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Gold may deliver high returns — but also long periods of stagnation: Value ResearchValue Research advises limiting gold exposure to 5–10% of an overall portfolio, mainly as a risk-management tool rather than a growth asset.By Anshul   July 1, 2025, 5:07:11 PM IST (Updated)2 Min ReadGold prices have risen sharply in recent years, but investors should remain aware of the metal’s historical tendency to go through extended periods of low or zero returns. According to a recent analysis by Value Research, while gold can serve as a hedge against inflation and market uncertainty, it does not consistently generate returns over the long term.

The report points out that gold saw a major rally in the late 1970s, with prices more than doubling from ₹75 to ₹163 per gram in just six months between October 1979 and March 1980.

However, this was followed by a long period of stagnation. Gold did not surpass its 1980 high until late 1986, implying nearly seven years without meaningful gains.

Value Research also highlights other such phases. Between 1995 and 2000, gold delivered an annual return of just 0.7%. More recently, from January 2012 to November 2018, gold prices again remained flat, offering no real growth over nearly seven years.

The analysis notes that gold differs from other investment assets like equities. It does not produce cash flows, dividends, or earnings, and its value is largely influenced by macroeconomic factors such as inflation, currency movement, and geopolitical risk.

The report adds that gold often sees price surges during times of crisis or uncertainty, but these are typically followed by extended periods of low returns. This cyclical nature makes it important for investors to set realistic expectations.

Value Research advises limiting gold exposure to 5–10% of an overall portfolio, mainly as a risk-management tool rather than a growth asset. It also suggests using gold exchange-traded funds (ETFs) or fund-of-funds as more cost-efficient ways to invest, compared to physical gold.

While gold has recently delivered strong returns—up nearly 47% in the past 12 months—the report stresses that past performance does not guarantee future gains and encourages a cautious, diversified approach.

ALSO READ | Gold's best year in decades in the making—what can make it happenContinue ReadingFirst Published: Jul 1, 2025 5:01 PM ISTCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsgoldGold investmentGold Pricesgold rates