Somebody at a family function this year has told you to stop your SIP and buy gold. They had numbers, and the numbers were on their side. Gold in India is trading around Rs 15,200 per gram for 24K, and anyone who bought two years ago is sitting on a gain that most equity funds did not come close to matching over the same stretch.
So the question is fair. The answer is not the one either camp wants to hear.
What actually happened to gold
The run is not a rumour. Through 2025 gold set record after record, with domestic prices rising far faster than international ones because the rupee was weakening at the same time. That double effect is why Indian investors saw gains that looked extreme even by global standards.
The pattern held into 2026. The MCX gold spot price rose 81 per cent year on year to a record quarterly average of about Rs 1,51,108 per 10 grams in the first quarter, touching an intraday high near Rs 1,75,231 before correcting roughly 15 per cent. Even after that correction, the trend has not broken.
What changed more meaningfully is who is buying and why. Bar and coin demand reached 62 tonnes in that quarter, almost matching jewellery for the first time, and accounted for 52 per cent of total domestic gold demand. That is the highest investment share in over a decade. Gold ETF inflows rose 197 per cent year on year. Meanwhile jewellery volumes fell 19 per cent as prices priced out ordinary buyers.
Read that together and the story is clear: Indians stopped buying gold to wear and started buying it to hold.
Why the comparison is unfair in both directions
Comparing two years of gold against two years of your SIP tells you almost nothing useful, for a simple reason. You picked the window after knowing the answer.
Gold spent most of the decade from 2013 to 2019 going sideways in dollar terms. Anyone who switched out of equity into gold in 2013 on the strength of the previous run spent six years watching nothing happen. The two years that just passed were driven by a specific combination — geopolitical tension, central bank buying, a weak rupee and safe-haven demand. None of those are permanent, and none of them are predictable.
The reverse trap is just as common. Equity investors who dismiss gold entirely are ignoring that it did exactly what it was supposed to do: it held value when other things did not. That is the entire job description.
If you want to see what your own SIP has done rather than what the internet says equity does, run your actual monthly amount and duration through the SIP calculator and compare it against the real value in your fund statement. The gap between the two is usually more informative than any gold comparison.
Gold does not produce anything
This is the part that gets skipped. A company you own through an equity fund employs people, sells things and generates profit. Some of that profit compounds inside the business. The share price rises over long periods because the underlying business grew.
Gold sits in a locker. Its price rises only because somebody later is willing to pay more than you did, usually because they are worried about something. That makes gold a genuinely useful hedge and a poor engine. A hedge protects the portfolio you have. It does not build the one you want.
This is why the standard guidance across most portfolio frameworks puts gold somewhere between 5 and 15 per cent of a long-term portfolio, not zero and not fifty. Below that band it is too small to cushion anything. Above it, you are betting on fear rather than growth.
What the switch actually costs
Here is where most people underestimate the decision. Moving money from an equity SIP into gold is not a free transfer. You pay on the way out and again on the way in.
On the way out, redeeming equity fund units triggers capital gains. Long-term equity gains are taxed at 12.5 per cent above the annual exemption of Rs 1.25 lakh, while units held twelve months or less attract short-term tax at 20 per cent. If your SIP is recent, most of your units are short-term, and a large part of the gain you are chasing disappears immediately.
On the way in, the form of gold you choose changes the cost substantially.
| Form of gold | Cost at purchase | Long-term after | Long-term tax rate |
|---|---|---|---|
| Jewellery | 3% GST plus making charges, often 8-25% | 24 months | 12.5% without indexation |
| Coins and bars | 3% GST | 24 months | 12.5% without indexation |
| Digital gold | 3% GST, platform spread | 24 months | 12.5% without indexation |
| Gold ETF (listed) | No GST, brokerage and expense ratio | 12 months | 12.5% without indexation |
Short-term gains in every one of these forms are taxed at your slab rate, not a flat rate.
Two things follow from that table. First, listed gold ETFs reach long-term status in twelve months instead of twenty-four and carry no purchase GST, which makes them the most tax-efficient wrapper for anyone buying gold as an investment rather than an ornament. Second, jewellery is the worst possible vehicle for investment gold. Making charges are not recoverable when you sell. Buy a Rs 1 lakh chain and the metal content you can actually resell is meaningfully less than what you paid, before any price movement at all.
Sovereign Gold Bonds changed too. From FY 2026-27, the capital gains exemption applies only to original subscribers who hold the bond to its eight-year maturity. Buying SGBs on the secondary market or redeeming early no longer carries the old exemption.
The question worth asking instead
"Should I switch to gold" is the wrong question because it assumes an either-or. The better question is what percentage of your total portfolio is currently in gold, and whether that number is where you want it.
Work it out. Add up your equity funds, your PPF balance, your fixed deposits and the market value of every gram of gold you own, including jewellery you would actually be willing to sell. Divide the gold figure by the total.
Most Indian households who run this calculation honestly discover something surprising: they are already well above 15 per cent, because of inherited and wedding jewellery they never counted as an investment. If that is you, the rebalancing move after a two-year rally is to sell gold, not buy it. That feels wrong precisely because the recent returns were good, which is what makes rebalancing difficult and also what makes it work.
If you are genuinely under-allocated, the sensible route is to redirect a portion of future contributions rather than liquidating existing SIP units and paying tax to do it. Adding gold slowly costs you nothing in exit tax. Switching in one move costs you a chunk of the gain you were trying to capture.
Three things to do this month
Calculate your actual current gold percentage, including jewellery, before deciding anything. Most people are guessing and most guesses are low.
If you decide to add gold, use a listed ETF for the investment portion and keep jewellery purchases in a separate mental bucket labelled consumption, because that is what they are.
Leave the SIP running. Stopping a systematic investment because a different asset had a good two years is the exact behaviour that systematic investing was designed to prevent. If you want to see how much a pause costs over a long horizon, compare a continuous run against a delayed one on the SIP calculator.
Gold earned its place in Indian portfolios over centuries and it earned its last two years honestly. It still does not compound. Both statements are true at once, and the portfolio that holds a little of each is the one that survives whichever decade comes next.
This article is general information based on publicly available rules and prices as of September 2026, not personalised investment advice. Tax provisions change, so verify current rates before acting on any figure here.