In 2025, US markets posted double-digit gains for the third consecutive year, although the ride was considerably more volatile than previous years.The benchmark S&P 500 ended the year with a total return (including dividends) of 17.9%. The Nasdaq Composite rose more than 20%.
For many Indian investors, this has reignited a familiar debate: should gold be the main hedge in a portfolio – or is allocating 20 to 30% to US equities a smarter long-term strategy?
The answer starts with a simple truth: gold and stocks serve fundamentally different purposes. Comparing them directly is often a category error.Gold: a hedge, not a growth engine
Gold has historically served as a store of value and hedge against macro shocks. In India, part of gold’s long-term appreciation (about 25% of its growth) comes from the depreciation of the rupee against the dollar. That works if your primary goal is to profit from the currency’s weakness. But portfolios are built to optimize overall returns, not just to absorb the depreciation of the rupee.
Over long cycles, gold does not compete with stocks in terms of wealth creation. The recent increase is also partly influenced by recent trends – driven by geopolitical tensions and flows to safe havens. Before the latest rally, gold’s annual returns were generally in the single digits.
And more importantly: gold does not always hedge currency risk. During the 2013 Indian rupee crisis – when the dollar moved from ₹54 to ₹68 in just a few months – gold fell 28%, while the S&P 500 rose 32%. Investors who owned only Indian stocks and gold suffered in dollar terms. The episode proved that gold can sometimes magnify losses instead of mitigating them.
US stocks: diversified growth and currency advantage
When we compare US stocks and Indian stocks, we are comparing stocks versus shares – a much more relevant framework.
A US allocation offers:
4-5% potential annual tailwind from rupee depreciation, on top of underlying equity growth
Low correlation with Indian equities, improving diversification
Access to global sector leadership
Consider the sector composition. The Nifty 50 is dominated by financials (36.5%) and traditional energy (14.7%) – more than half of the index. In contrast, the S&P 500 allocates about 30% to technology alone.
The largest U.S. companies are leaders in industries that are difficult to copy at home:
Semiconductors, AI, cloud computing, biotechnology, energy transition, advanced manufacturing.
Comparing a broad index to gold can also be misleading. Index returns include laggards. If you compare gold’s recent performance against just the “Magnificent 7” US tech leaders, these stocks have clearly outperformed precious metals over time.
Limiting US exposure to just 10-15% increases geographic concentration risk – something gold cannot hedge against.
What about gold ETFs and gold miners?
For Indian investors who want exposure to gold without the hassle of physical ownership, Gold ETFs remains one of the easiest routes.
Globally, investors also have access to gold miner ETFs, which provide exposure to mining companies rather than the precious metal itself. These instruments combine exposure to the gold price with equity characteristics.
When the price of gold rises, miners’ profitability can increase more quickly due to operating leverage, which often increases returns.
That dynamic was evident in 2025, when gold mining stocks outperformed precious metals as record prices boosted margins.
However, Indian exchanges do not offer ETFs for gold miners. Through global investments platforms like AppreciateIndian investors have access to international gold mining ETFs and broader US equity markets, and can use them as higher-risk satellite allocations alongside core investments.
So gold or 20-30% US allocation?
It’s not an either/or decision.
Gold plays the role of portfolio insurance: useful, stabilizing, but not a growth engine.
US equities offer structural growth, currency diversification, sector leadership and lower correlation with Indian markets.
In a world of increasing globalization and innovation cycles, an allocation of 20 to 30% to US equities can meaningfully increase portfolio efficiency over the long term, while a measured allocation to gold can provide tactical stability.
The real question is not whether gold is a hedge. It is.
The question is: are you building a portfolio to protect wealth – or grow it globally?
With access to international markets via platforms like AppreciateIndian investors no longer have to choose between domestic exposure and global opportunities. They can design portfolios that do both.
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