The Gold Illusion

Amar Pandit , CFA , CFP

January 27, 2026 | 5 Minute Read

Rajesh considered himself a “contrarian investor.”
He prided himself on spotting opportunity before others did.
But with gold, like many others, his timing was always perfect, perfectly wrong.

In 2011, gold touched new highs.
News channels shouted about the “gold rush.”
His friends were buying coins, ETFs, bars, anything that glittered.
Rajesh, who had ignored gold for years, finally gave in.
He bought near the top.

For the next eight years, gold went nowhere.
He saw no returns. No excitement.
His patience gave way to frustration.
In 2019, he sold most of it, saying, “I am done with gold. It’s dead money.”

Then came 2020.
COVID hit. Fear spread faster than the virus.
Gold soared again.
Rajesh regretted selling. He bought again this time much higher.

Two years later, the price flattened.
He saw headlines about stock market rallies, new highs, quick profits.
Gold looked dull again.
He sold again near the bottom.

Fast forward to 2024.
Gold surged.
Everyone said it would “go to the moon.”
Rajesh, not wanting to “miss out,” entered once more this year.
And on 21st October 2025 , gold corrected by 6% and overall dropped by 12% in the next several days.

He panicked and sold again.

Now it’s going up again and he wants to buy again.

The story had come full circle.

This cycle repeats with every generation of investors.
Gold attracts emotion like few other assets.
Fear makes people rush in. Boredom makes them rush out.

But gold was never meant to excite.
It was meant to stabilize.

Gold is not a return-generating engine. It is a shock absorber.
It is not meant to outperform equities or thrill you with growth.
Its purpose is to preserve, to protect your portfolio’s real value when uncertainty rises.

Think of gold as the seatbelt of your portfolio.
You don’t wear a seatbelt hoping for an accident.
You wear it because someday, one might happen.

The real purpose of gold is not to make you rich.
It is to make sure your wealth survives through chaos.

Every asset in your portfolio should have a role.
Equities grow your wealth.
Debt gives you stability.
Gold gives you protection.

When you start treating every asset like a performer, you miss the point of diversification.
Each one plays a part in your long-term story.

Gold will never consistently outperform stocks.
It should not.
Because it does something that equities cannot, it moves differently.

When markets crash or currencies wobble, gold reminds you what true value feels like.
And when markets run, gold stays quiet because that is its design.

Investors lose money not because gold fails them, but because they fail to understand its purpose.
They treat it like a lottery ticket, not a hedge.

If you truly want to benefit from gold, hold it without excitement.
Don’t chase it when it shines. Don’t abandon it when it dulls.
Allocate it with intention, not emotion.

In investing, your relationship with gold reflects your relationship with patience.
If you cannot stay still when it is quiet, you are not investing, you are reacting.

Gold teaches one of the hardest lessons in wealth creation:
Real strength is not in movement, but in endurance.

If in the future, gold cools after a run, don’t ask, “Should I sell?”
Ask, “Is it still doing its job in my portfolio?”

If it is, leave it alone.

Because investing, like life, is not about always chasing what shines;
It’s about holding on to what lasts.