What Does The Surge In Gold’s Price Means For Investors?

January 2026: Gold is once again breaking historical price records; the gold price in Kolkata is Rs. 13,338 per gram for 22 carat gold and Rs. 14,550 per gram for 24 karat gold today (17th January 2026). In the past three years alone, the value of this safe haven asset has increased 2.5 fold, from Rs. 5,267 per gram for 24 carat gold in 2022 rising to an average Rs. 6533 per gram in 2023; further trending upwards at 7791 per gram in 2024, then a surge in 2024 where it firmly traded at Rs. 12,000.

Indians are among the world’s leading consumers of gold, with the precious metal constituting a significant portion of our total imports. Indians tend to buy gold since it is considered a ‘safe’ investment. Investors study the markets for fluctuations in prices, which dictate demand.

Over a longer period, gold has outperformed even the S&P 500 Total Return (including dividends and excluding taxes) by a factor of two over the past 25 years. Gold is traditionally considered a risk-hedging instrument during times of crisis, but the current anomaly may indicate a more fundamental shift, a transition from a unipolar reserve formation logic to a bipolar one. In one corner, liquid instruments like currencies and bonds remain. In the other, gold is a sovereign asset, normally designed to ensure the system’s survival in the face of serious risks.

How the reserve architecture has changed –

The dollar is gradually losing its status as the world’s leading reserve currency, not so much in official transactions, but as an asset. One key indicator of this shift is the actions of central banks, which are increasing their gold reserves. In November alone, global central banks added 45 tons of gold to their reserves, and since the beginning of 2025, cumulative purchases have reached almost 300 tons. As a result, experts estimate that last year, gold prices rose by 65%, which is the largest jump since 1979, while the dollar index fell by 9.4%, which is its worst decline in the last 08 years.

In January, analysts have assessed the role of the dollar and gold in global reserves. The precious metal’s share reached its highest level since the early 1990s which is 28%. This increase over the past 10 years has amounted to 12% age points, resulting in gold overtaking the euro, yen, and pound sterling. Meanwhile, the dollar accounts for approximately 40% of global foreign exchange reserves. This is the lowest level in 20 years. Over the past 10 years, the US currency’s share has declined by 18% age points. S&P Index demonstrates that when gold is included in the overall reserve structure, the dollar’s sharp falls below the symbolic 50% mark to approximately 47%. Gold ranks second with a share of 20%.

These aren’t statistics. The International Monetary Fund’s Composition of Foreign Exchange Reserves (COFER) report states that the dollar accounts for approximately 57%. In monetary terms, this amounts to over $7 trillion. However, it doesn’t provide data on gold; it is traditionally considered a separate asset category. While official data on gold reserves is published by the IMF and the World Gold Council, statistics are based on voluntary disclosures by individual countries. For example, there have long been suspicions that China holds far more gold in its reserves than it claims (not the 2,300 tons that has been reported for the third quarter, but 2X or 10X that amount). Overall, this suggests a lack of a complete picture of reserve dynamics. Therefore, all calculations and comparisons of the shares of foreign exchange assets and gold are purely interpretations .

Profitability –

The trend toward a declining role for the American currency in global reserves is clear. For the first time since the mid-1990s, the total market value of US Treasuries held by global central banks has become less than the total market value of gold in their reserves ($3.7 trillion versus $5.2 trillion).

US Treasuries have become an asset with weak long-term real returns. $10,000 invested in US Treasury bonds 20 years ago (assuming coupons were reinvested) would be worth $18,000 today (unadjusted for inflation). Over the same period, gold purchased through an exchange-traded fund has shown a gain of over 650%, with the proceeds reinvested, $10,000 would become $75,000.

What does this mean for a private portfolio?

Although reports show the dollar as the largest share of total foreign exchange reserves, central banks have begun to reallocate reserves in favour of gold. The precious metal reduces dependence on foreign exchange assets, whose value and purchasing power can fluctuate due to the policies of issuers. This signals a fundamental shift: the dollar is no longer the only alternative, and gold is no longer considered a mere liability without yield; it has become an asset for mitigating systemic risk. In other words, a shift has occurred from a single-anchor system to a dual-anchor system: yield is no longer the primary KPI, and the focus has shifted to survivability and control .

At the same time, it’s worth noting that the increase in gold holdings in central bank vaults reflects structural risks. This makes the precious metal an option for capital protection or a safety net. In this context, gold ceases to be a liability without yield . It no longer generates a coupon, but performs a different function: it reduces systemic risk. Therefore, allocating 10% to 20% of a portfolio to gold may be reasonable. However, it should be stored in a form where access and control belong to the owner, not an intermediary .

How and where to invest in gold:

• Buying gold from reputed banks, and specialised dealers;
• Opening an impersonal metal account;
• Investing through mutual investment funds (MIFs);
• Gold futures;
• Buying shares of gold mining companies.

The ideal formula is one in which a portion of the investor’s capital is invested in assets under direct physical or legal control. Another portion is dedicated to operating and generating income. Only a limited portion can be devoted to growth and experimentation.

[[Maverick News has asserted the present Metal Market Scenario, and has no intent in providing any  investment recommendations]].

Team Maverick.