Kolkata: Gold or silver, is a common question that torments many investors. This year, the question has assumed a lot of significance since both the precious
metals generated superlative returns in the past two years, climbed to dizzy heights this January and then crashed, only to again start rising in the past few weeks. Where to invest in 2026, gold or silver is again back in the lips of millions of investors. One of the most high profile asset management companies in the country, Tata Mutual Fund, is bullish on both precious metals over the medium to long term. However, it thinks a higher allocation to gold is prudent due to its lower volatility.
The 70:30 prescription
Tata Mutual Fund thinks a 70:30 allocation to gold and silver makes sense. It also says investments should be staggered and not in a lumpsum. The AMC has urged investor not to try to take advantage sudden moves in the market but build exposure steadily during the period of soft prices. There is no point is lamenting if they have missed the past rally.
Bullish on gold
Gold has recovered in recent weeks, helped by softer US economic data, weakening dollar and easing bond yields. However, the near-term outlook remains vulnerable to changes in US monetary policy expectations, movements in the dollar and bond yields, the AMC thinks. In other words, the yellow metal could remain volatile or range-bound in the short term. But one should invest with a long-term horizon and there are structural reasons to be positive.
Central-bank buying generates strong tailwind. Gold also draws demand from the need to diversify the portfolio of investors. Also gold draws demand from safe haven needs in times of inflation and currency fluctuation. “Despite these short-term fluctuations, we maintain a constructive medium-to-long-term outlook on gold. Continued central bank purchases, sustained investment demand and the increasing need for portfolio diversification remain structural supports for the asset class. Gold also continues to play an important role as a hedge against macroeconomic uncertainty and currency debasement risks. Investors may consider utilizing periods of market weakness to gradually build strategic long-term allocations to gold,” mentioned Tata MF.
World Gold Council data
World Gold Council data shows central bank purchases rose to 289 tonnes in the second quarter of the calendar year, which marks the strongest Q2 buying on record. Purchases during January-March stood at 345 tonnes.
Gold ETF have started witnessing demand from July, though it suffered outflows following the US-Iran conflict.
The silver story: more exciting, more volatile
Silver has traditionally been more volatile than gold, and therefore, more exciting. Unlike gold, silver is not just a precious metal and it has constant demand in multiple industries from electric vehicles to solar panels and from high-performance electronics such as data centres. Ironically, that’s both a source of strength and weakness for the white metal.
“Moderation in solar installations and easing supply tightness have reduced some of the immediate demand catalysts, which could lead to periods of consolidation and higher price volatility,” said Tata MF experts. Therefore, investors with a medium- to long-term horizon should approach silver with a staggered investment.
Sixth year of deficit for silver
Tata MF points out that 2026 is going to be the sixth consecutive year marking supply deficit of silver. China is another important factor and the AMC says that country holds around 11% of global silver reserves and controls 60-70% of refining capacity. Just by tweaking its policy, China can control supply in the global markets which can raise prices. The mismatch in demand and supply creates a powerful combination for the white metal.
Not one-way bet
Tata MF reminds investors that precious metals are not a one-way bet. It also tells investors that rapid appreciation can be followed by sharp declines. Gold prices can come under pressure from a stronger dollar, higher bond yields and a more hawkish US Federal Reserve stance. Silver can face additional risk in the form of dependence on industrial demand.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, REITs, InvITs and any form of alternative investment instruments and crypto assets.)
