Gold: what changed in 2026, and the sensible way to own it

What gold is actually for

Gold pays no dividend, earns no interest and produces nothing. A company can grow its profits. A gram of gold will be a gram of gold in twenty years.

So its role in a portfolio is not growth. It is that gold frequently holds up, or rises, when equity is falling. That makes a portfolio steadier during exactly the periods when steadiness matters. See diversification.

This also sets a sensible size. A small allocation, commonly in the range of 5% to 10%, is enough to do that job. A large allocation turns a stabiliser into a bet on one commodity that can sit flat for years.

And a caution particular to India: gold feels safe because it is familiar and physically present. Familiarity is not safety. Gold prices fall, and have gone nowhere for long stretches.

Sovereign Gold Bonds, and what changed

SGBs were the best gold product India has had. Government backed, tracking the gold price, paying 2.5% annual interest on top, with no storage or purity concerns, and capital gains at maturity that were exempt.

Two things have changed, and both matter.

No new issues. The last tranche was issued in February 2024. No issuance calendar has been announced since, and the government has indicated the scheme was discontinued for fresh issues because it proved an expensive way to borrow, particularly as gold rose sharply.

The tax exemption was narrowed. Budget 2026 restricted the capital gains exemption on redemption to investors who originally subscribed to the bond and held it continuously to maturity. Someone who bought SGBs on the exchange from another investor no longer gets that exemption, even if they hold to maturity.

The 2.5% interest was always taxable at your slab rate and remains so.

The remaining ways to own gold

For most people the practical choice is now between a gold ETF and a gold mutual fund, and it comes down to how you invest. If you already have a demat account and invest in occasional lump sums, the ETF is usually cheaper. If you want a monthly SIP without a demat account, the gold fund is simpler.

A specific caution about digital gold

Digital gold is sold through many apps and payment platforms in small amounts. SEBI issued a public caution in November 2025 about dealing in it. The core issue is that digital gold is not a regulated securities product, so the investor protections that apply to ETFs and mutual funds do not apply. You are relying on the provider.

It is convenient, and convenience is a poor reason to step outside regulatory protection for a long term holding.

Why jewellery is not an investment

Buying jewellery involves making charges that are frequently 8% to 25% and are not recovered when you sell. GST applies. Purity depends on hallmarking. When you sell, a jeweller will typically deduct for making and wastage.

Buy jewellery because you want to wear it. Do not confuse it with a gold investment, because you are starting a long way behind.

How gold is taxed

The rules diverged recently in a way that is easy to get wrong.

Note the first two rows carefully. A gold ETF and a gold mutual fund can hold the same gold and have different holding period requirements, purely because ETF units are listed and fund units are not. Short term gains in each case are taxed at your slab rate.

Gold does not get the ₹1.25 lakh exemption that equity receives. That applies only to listed equity and equity funds.

How much, and how to hold it

• Keep it small. Around 5% to 10% of your investment portfolio does the stabilising job. More turns a hedge into a bet.
• Count what you already have. Family gold and jewellery is real gold exposure even if you never think of it as an investment. Many Indian households are already at or beyond a sensible allocation before buying any.
• Rebalance it. After a strong run in gold, it will exceed your target. Trimming back to target is exactly the discipline that makes holding it worthwhile.
• Do not chase it. Gold attracts the most buying after it has already risen sharply, which is the same behavioural error as chasing equity.
• Prefer regulated routes. ETFs and mutual funds sit inside SEBI regulation. Digital gold does not.

Gold is a supporting player in a portfolio. Held in moderation and rebalanced, it makes bad equity years easier to sit through, and that is worth having. Held in size, expecting growth, it usually disappoints.