Kishore Narne, Executive Director at Motilal Oswal, said the recent parabolic run in gold — and the spike in silver — is less about festival buying and more about deeper, structural forces reshaping global markets. In a podcast on YouTube with Sharan Hegde – Founder & CEO, 1% Club, Narne discussed why gold has erupted, why India’s Dhanteras rush isn’t the main driver, and how silver’s industrial role has altered its return-risk profile.
Narne argued that gold should be thought of as a currency-like store of value rather than a conventional income-producing asset. “Gold doesn’t pay interest or dividends; its role is to preserve purchasing power when currencies weaken,” he said, noting that much of the recent price rise reflects currency depreciation and a broader flight to safe havens amid geopolitical and macro uncertainty. The onset of anticipated rate cuts in the US and parts of Europe — and the historically high real rates that followed COVID-era easing — have also supported the rally by lowering the opportunity cost of holding non-yielding gold.
On fundamentals, Narne highlighted that current gold prices trade at roughly three times the cost of production — well above historical norms — reflecting an unusually steep premium. That premium is underpinned by strong central-bank buying, renewed retail interest and constrained physical availability in key trading hubs. But he cautioned that the speed of the rally is as notable as its direction: rapid moves up tend to raise the probability of sharp corrections.
Silver, he said, has a separate story. The white metal has been driven higher not only by investment demand but by an irreversible structural uptick in industrial consumption — solar panels, electronics and electric vehicles now absorb a far larger share of global silver supply. With production failing to keep pace, inventories have tightened and silver has outperformed gold. Narne suggested silver could rise further — even doubling from recent levels — but warned investors that silver is far more volatile than gold and carries higher downside risk.
Narne also debunked the common belief that India’s festival season directly causes price spikes. Jewelers typically buy and stock metal months earlier; retail purchases during Diwali mainly rotate that existing stock. India imports virtually all its gold, so domestic demand spikes are met from previously acquired inventory rather than immediate incremental imports.
On how to own gold, Narne recommended cost-aware choices: physical gold involves making charges and GST, which can erode value on repeated churn; gold exchange-traded funds (ETFs) and digital-gold platforms offer lower frictions and audited custody; sovereign gold bonds, once a preferred route, are no longer being issued but existing paper trades in the secondary market. He advised investors to pick low-cost, liquid ETFs if opting for paper exposure.
For portfolio allocation, Narne suggested commodity exposure of 15–20% for younger, risk-tolerant investors, with a lower 10–15% gold weighting for more conservative allocations. He reiterated that gold gives stability while silver can supply higher returns — and higher volatility — making clear that the right mix depends on one’s risk appetite and investment horizon.
In short, Narne framed the rally as a complex mix of monetary policy dynamics, structural industrial demand and shifting safe-haven flows — and urged investors to weigh both the potential upside and the sizeable risks that come with such a fast-moving market.
