January 2026 gave us a behavioural signal that we should not ignore.
For the first time in recent years, inflows into Precious Metal ETFs, particularly gold and silver, exceeded total inflows into equity mutual funds. In a country that has spent the last decade building SIP discipline and deepening financialisation, this is not a small shift. It reflects a change in investor sentiment.
Let us address the obvious question upfront. Yes, gold has delivered strong returns over the past decade. In several phases, it has outperformed equities. So why argue that it should remain a stabiliser and not become a dominant allocation?
Because performance does not define role.
Gold can perform exceptionally well during inflationary cycles, currency depreciation or global uncertainty. But economically, it does not represent ownership in productive enterprise. It does not grow earnings. It does not create innovation. It does not compound through business expansion. Its primary function in a portfolio is preservation and diversification.
There is nothing wrong with owning gold. The concern begins when allocation turns into migration.
If gold was part of a 5 to 10 percent allocation framework, that is strategic. If investors are increasing exposure because it has recently performed well, that is behavioural.
We must be honest here. A large section of retail investors today operate without a documented investment philosophy. DIY platforms have expanded access to markets, which is positive. But access without structure often leads to momentum chasing. When equity markets consolidate or move sideways, frustration sets in. Investors who entered during a strong rally expect linear returns. When that does not happen, capital shifts toward whatever is currently shining.
This is pendulum investing. And pendulum investing weakens compounding.
Equities represent participation in economic growth. Over long horizons, they align with productivity, profits and expansion. Gold protects. It hedges. It stabilises. Both are important. But confusing protection with growth distorts long-term wealth creation.
The January 2026 data should therefore not be celebrated as a metals victory. It should be seen as a behavioural checkpoint.
At this stage, the responsibility rests with the broader Financial Advisory community in India, including investment advisors, distributors, wealth managers and the 3,500 plus Certified Financial Planner professionals who are trained in structured, goal-based frameworks.
The role of an advisor today is not simply to recommend products. It is to protect investors from their own behavioural impulses.
Three reminders are critical.
- Asset allocation is not seasonal. It does not change because headlines change.
- Volatility is not failure. Consolidation phases are part of market structure.
- Goals drive allocation. Not recent returns.
If an investor’s retirement and education planning was built on long-term compounding assumptions, that logic does not collapse because gold outperformed for a few quarters.
India’s journey toward financial maturity depends not just on product innovation but on behavioural evolution. Precious metals have a legitimate place. Equities have a critical role. The discipline lies in keeping both in proportion.
Investing is not about chasing what worked last quarter.
It is about staying committed to what works over decades.
The advisory fraternity must lead that conversation firmly and responsibly.
Rishi Pal Singh Narang, CFP®
Academic Head
International College of Financial Planning
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