Gold prices have soared to record highs this Diwali season, but Value Research CEO Dhirendra Kumar has urged investors to stay cautious, saying the precious metal “produces nothing, earns nothing” and investors should not have more than 10 per cent of gold in their portfolio.
Speaking on a podcast on Diwali 2025 investments, Kumar said his long-held view on gold as a non-productive asset had only shifted slightly since the Russia–Ukraine war began in early 2022. “Yes, something has changed. Not in my core belief. I have always believed what Warren Buffett kept saying, gold produces nothing, earns nothing, sits pretty, and it appreciates on the anticipation that more people would like to acquire it,” he said.
He explained that central banks-not retail buyers-had driven the current rally. “Central banks around the world, particularly China, India, Turkey—they went on an acquiring spree not for the sake of sentiment, not because they like gold but to secure themselves. They’re doing it for security. The freezing of Russian central bank assets was the biggest trigger. People want to de-risk themselves. This is the de-dollarisation and the scale of demand is unusual,” he said.
Kumar described this as a monetary stance taken by central banks rather than a retail phenomenon. “It is not that the housewife is going to the marketplace and buying that jewelry. That has always been. It will always remain. But the quantum of that is nothing as compared to what the central banks are doing. This monetary stance taken by central banks has led to this surge,” he explained, adding that he did not know when it’ll reverse.
“But something which is becoming so mainstream as a currency and which is held by so many individuals as well-that is leading me to think that yes, it is something which should be had for de-risking oneself but the basic character of gold doesn’t change. It still does not produce anything, it still sits pretty.”
When asked if this was the right time for investors to buy, Kumar advised restraint. “I would say that somebody should have some gold but make sure that it is some. It is not too much. Make sure that it is not exceeding 10%. Make sure it is not exceeding 5%,” he said.
He acknowledged that his past scepticism about gold had drawn criticism. “I come across once in a while angry mails from some of our users that ‘because of you, we haven’t invested in gold and gold has appreciated so much’. My apologies for it, but I’m anyway not in the business of astrology. I’m only looking at facts and this fact has changed and that has led to the change in styles.”
However, Kumar warned investors against herd behaviour. “Something which keeps going up will not keep going up simply because there will be averaging, there will be people who would like to book profit, there will be central bankers who will book profit. The worst time to buy something is when there is a complete consensus that the whole thing will only keep going up. And that’s a very dangerous thing to do. So be careful, be cautious. Invest some in gold but don’t get carried by this,” he said.
Reiterating his long-term stance, Kumar added: “Equity should remain mainstay. Fixed income should be mainstay and there should be a little bit of gold in an investment form so that you can invest it and realizse it as and when you need it or rebalancing it.”
The warning comes amid a massive rally in gold prices this year. The precious metal of 99.9 per cent purity touched an all-time high of Rs 1,34,800 per 10 grams on Friday, up Rs 3,200 in a single day. Prices of 24-karat gold have risen 62.65 per cent over the past year—from Rs 81,400 on Dhanteras 2024 to Rs 1,34,800 this week-prompting many retail investors to jump in, even as experts caution that the entry point may no longer be ideal.