Gold & Silver: Safe Havens or Shiny Distractions? Beyond the Noise in Commodity Investing

Rishab Kapur February 12, 2026
This post is not financial advice to buy, sell, or hold gold or silver right now. It is about understanding commodities as an asset class and where they fit in a long-term investing framework.

Short-Term Noise: Why Gold and Silver Are Suddenly Everywhere

If you’ve been following the markets recently, it’s been hard to miss the violent swings in gold and silver prices.

  • In just the last 10–15 days: Silver saw sharp intraday corrections from recent highs (approaching ~20% at peak stress points), with single-day moves that would make Warren Buffett sweat! 
  • Gold also corrected meaningfully in the short term before bouncing back, though with lower volatility compared to silver.

Gold prices last 1 year

Silver prices last 1 year

The takeaway is simple: precious metals are anything but predictable in the short term, especially silver. 

The Big Myth: “Gold Is a Safe Haven, You Can’t Lose Money”

This belief is extremely popular — and also only partially true.

Yes, gold has delivered respectable long-term returns over decades. But zoom in a little, and the story starts changing.

If you simply look at a price chart of gold over the last 10 years, suddenly the metal doesn’t look quite as shiny anymore.

There are long stretches in that 10-year window where:

  • Returns were flat or muted

  • Prices moved sideways for years

  • Equities quietly compounded at a much faster pace

And this is visible on any long-term chart.

Below, I have taken the last 10 years except the last 1 year ie. 2016 to 2025 for both gold and silver. 

Take a look below. 

Gold price chart from 2016 - 2025

Silver price chart from 2016 - 2025

Now suddenly, you realize that entering silver now could mean near 0% or even negative returns for the next few years! 

But you think, why not gold? That's still been better and given decent returns.

Lets take a look at the price chart of gold over the last few decades now.


Gold Does NOT Move in a Straight Line - It Moves in Regime Shifts

Gold’s long-term performance makes far more sense when you look at it across monetary regimes, not just rolling 5–10 year windows.

1971–1979: The Gold Explosion

In 1971, the gold standard was removed, breaking the direct link between the US dollar and gold.

What followed?

  • Gold prices rose nearly 6× in under a decade

  • Inflation surged

  • Confidence in fiat currencies weakened

Gold wasn’t just an asset then — it was a hedge against a new and untested monetary system.

Gold price: 1971–1979
Shows explosive move after the gold standard ended

1980–2000: Central Banks Align, Gold Goes Nowhere

After the inflationary chaos of the 1970s:

  • Central banks globally coordinated monetary policy

  • Inflation was tamed

  • Confidence in fiat currencies improved

Result?

  • Gold remained largely flat for nearly two decades

  • Equities and bonds delivered far superior returns

This period alone disproves the idea that gold always protects wealth.

2012–2018: Another Long Pause

Even in modern markets, gold has tested investor patience:

  • Prices stagnated

  • Returns were muted

  • Equity markets quietly compounded

Sources:

Post-2022: Gold Moves Again — But for a Reason

A new regime shift began after 2022.

When Western countries froze Russian dollar assets held in government treasuries following the Russia–Ukraine conflict, something important happened:

  • Central banks globally realised that fiat reserves are not politically neutral

  • Trust in dollar-denominated assets took a hit

  • Gold once again became a neutral reserve asset

Since then, gold has resumed its upward trajectory.

This reinforces an important point:

Gold is not just a hedge against inflation — it is a hedge against the global fiat currency system itself.

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TLDR ?

Gold does NOT go up all the time.

There have been very long periods where gold did nothing:

  • 1980–2000: Gold remained largely flat after the 1970s rally

  • 1995–2000: Near-zero returns while equities boomed

  • 2012–2018: Gold prices stagnated for years

Sources:

Meanwhile, equities during some of these periods delivered exceptional returns.

So Why Do People Still Trust Gold? Because Context Matters

Despite all of the above, gold does tend to perform well during uncertainty:

Examples:

Sources:

And right now, with Mr T sitting in the oval office, uncertainty is the only certainty. 

The Real Question Isn’t Timing - It’s Allocation

Trying to answer “Should I buy gold now?” is the wrong question.

A better question is:

What role should gold, silver, and commodities play in my overall net worth?

This is where asset allocation comes in:

  • Equity → long-term growth based on a long-term India growth thesis

  • Debt → stability & cash flows especially for emergencies or large life events

  • Gold / Silver / Commodities → more for diversification & an uncertainty hedge

This only makes sense after you have already:

  • Built an emergency fund

  • Taken care of health & life insurance

  • Developed consistent saving and investing habits - v. v. v. important!

Trying to earn an extra 2 - 3 % CAGR by timing commodities usually matters far less than earning more, saving more, and staying invested long enough for compounding to kick in.

A Reality Check for 20s & 30s Investors

If you’re early in your career:

  • Your career growth matters more than asset selection. Over your entire career, you will probably earn between 5X and 20X of what you were earning in your early years. And your career trajectory will determine that. So maybe focus there instead of checking the markets every 10 minutes? 

  • Your discipline matters more than anything else. This is something our generation doesn't get, but your grandfather will show you how they invested in a stock through 'paper' fund and forgot about it for a decade or two. Years later, that fund gave a 12-15% CAGR and a Rs 10K investment turned into Rs 4 lacs.

  • Your savings rate matters more than gold vs equity debates - which again comes from how well you manage your finances and curb unnecessary spending.

Once you’ve built a large enough base - around 10-15× annual expenses, only then fine-tuning starts to matter. Otherwise the change in CAGR doesn't impact your portfolio as much as the amount you are saving.

That base could be ₹1 Cr, ₹3 Cr, or more - depending on your lifestyle.

Before that:

  • Invest in skills

  • Grow income

  • Avoid needless spending

  • Stay boring and consistent

Read more about personal finance in this article: The Power of Personal Finance

Closing Thought

No one can reliably predict gold or silver prices over weeks or months. Trading commodities consistently is extremely difficult and risky, with 30% drawdowns possible. Investing too much of your portfolio into commodities could mean years before you see any return on your investment. 

The key thing to remember when dealing with a large investment is asset allocation of your overall portfolio. Diversify to protect against extreme moves in any one asset class.

And that is how long-term wealth creation actually works.

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