Investor Who Predicted Mid & Small Cap Fall Now Sounds Alarm On Gold And Silver

S. Naren, Chief Investment Strategist at ICICI Prudential Mutual Fund, who earlier forecasted declines in mid- and small-cap stocks, has now issued a cautionary warning for investors in gold and silver, signaling potential risks in precious metal markets.

According to Naren, the recent surge in gold and silver prices should serve as a warning to investors. He emphasised the importance of choosing the right asset at the right time, noting that many investors tend to buy assets after they have already performed well, a practice he terms “anti-asset allocation”. This can seem beneficial initially but often results in long-term harm.

Time To Exercise Caution

Naren pointed out that gold and silver have outperformed the stock market over the past year, prompting a rush to buy

these metals. However, he warns that past performance does not guarantee future results.

He cited the example of purchasing silver two or two and a half years ago when prices were lower, as opposed to now when prices are high, which could be risky. He also noted that gold and silver do not pay dividends or earn interest and cannot be evaluated using financial metrics like the P/E ratio.

While some are drawn to gold due to its recent higher returns compared to the stock market, Naren argues that this also represents a significant risk. Investing in an asset at its peak heightens this risk.

How Investors Should Respond

To mitigate this, Naren suggests that investors should not heavily concentrate their portfolios in gold and silver. Instead, these should be part of a diversified, multi-asset strategy to maintain a balanced investment approach. This strategy helps avoid excessive exposure to a single asset and protects the overall portfolio.

Ultimately, Naren stressed that successful investing involves buying low and selling high, a principle often overlooked by investors who tend to do the opposite, resulting in long-term losses.

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