Gold vs Stocks in 2026: Expert Asset Allocation Strategies for ₹10 Lakh Investment

The investment narrative took a dramatic turn in 2025, humbling equity bulls who had dismissed non-yielding assets. While the Nifty delivered a modest 10.5% return and broader markets posted outright losses, gold surged 75% and silver exploded with a staggering 183% gain. This stark performance divergence has forced investors to fundamentally rethink their asset allocation strategies as 2026 begins.

Market Performance Comparison

The performance gap between asset classes in 2025 highlighted the importance of diversification:

Expert Allocation Strategies

S Naren of ICICI Prudential AMC has issued a cautionary note about precious metals while expressing optimism for Indian equities. "We think at this point of time the best way to invest would be in the form of asset allocation and one can take a little bit of higher risk towards equity compared to where you were taking risk in 2025 January, simply because in the last one year Indian markets have underperformed most markets in the world," Naren stated. He believes precious metals are showing signs of euphoria but expects Indian equity markets to outperform most global markets in 2026.

Nilesh Shah, Managing Director at Kotak Mahindra AMC, outlined his firm's current strategic allocation for average risk-takers:

Shah maintains a positive outlook on equities, expecting performance in the order of midcap, largecap, and smallcap. However, his precious metals stance remains "positive but subject to central bank buying," advising investors to exit when central banks begin selling.

Risk-Based Investment Approaches

Sunil Sharma, Chief Investment Strategist at Ambit Global Private Client, recommends a more equity-heavy allocation for moderate-risk investors:

Sharma's strategy notably includes a 6-8% allocation to REITs within the equity bucket while avoiding duration exposure.

For younger investors aged 30-40, Sunny Agrawal of SBI Securities advocates a more aggressive approach:

• Equity: 70%
• Gold: 10%
• Silver: 10%
• Bonds: 10%

"At this life stage, the individual typically has a relatively higher risk appetite and a longer investment horizon, which allows for greater exposure to equities," Agrawal explained, emphasizing the importance of periodic rebalancing aligned with financial goals and market dynamics.

Cautionary Perspectives on Precious Metals

Dhiraj Relli, MD & CEO of HDFC Securities, issued a stark warning about recency bias affecting investment decisions. "While asset diversification is an effective risk management strategy, investors should be cautious about chasing recent performance in asset classes like gold and silver, which have experienced significant rallies in recent months," Relli cautioned.

He emphasized that such one-sided moves can lead to exuberance and heightened volatility, making it prudent to avoid disproportionate allocations to these assets. Relli advocates viewing gold and silver "as portfolio insurance rather than primary growth drivers, where modest allocations help manage tail risks without creating concentration concerns."

Strategic Outlook for 2026

The consensus among wealth managers points toward a balanced approach with a strategic tilt back toward equities. This shift is based on the premise that Indian markets' underperformance in 2025 positions them for potential recovery in 2026. However, the dramatic outperformance of precious metals has reinforced the critical importance of diversification in portfolio construction.

As precious metals flash warning signs of euphoria and Indian equities emerge from their challenging year, investment professionals are advocating for measured approaches that balance growth potential with risk management. The key lies in avoiding the temptation to chase recent performance while maintaining exposure to multiple asset classes for optimal risk-adjusted returns.