Gold and silver dazzled investors in 2025. Gold prices surged close to 80% while silver outshone all asset classes with gains of nearly 150%. Such spectacular returns naturally lead to the question: should one load up on precious metals in 2026?The short answer is yes, but with restraint. The fundamental factors that powered the rally in 2025 are not only intact, but have grown stronger. Geopolitical tensions remain elevated across regions, from prolonged conflicts to renewed strategic rivalries among major powers. The US moves in the Caribbean can put oil on the boil. China’s trade rivalry with the US and the European Union is intensifying. And the Middle East continues to simmer under a fragile ceasefire.In such uncertain times, gold’s role as a safe-haven asset comes to the fore. Whenever global risks rise, investors seek assets that preserve value, and bullion has historically played that role well.Inflation, too, refuses to fade quietly. While headline numbers may moderate in phases, the risk of inflationary flare-ups persists due to supply-chain disruptions, energy shocks and high fiscal spending by governments worldwide. Gold and silver tend to do well when real returns on financial assets are under pressure, acting as a hedge against the erosion of purchasing power.Silver enjoys an additional tailwind. Unlike gold, which is primarily a store of value, silver has significant industrial applications—ranging from electronics to renewable energy and electric vehicles. As the global energy transition gathers pace, demand for silver could remain robust, lending further support to prices.All this suggests that gold and silver can continue to play a useful role in portfolios in 2026. But investors should guard against the mistake of extrapolating recent returns too far into the future. Precious metals rarely move in a straight line. Gold, in particular, is known for long periods of stagnation punctuated by sharp rallies. After a strong run, prices can consolidate for years before the next upswing.That is why allocation matters more than enthusiasm. A prudent approach is to cap combined exposure to gold and silver at around 20–25% of the overall portfolio. This ensures that investors benefit from diversification and downside protection without becoming overly dependent on one asset class.Best ways to investFor most investors, gold and silver ETFs offer the easiest and most cost-effective route. They provide purity, liquidity and transparency, without the hassles of storage or concerns about quality. Sovereign Gold Bonds (SGBs) are even more attractive for long-term investors. Apart from tracking gold prices, they pay a fixed interest and offer complete capital gains tax exemption if held till maturity, making them tax-efficient.Physical gold still has a place, especially for those who value its universal liquidity. In times of extreme stress, physical gold can be sold almost anywhere in the world. Jewellery, though not the most efficient investment due to making charges, carries its own non-financial returns—emotional satisfaction and social utility—which many households value.The key message for 2026 is balance. Gold and silver remain relevant in a world marked by uncertainty and inflation risks. Maintain your allocation, rebalance if prices run ahead of fundamentals, and use the right investment vehicles. Precious metals work best not as speculative bets, but as steady anchors in a well-diversified portfolio. (Disclaimer: Times of India does not give any personal finance or stock market investment advice. Always consult an expert before taking investment decisions)
