Gold and silver investments surged past equities in January, signalling a shift in investor preference toward safe-haven assets amid ongoing market uncertainty.
According to data released by the Association of Mutual Funds in India (AMFI), combined inflows into gold and silver exchange traded funds (ETFs) crossed ₹33,500 crore during the month, exceeding the ₹24,029 crore that flowed into equity schemes. The development marks the first time precious metal ETF inflows have overtaken equities.
Market participants attribute the trend to rising volatility and a renewed focus on portfolio protection. With gold prices remaining elevated and global risks persisting, investors appear to be increasing allocation to defensive assets.
Experts say investors now face a choice between multiple formats of owning precious metals — physical gold and silver, digital platforms, ETFs and Sovereign Gold Bonds (SGBs).
While physical gold continues to hold cultural appeal, making charges, storage costs and resale discounts reduce its efficiency as an investment. Digital gold offers convenience and small-ticket investing, though it remains largely unregulated.
ETFs provide regulated, market-linked exposure without storage concerns and are suited for diversified portfolios. Meanwhile, SGBs — backed by the government — offer fixed interest along with price appreciation and remain the most tax-efficient option if held until maturity, though liquidity can be limited.
Tax treatment varies based on holding period, with most gold and silver investments attracting 12.5% long-term capital gains tax, while short-term gains are taxed as per income slab.
With uncertainty lingering in financial markets, analysts suggest investors align their gold and silver exposure with long-term financial goals and liquidity needs rather than relying solely on traditional preferences.
Frequently Asked Questions
Why did gold and silver ETFs see higher inflows than equities in January?
Investors shifted toward safe-haven assets amid market volatility and global uncertainty. Gold and silver are traditionally seen as portfolio stabilisers during uncertain times.
Are gold and silver ETFs better than physical metals?
For investment purposes, ETFs are generally more efficient as they eliminate storage, purity and making charge concerns. Physical gold is better suited for jewellery and consumption needs.
Is digital gold safe to invest in?
Digital gold offers convenience and small-ticket investing, but it remains largely unregulated compared to ETFs and SGBs. Investors should assess platform credibility before investing.
Which gold investment option is the most tax-efficient?
Sovereign Gold Bonds (SGBs) are the most tax-efficient if held till maturity, as capital gains are exempt. Other formats typically attract 12.5% long-term capital gains tax.
How should investors decide the right format?
The choice depends on investment horizon, liquidity needs and financial goals. ETFs suit portfolio diversification, SGBs are ideal for long-term holding, digital gold works for flexibility, and physical gold serves consumption purposes.
