Gold: Smart Portfolio Insurance for HNIs & Retirees

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Gold as Strategic Portfolio Insurance: A Pragmatic View for HNIs & Retirees

By Rajat Dhar, Managing Partner, Finogent Solutions LLP

🌍 Gold’s Resurgence Isn’t Accidental – It’s Structural

In April 2025, gold touched a historic high of $3,500/oz, with projections by JP Morgan now pointing toward $4,000/oz by mid-2026. This is not a speculative anomaly—it is a reflection of deep macroeconomic shifts:

• Weakening US dollar
• Lower interest rate environment
• Ongoing geopolitical fractures and policy uncertainty

Central banks are responding to these shifts with urgency—over 1,000 tonnes of gold were added by global institutions like the RBI, PBOC, and NBH in the past year alone. The RBI’s own gold reserves surged by 57% YoY, reaching a historic ₹4.31 lakh crore.

These numbers are not just impressive—they are instructive.

📈 Portfolio Strategy Insight: Reframing Gold’s Role

For affluent investors and retirees, gold needs to be reclassified not merely as a hedge—but as strategic portfolio insurance. Here’s why:

Investment Role	Insight
Capital Protection	Gold has outperformed inflation (2–4% average) with CAGR of 14% over 10 years
Volatility Hedge	Gold shows low correlation with equities, real estate, and debt
Crisis Alpha	During stagflation, debt crises, or geopolitical shocks, gold preserves value
Currency Shield	For Indian investors, gold helps mitigate rupee depreciation vs USD

🛡️ Tactical Allocation: How Much Gold Should HNIs Own?

At Finogent, we typically recommend:

• 5–10% gold allocation for balanced portfolios
• 10–15% for retirement or wealth-preservation mandates
• Allocations through a blend of Sovereign Gold Bonds (SGBs), Gold ETFs, and global feeder funds (for dollar-denominated exposure)

This blend optimizes:

• Liquidity (ETFs)
• Yield + tax exemption (SGBs held to maturity)
• Global exposure (USD-hedged)

📊 Data-Driven Performance Snapshot

Metric	Gold (India)	Nifty 50	Sensex
1-Year Return	37.3%	21%	19%
2-Year Average Annual Return	29%	18% (Nifty)	~15% (Sensex)
10-Year CAGR (Gold in INR)	14%	~12%	~11%

Source: SEBI, RBI, AMFI, JP Morgan, Moneycontrol – data as of April 2025

💼 Real Talk: ETFs, SGBs, or Physical Gold?

Gold Instrument	Liquidity	Returns	Tax Impact	Ideal For
SGBs	Moderate	2.5% p.a. + Price	Zero capital gains tax if held to maturity	Long-term, retirement-focused investors
Gold ETFs	High	Price-linked	STCG/LTCG as per tax slab	Tactical exposure, portfolio rebalancing
Physical Gold	Low	Price-linked	Capital gains tax	Sentimental, but costly (storage, insurance)

🧭 Strategic Takeaways for Investors

1. Gold is no longer a passive hedge—it is a dynamic portfolio tool.
2. Use gold to diversify away from INR-centric and equity-only exposure.
3. Prefer SGBs for retirement portfolios due to tax-free exit and semi-annual coupon.
4. Use ETFs for shorter tactical allocations or rebalancing around economic triggers (e.g., elections, rate cuts, geopolitical events).
5. Monitor central bank behaviour—they are often the smartest buyers.

📌 Final Word from Rajat Dhar

In an age where portfolios are vulnerable to black swan events and rising policy unpredictability, gold offers asymmetric protection with embedded upside.

At Finogent Solutions LLP, we blend traditional wisdom with quantitative precision. Gold today isn’t about fear—it’s about foresight.