Before celebrating gold’s spectacular rise, it’s worth asking whether the metal has grown richer—or whether our money has quietly grown poorer.
Dipankar Jakharia
Guwahati
An investor friend of mine is in an unusually upbeat mood these days. A year ago, he invested in a Gold ETF, and now he is counting his luck. He admitted, almost sheepishly, that he never really considered gold as an “investment option” earlier. But after reading one of my columns in this space, he decided to allocate a portion of his portfolio to gold.
Old readers may remember that I have always advocated keeping one-tenth of one’s portfolio in gold. This is not my personal invention. In the financial advisory world, it is common practice to recommend retail investors keep around 10% in gold, mainly as a hedge against equity and debt. I have discussed this earlier too.
But here is the irony: our collective memory is getting shorter by the day. We rush to join any party that offers instant returns. We choose a holiday destination because it is “in” and social media is buzzing with it. We chase a dress, a gadget, or the newest restaurant because it has suddenly become the hottest topic in town. In doing so, we often overlook a longer, steadier approach in decision-making.
It is fine to pick the winner of today when it comes to lifestyle. But when it comes to investments, it pays to think long-term. A longer perspective prevents panic, reduces sleepless nights, and saves us from impulsive decisions driven by fear. Above all, it keeps us away from the greatest enemy of investing: FOMO, which is very real in our lives.
Gold is a fascinating metal. Continents were colonised and wars were fought for it. Its lure is universal across civilisations. Why gold is so precious and sought after cannot be explained by any one convincing scientific theory. But historically, it became valuable because it served as currency—portable, borderless, trusted, and accepted everywhere. Kings paid tributes in gold, nobles were rewarded in gold coins, and trade flourished because gold had credibility.
However, once humanity shifted to paper currency, measuring gold using paper currency became tricky.
Consider the historical gold prices in India:
• 1964: Rs 63 per 10 grams
• 1974: Rs 506
• 1984: Rs 1,970
• 1994: Rs 4,598
• 2004: Rs 5,850
• 2014: Rs 28,006
• 2024: Rs 77,913
• 2026 (today): Rs 1,62,800
At first glance, this looks like a phenomenal rise. But pause for a moment and ask: has gold truly become so much more valuable—or has our paper currency become weaker?
After all, the world cannot endlessly produce gold. Most easily accessible gold has already been mined. What remains under the earth is limited and often too deep for commercial exploitation. So why has the price risen decade after decade?
The answer is simple: the long-term rise in gold price is largely the story of devaluation of money, which we call inflation.
In 1964, if you had paid 10 grams of gold to buy a small plot of land, a few cows, or a certain quantity of grains, chances are you would still need roughly the same amount of gold today to buy similar real assets. The rupee value has changed dramatically—not necessarily the real value of gold.
That is why one must not get over-euphoric by comparing gold prices across decades.
In many ways, gold’s biggest strength is that its purchasing power tends to remain stable over long periods of time.
Then why do we see sudden spikes or drops in gold prices?
That happens mainly due to short-term factors such as:
1. Supply and demand: more buyers push prices up, more sellers pull prices down.
2. Currency movement: Since gold is globally priced in dollars, rupee depreciation makes gold costlier in India.
3. Government policies and import duties: Taxes and duties directly impact the domestic price.
So gold behaves like a volatile asset in the short run, but like a store of value in the long run.
The takeaway is clear: the long-term increase in gold prices is mostly inflation showing up in numbers. If you want to preserve purchasing power over decades, gold still remains one of the best instruments—not for instant riches, but for long-term stability. That is precisely why keeping 10% of the portfolio in gold continues to be sensible advice.
