Gold vs silver vs Nifty 50: Which asset to prefer in your portfolio? Explained

 

Gold vs silver vs Nifty 50: Which asset to prefer in your portfolio? Explained

 

Gold vs silver vs Nifty 50 chart: Amid high volatility in the Indian stock market and sharp retracements in gold and silver prices from their respective peaks, investors may look to bottom-fish in these three asset classes. However, during portfolio diversification and asset allocation, an investor might find it tricky to allocate funds to these assets. According to experts, investors who are having difficulty allocating funds to equity, gold, and silver can use the age-old gold-silver ratio and the Nifty 50-gold ratio.

 

Nifty 50-gold ratio

Speaking on the percentage exposure to risky assets in one's portfolio, Pankaj Mathpal, CEO & MD at Optima Money Managers, said, "The best practice of allocating funds to risky assets like equity, gold, and silver is to deduct your age from 100. For example, if your age is 35, allocate 65% (100 - 35) of your investments to risky assets, and the remaining 35% to debt or risk-free assets. This formula helps lower one's risk with growing age."

On how to decide among equity, gold, and silver, Anuj Gupta, a SEBI-registered market expert, said, "One should first decide about the equity by finding out the Nifty 50-gold ratio. Today, the Nifty 50-gold ratio is around 1.63 (Nifty 50 closed at 25,571; MCX gold rate finished at around ₹15,700 per gm). Remember, in the Nifty-gold ratio, if the outcome is below 2.50, then it is a sign that gold is over-weight and equities are available at discounted prices. So, one should allocate more money in stocks than gold in the current market scenario."

 

Gold-silver ratio

On how to decide which bullion to buy, Amit Goel, Chief Global Strategist at PACE 360, said, "The COMEX gold rate today is $5,080/oz, whereas the COMEX silver rate today is $82.345/oz. This means the gold-silver ratio today is around 61.70. Remember, 80 is the pivot in the gold-silver ratio. If the gold-silver ratio exceeds 8u0, one should prefer silver over gold. Likewise, if the gold-silver ratio is below 80, then one should prefer silver over gold. As the gold-silver ratio today is around 61, one should look at gold ahead of silver." He advised investors to use COMEX prices when calculating the gold-silver ratio.