Gold, silver or equities:Where should investors park capital

Equities can be the preferred asset class as geopolitical tensions ease. Gold will continue to serve as a portfolio hedge and wealth-preservation tool, while silver may benefit from improving industrial demand but remains a relatively volatile asset.

As geopolitical tensions ease following the US-Iran peace deal, investors are re-evaluating their portfolio allocations. Expectations of better crude oil supplies and lower energy prices have improved the outlook for economies such as India, which is heavily dependent on oil imports.

Against this backdrop, investors are evaluating whether to stay invested in traditional safe-haven assets like gold and silver or shift capital towards equities that could benefit from improving economic conditions.

So, let’s find out what experts have to say about where investors should allocate capital after the US-Iran MoU eased geopolitical tensions: gold, silver, or equities.

Gold may lose momentum, but it remains an important portfolio hedge

Gold emerged as one of the biggest beneficiaries of geopolitical uncertainty in 2025 and early 2026. Rising global tensions, concerns over inflation, and economic uncertainty pushed investors towards the traditional safe-haven asset.

The rush into gold was evident in ETF flows. According to Arjun Guha Thakurta, Executive Director, Anand Rathi Wealth, investors increasingly allocated money to gold as prices continued to rise.

“In January 2026, when gold prices peaked, gold ETFs recorded record inflows of ₹24,040 crore, surpassing equity mutual fund inflows for the first time in history. Investors were effectively extrapolating recent performance into the future, a classic example of recency bias,” he said.

However, with geopolitical concerns easing and gold prices moderating, investor interest has started cooling. Gold ETFs recorded outflows of ₹725 crore in May 2026, marking the first monthly outflow in 13 months.

Despite the slowdown in flows, experts do not suggest investors to completely abandon gold.

Narinder Wadhwa, Managing Director and CEO of SKI Capital Services, said gold continues to benefit from structural factors beyond geopolitical tensions.

“Gold is unlikely to witness a sharp exodus of capital. While easing geopolitical risks typically reduce demand for safe havens, gold continues to enjoy support from central bank buying, strategic reserve diversification by countries such as China and India, and expectations of lower interest rates.”

Wadhwa added that recent price action suggests investors continue to view gold as a long-term portfolio hedge rather than merely a crisis asset.

Similarly, Vaibhav Porwal, Co-founder of Dezerv, believes investors should maintain a strategic allocation to precious metals irrespective of short-term market movements.

“Precious metals should be a strategic 10% allocation in every portfolio, not a tactical call. If you are overweight, trim back to 10%. If you are underweight, bring it up to 10%.”

Silver could continue attracting investor interest

Silver witnessed a similar momentum-driven rally like gold in 2025. Thakurta mentioned that “silver followed a similar path in 2025, with prices surging nearly 150% over the year. As returns accelerated, investors poured money into silver ETFs, which attracted ₹9,463 crore in January 2026 alone. However, once prices corrected and momentum slowed, investor interest also began to fade”.

However, silver’s investment case differs from gold. While gold primarily acts as a safe-haven asset, silver benefits from both investment demand and industrial consumption.

According to Wadhwa, this dual nature could help silver attract investor interest even as geopolitical concerns fade. “Silver may emerge as a relative outperformer,” he noted, adding that demand from manufacturing, renewable energy, electronics and other industrial sectors could support silver prices if global economic growth improves.

At the same time, experts caution that silver remains considerably more volatile than gold.

Thakurta pointed out that long-term data highlights silver’s unpredictability. “Silver has been even more unpredictable, with only about a 27% probability of generating returns above 10% returns, reflecting its greater volatility and dependence on industrial and cyclical demand.”

As a result, while silver may benefit from improving growth expectations, it is generally viewed as a tactical opportunity rather than a core long-term portfolio allocation.

Equities are likely to outperform other asset classes

Most experts agree that equities are likely to perform better as geopolitical risks ease.

Lower crude oil prices reduce inflationary pressures, improve corporate profitability and support consumer spending, creating a more favourable environment for stock markets.

Wadhwa suggests that investors can increase allocations towards domestic consumption, banking, industrial, and infrastructure sectors that stand to benefit from improving economic visibility. “Equities appear to be the biggest beneficiary. Lower crude prices reduce inflationary pressures, improve corporate profitability, support consumer spending, and increase the probability of easier monetary policy,” he said.

Recent fund flow trends already indicate a shift in investor preference. “Money has started finding its way back into growth assets. Equity mutual funds received net inflows of ₹22,908 crore in May, up 20% from a year ago,” Thakurta mentioned.

According to Vijay Kuppa, CEO of InCred Money, investors have been waiting for a favourable opportunity to increase equity exposure. “Given that Indian equity valuations have corrected, investors have been waiting on the sidelines for making an entry into equity as it continues to be perceived as a tangible wealth generator despite poor returns over the past year.”

“Geopolitical tensions were a major overhang on stock markets, and that overhang, now gone, makes Indian equities that much more attractive,” he added.

Porwal also sees a compelling case for Indian equities, arguing that valuations and foreign ownership levels are currently favourable. “The better question is where quality assets are still temporarily underpriced. On that test, Indian equities sit in a position we have not seen in over a decade.”

He highlighted that the Nifty 50 is trading below its long-term median valuation, while foreign portfolio investor ownership in NSE-listed companies is near a 17-year low.

“Cheap valuations, low FII ownership, and the dominant macro headwind easing at the same time give us a good entry point,” he said.

What should investors do?

While you can rotate from gold and silver towards equities as geopolitical risks ease, experts caution against making decisions solely based on recent performance.

Thakurta noted that investors often move towards whichever asset class is delivering the strongest returns at a given point in time. “Investors tend to flock towards the asset class or category that is showing the strongest momentum. Looking at long-term data of 10-year rolling periods since 1990, we can see that equity remains the primary long-term wealth generator,” he mentioned.

“Equity should continue to be the primary long-term wealth generator at an allocation of 80% of the total portfolio. The combined allocation to gold and debt should not exceed 20%, and investors can allocate to gold when they have long-term objectives such as wealth preservation or gradual accumulation for future needs.

“Silver, on the other hand, remains a highly volatile and cyclical asset, and is not ideal for strategic allocation,” Thakurta elaborated on the portfolio allocation.

The broad consensus among experts is that equities can be the preferred asset class as geopolitical tensions ease. Gold will continue to serve as a portfolio hedge and wealth-preservation tool, while silver may benefit from improving industrial demand but remains a relatively volatile asset.

For long-term investors, maintaining disciplined asset allocation rather than chasing recent performance remains the preferred strategy.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not sharechart. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.

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