious metals can provide a balanced hedge against economic volatility, inflation, and currency fluctuations?

"Gold has long been a staple in investment portfolios, prized for its stability and inflation hedge. However, the evolving financial landscape suggests that diversifying into other precious metals-such as silver, platinum, and palladium-could add resilience. Each metal has unique strengths: silver, used heavily in electronics and solar panels, may benefit from rising demand for green technology. Platinum and palladium, integral in the automotive industry for catalytic converters, are linked to global industrial cycles and environmental regulations," said S Ravi, Founder Ravi Ravi Rajan & Co.

"While gold tends to hold its value during economic uncertainty, these other metals offer diversification by tapping into different market demands. Adding a mix of precious metals can provide a balanced hedge against economic volatility, inflation, and currency fluctuations. For the new Hindu financial year, investors might benefit from a broader metals portfolio to spread risk and harness opportunities across sectors, adapting to both traditional and emerging economic trends," S Ravi further added.

Can investors incorporate real estate alongside traditional investments like gold and other precious metals?

Gold has long been a cornerstone for Indian investors due to its liquidity and its ability to act as a safeguard against inflation, particularly during economic uncertainty. Diversifying beyond gold, on the other hand, might be a wise strategy given the changing global economic patterns and the appearance of new investment opportunities. This diversification may include additional precious metals like silver and platinum, as well as real estate.

"Real estate stands out as an appealing investment for people seeking long-term financial wealth. Unlike precious metals, real estate can provide a steady income stream in the form of rental yields, as well as considerable tax breaks. Property values tend to rise over time, often surpassing inflation. Furthermore, real estate has practical applications, whether for residential, commercial, or industrial purposes. It also offers the advantage of leverage, allowing investors to fund additional property purchases while potentially increasing their revenues. While precious metals do not provide income and are mainly based on market speculation, real estate provides a more balanced strategy, combining growth potential with income generating. This makes it a good option for people looking to diversify their portfolios," said Saurabh Phull, COO, The Guardians Real Estate Advisory.

"According to recent analysis, rental yields across India's major cities vary significantly in cities like Mumbai, Delhi, and Pune are relatively modest, ranging from 2% to 4%, primarily due to high property prices. In contrast, cities such as Bengaluru, Chennai, and Hyderabad show stronger yields, with Bengaluru leading at 4.45%, driven by demand from the IT sector. Kolkata and Ahmedabad offer yields between 3% and 5%, making them attractive for investors seeking steady rental income," Saurabh Phull further added.
Given these insights, real estate presents a solid option for those seeking to diversify their portfolios. By incorporating real estate alongside traditional investments like gold and other precious metals, investors can build a more balanced portfolio with a combination of growth potential, income generation, and risk management.

Will silver outperform gold in the coming year?

"Gold has been a great investment class in the last few years. The price of gold has appreciated significantly as Central banks across the globe are diversifying away from the US dollar and investing in other assets including gold. In fact it would not be wrong to say that the most preferred asset class for them currently is gold. However, from an investor perspective, it would be good to diversify beyond gold in other commodities like silver, copper, aluminium, platinum, uranium and nuclear energy. This could be good as a class for long-term diversification. We particularly like silver and believe that outperform Gold in the coming year. A significant parameter Gold-silver investing is the gold-silver ratio. Simply put this ratio tells us how many ounces of silver can be used to purchase an ounce of gold," said Gaurav Goel (Entrepreneur, SEBI Registered Investment Advisor).

"Currently this ratio is tilted usually in favour of gold and stands at 83.65. The mean average ratio since 1970 has been around 54. We feel that at some point of time, the reversal is on the card and it should head towards its historical average. Silver has many industrial uses from electronics to solar panels to radio frequency identification chips medical devices batteries photography mirrors and dental alloys. The industrial usage of silver is increasing by the day. In fact, in the last one year silver has outperformed gold. It has risen by almost 44% whereas gold has appreciated by 38%," Gaurav Goel further added.

"We feel that there is further scope of outperformance. There is no harm in diversifying into silver for sure. The performance of aluminium and copper has also been fairly good last year. We think uranium has a good future in nuclear power generation. In a nutshell we feel diversifying beyond Gold in commodity space makes a lot of sense," he stated.

Conclusion

While gold remains a favoured asset, diversifying into other precious metals like silver and platinum can balance risk and reward. These metals often complement gold's stability, particularly in industrial applications, offering potential for long-term growth. However, gold's resilience still makes it a core asset for cautious investors, as per Veer Mishra, Founder, PLUS Gold.