Now he’s telling investors to stop chasing the metal entirely.
“At current valuations, we would avoid allocating incremental capital to gold,” Banthia said. “Among the three—equity, debt and gold—gold currently appears the least attractive.”
Banthia, who handles debt assets worth Rs 2.7 lakh crore, has held an underweight position on precious metals for the past six months. The logic is a clean inversion of what made the 2023 call so compelling.
Back then, the setup was near-perfect: gold had delivered limited returns since 2011, silver had gone largely nowhere, sentiment was weak, and a powerful set of macro drivers like central bank buying after the Russia-Ukraine conflict, rising US inflation, and de-dollarisation concerns were building quietly beneath the surface. While valuations were attractive, the popularity was low.
Fast forward to 2024 and into 2025, and that picture had completely reversed. “Prices rose sharply. While the underlying narrative remained unchanged, valuations expanded rapidly, and sentiment became overly optimistic,” he said.
One data point captures the frenzy: India accounted for roughly 5% of incremental global silver demand during this period—driven almost entirely by ETF investments rather than industrial use. “These flows played a significant role in pushing prices higher,” Banthia noted.The trade, in other words, had become crowded. Gold prices have fallen by around 25% in international markets from their historical peak of $5,626.80, hit on January 29 this year.
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The Bull Case Is Real But Already Priced In
Banthia is careful not to dismiss the structural arguments for gold linked to de-dollarisation, US fiscal deficits, rising debt, and global imbalances. But he draws a sharp distinction between recognising a long-term trend and acting on it as an investment today.
“De-dollarisation is a long-term structural trend, unfolding over decades,” he said. “Recognising a structural trend is different from making a near-term investment decision. Current gold prices already reflect a significant portion of that narrative.”
On central bank demand, which has been the other great pillar of gold, he is equally pointed. “Central bank buying has moderated, and in some cases, institutions have booked profits after the sharp run-up in prices. Higher gold prices have already increased its share in central bank reserves, meaning diversification objectives are largely met.”
The distinction he makes between buyers matters here. “Central banks, as long-term investors, tend to buy when valuations are attractive and reduce exposure when prices become stretched. In contrast, ETF flows are typically more speculative. The last rally was driven more by such flows than by sustained institutional demand.”
Gold vs. Equities: A Cycle That Has Turned
His medium-term view on gold relative to equities is unambiguous. “In 2022–23, gold was relatively undervalued. Even in 2024, equities appeared expensive compared to gold. Today, the situation has reversed—gold looks expensive relative to equities.”
He draws a further parallel with long-duration US Treasuries: gold has significantly outperformed over the past two decades, creating a divergence that historically signals expectations are already priced in. “Such large divergences often suggest that expectations are already reflected in current valuations,” he said. His broad view is that gold is unlikely to outperform equities over the next three to five years.
“A key mistake investors make is assuming that a good asset is always a good investment, regardless of price. The global monetary system may evolve toward a more multipolar structure, but that does not guarantee gold will outperform other asset classes.”
So Where Does the Money Go?
For the Rs 10 lakh investor today, Banthia’s framework points to a balanced split between equities and debt, with gold sidelined entirely. “Debt offers attractive yields, while equities provide long-term growth potential,” he said.
On the equity side, his conviction is in emerging markets.
India tops the list for domestic investors. Valuations that were dangerously stretched in 2024 have since moderated sharply. “India was among the most expensive emerging markets in 2024, but valuations have since moderated significantly. For domestic investors, equities now appear reasonably attractive.”
For foreign investors, rupee depreciation adds an additional layer of appeal. He sees the rupee, currently at real effective exchange rate levels comparable to those in 2013, as fairly valued and attractive over the medium term.
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On the wave of FPI caution toward India, Banthia is contrarian. “With the shift in FPI sentiment and moderation in valuations, India is increasingly emerging as a contrarian opportunity for global investors, rather than a crowded consensus trade.” The narrative that India has missed the AI opportunity, he argues, is in adopting and scaling technology, not leading breakthrough innovation.
China also features in his buy list. “Both India and China appear attractive,” he said. In contrast, Taiwan and Korea, big beneficiaries of the AI-driven rally, look relatively expensive, with valuations showing signs of over-extrapolation.
His broader emerging market thesis ties back to the de-dollarisation argument he’s cautious about for gold: “Historically, major shifts in the global monetary system have been accompanied by changes in economic leadership. A gradual transition toward a more multipolar world could create meaningful opportunities across emerging economies.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)