- You may have chased the recent 14% silver bounce, but the underlying risk is soaring.
- ICICI Prudential’s CIO says the "golden era" for direct bullion exposure is finished.
- His rule: avoid assets that have just delivered stellar returns; seek those that have lagged.
- Investing through multi‑asset mutual funds could be the only sensible route forward.
- Understanding this shift can protect your portfolio from a potential post‑rally correction.
You’ve been dazzled by gold’s sparkle, but you’re probably buying a trap.
Why Sankaran Naren Says Gold’s Golden Era Is Over
During a candid video that went viral on X, Sankaran Naren, Executive Director and CIO of ICICI Prudential Asset Management, laid out a stark framework: gold and silver have become the "most dangerous assets" for long‑term investors. His argument rests on two pillars – recent performance and a contrarian timing rule. Because precious metals have outperformed every other asset class globally over the past months, Naren believes the upside potential is largely exhausted. In his words, "the time to invest in gold and silver is gone" – unless you do it via a diversified multi‑asset fund.
Multi‑Asset Mutual Funds: The Only Safe Harbor for Bullion Exposure?
Multi‑asset funds blend equities, bonds, commodities and, occasionally, a small allocation to precious metals. By nesting gold or silver inside a broader basket, the fund dilutes pure bullion volatility while still capturing a modest participation in any price rally. For an investor who wants exposure without the "dangerous" single‑asset risk, this structure aligns with Naren’s risk‑adjusted return philosophy.
Sector Ripple Effects: How the Bullion Rally Touches Other Industries
The 14% surge in MCX silver and a 6.5% jump in MCX gold have reverberated beyond the metals market. Mining giants such as Tata Steel’s subsidiary Tata Silver and Adani Enterprises, which has been building a foothold in mining, are seeing short‑term balance‑sheet lifts from higher commodity prices. Yet, if the rally stalls, those same firms could face margin compression as operating costs rise faster than selling prices. Moreover, the broader financial sector is feeling the pressure: banks that fund mining projects are reassessing credit risk, while wealth‑management houses are re‑balancing client portfolios away from pure bullion holdings toward diversified funds.
Historical Cycle: From Real Estate Boom to Equity Revival
Naren’s rule is simple: assets that have been stellar performers are likely near their peak, while those that have lagged for years are poised for a comeback. He cites Indian real estate in 2013 as a classic example – it was the best‑performing asset class then, while equities were depressed. Savvy investors shifted capital from property to stocks, capturing the equity rally that followed. Applying that lens to today, gold’s recent outperformance suggests a turn to under‑performers such as Indian equities, high‑yield bonds, or even emerging‑market currencies could be the next source of alpha.
Competitor Landscape: How Peers Are Reacting to the Bullion Bounce
While ICICI Prudential is vocal about staying out of direct bullion, other asset managers are taking a more nuanced stance. HDFC Mutual Fund has introduced a hybrid fund with a 5% cap on gold exposure, positioning it as a “cushion against volatility.” Meanwhile, Birla Sun Life’s “Growth‑Oriented” scheme has reduced its silver allocation to 2% after the recent rally, citing valuation concerns. These moves underscore a sector‑wide pivot: the consensus is shifting from pure metal bets to integrated, risk‑managed exposures.
Technical Corner: Decoding the 46% Price Drop and 14% Rebound
The three‑day crash that erased 46% of gold’s peak price was a classic "over‑sell" scenario driven by profit‑taking and a sudden shift in risk sentiment after the U.S.–India trade announcement. The subsequent 14% silver rally reflects a “bounce‑back” pattern often seen when technical support levels hold. Traders watch the 200‑day moving average and the Relative Strength Index (RSI); in this case, RSI moved from the oversold zone (<30) back toward neutral, signaling a short‑term recovery but not a sustainable trend.
Investor Playbook: Bull and Bear Cases for Precious Metals
Bull Case: If geopolitical tensions (e.g., Iran‑U.S. talks) flare up, safe‑haven demand could reignite, pushing gold above $5,000 per ounce. In such a scenario, a multi‑asset fund with a 10‑15% metal tilt would capture upside while limiting downside through equity and bond exposure.
Bear Case: A rapid resolution of trade disputes and stronger U.S. monetary tightening could dampen safe‑haven appeal. Gold and silver would likely retrace a portion of the recent rally, potentially falling 10‑15% from current levels. Investors fully exposed to bullion would suffer, whereas those in diversified funds would see only modest impact.
Bottom line: Treat gold and silver as a “seasonal garnish” rather than the main course. Align your exposure with multi‑asset solutions, stay alert to macro‑risk catalysts, and keep an eye on the under‑performing sectors that could be primed for the next breakout.