When people in India invest in gold, they usually buy it in Indian rupees, but the global market fixes gold prices in US dollars. So, is it smarter to buy gold in dollars or rupees?
A new report by CapitalMind Financial Services has given some interesting insights into this topic. It shows that Indian investors who buy gold in rupees get better returns over the years than those who invest in gold using dollars.
Let’s explain why buying gold in rupees has worked out better for Indian investors, what future gold trends look like, and how gold fits into an innovative investment portfolio.
Why Buying Gold in Rupees Gives Better Returns
One of the biggest reasons gold returns are better in rupees is the fall of the Indian rupee against the US dollar over the years.
In 1973, $1 was equal to Rs. 8, but today it is close to Rs. 85. This steady decline means that even if global gold prices stay the same, gold becomes costlier in India. That’s because Indians need to pay more rupees for the same amount of gold in dollars.
This currency movement increases the value of gold in rupee terms. So, Indian investors get better returns, even when international gold prices don’t rise much.
Gold Has Never Given Negative Returns in Rupees Over 10 Years
CapitalMind’s report shows that gold has never given negative returns over 10 years in rupee terms. But in dollar terms, there have been two full decades where gold gave negative returns.
This analysis makes gold a more stable and reliable investment for Indian investors when bought in rupees.
Anoop Vijaykumar, Head of Research at CapitalMind, said that gold has two sides. It’s both a safe store of value and a volatile asset. However, for Indians, gold is more of a safe option due to the falling rupee.
Big Rally Expected in Gold in 2025
The report also mentions signs of a possible gold rally in 2025. There are several global reasons behind this:
- Tensions between big countries like the US and China
- Slow growth in the US economy
- Rising fiscal deficit in many countries
- Weakness in the Chinese Yuan
These issues are pushing investors around the world towards safer assets like gold. That’s increasing the global demand, which could lead to a price jump.
Tariff Wars and Currency Weakness Push Investors to Gold
The ongoing trade war between the US and China makes global investors nervous. At the same time, China’s currency — the yuan — has become very weak. People globally rush to gold as a backup when major currencies fall or lose value.
Analysts expect this trend to continue in 2025, potentially driving a strong rally in gold prices.
Gold in Your Portfolio: Why It’s a Smart Move
The CapitalMind report strongly supports adding gold to your investment portfolio. It recommends keeping 5% to 10% of your portfolio in gold. This step makes your total investments more balanced and less risky.
If you had a portfolio with 50% in gold and 50% in Nifty 50 stocks, you would have earned better returns than holding just gold or only stocks over the past 20 years.
But there’s a condition — you must rebalance the portfolio every year. That means if gold performs better in a year, you take some money out from gold and move it into stocks to bring it back to 50:50 again.
History Shows Gold Rewards Patience, Not Emotions
Many investors get emotional with gold. But history teaches a different lesson.
- In the 1970s, gold prices jumped by over 1300%.
- In the 1980s and 1990s, gold gave inferior returns.
- From the early 2000s, gold again jumped by almost 293%.
So, people who entered gold investments with emotion in the 1980s lost money. But those who stayed invested with a long-term view in the 2000s gained big.
This shows that gold is not a “get rich quick” option. It works best when added to a long-term plan and balanced carefully with other investments.
Long-Term Gold Returns: Dollar vs Rupee
Between 1990 and 2002, gold often gave negative returns in US dollars. But in the same years, the returns in Indian rupees stayed positive.
This pattern has continued in most 5-year periods for the last 35 years. When you check 5-year periods like 1985–1990, 1986–1991, and so on, gold has performed chiefly better in rupees than in dollars.
This trend became stronger after 1991 when India opened its economy and moved to market-based currency rates. Since then, the rupee has become more sensitive to global changes, and gold has become even more critical for Indian savers.
Sources: CapitalMind Financial Services, RBI, World Gold Council
