Mini Feature ROLE OF GOLD IN GLOBAL PORTFOLIOS

By: Dr K C Gupta, YBB Personal Finance

CONTRARIAN INDICATORS

AAII Bull-Bear Spread -6.3% (below average)
CNN Fear & Greed Index 60 (greed)
NYSE %Above 50-dMA 58.66% (positive)
SP500 %Above 50-dMA 54.40% (positive)

ICI Fund Allocations (Cumulative), 4/30/26
OEFs & ETFs: Stocks 62.61%, Hybrids 3.96%, Bonds 17.12%, M-Mkt 16.31%

INTEREST RATES

CME FedWatch
Cycle peak 5.25-5.50%
Current 3.50-3.75%
FOMC 6/17/26+ hold (WARSH-Fed)
FOMC 7/29/26+ hold

Treasury

-Bills 3-mo yield 3.69%, 1-yr 3.79%; T-Notes 2-yr 3.98%, 5-yr 4.13%, 10-yr 4.45%; T-Bonds 30-yr 4.99%;
TIPS/Real yields 5-yr 1.61%, 10-yr 2.07%, 30-yr 2.71%
FRNs Index 3.627%

Bank Rates www.depositaccounts.com/



Stable-Value (SV) Rates, 6/1/26
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.25%, RA 5.00%
Flexible RCP 4.50%, SRA 4.25%, IRA-101110+ 3.65%
TIAA MYGA (not updated) 4.15% (3-yr), 4.30% (5-yr), 4.40% (7-yr)
TSP G Fund pending (previous 4.500%)

India Fear & Greed MMI 70.37 (extreme greed)
Weekly ETFs: INDA +0.35%, INDY +0.35%, EPI +0.45%, INDH -0.13% | SPY +1.45%

The data above are as of Sunday preceding the publication date.

FINANCIAL. Prudential plc (2378/HK, PRU/UK, PUK/US; CEO Anil Wadhwani) is buying 75% controlling stake in Bharti Life Insurance from Bharti Life Ventures & 360 ONE Asset Management. Prudential plc-India operations will include (i) majority-owned Bharti Life Insurance (75%) & Prudential HCL Health Insurance (70%), & (ii) minority-owned ICICI Prudential Asset Management (35%) & ICICI Prudential Life Insurance (to be reduced from 22% to 10%).

INDUSTRIAL.

US Tesla/TSLA took a pass on manufacturing EVs in India. It will only have showrooms to sell imported Tesla – sales have been very slow. To attract foreign EV manufacturers to India, the Government reduced import duties to 15% (from 110%) for EVs priced above $35K if commitments for substantial local manufacturing were made ($500+ million in 3 years), but Tesla decided not to play. Mercedes-Benz, Skoda-Volkswagen, Hyundai, Kia, etc have shown interest.

Indian multinational Eicher Motors is strengthening its partnership with Volvo-India by buying 50% stake in nonbank financial Volvo Financial-India. Eicher & Volvo already have a joint-venture VE Commercial Vehicles (VECV; Eicher 54.4%, Volvo 45.6%).

MARKETS. Barron’s 5/25/26 had 2 stories on INDIA. The INTERNATIONAL column noted significant impacts of Iran war & free fall of rupees that may be headed to $1 = Rs100. RBI has intervened without much effect but is reluctant to raise rates from 5.25% just to defend rupee. Inflation is +3.5% (understated due to government caps on energy prices) & economic growth has slowed a bit (but still the highest globally). Indian stocks may not have bottomed. The FUNDS column was more favorable & noted US ETFs: indexed INDA, EPI (also, rupee-hedged INDH); active ETFs GIND, NDIA.

SPECIAL TOPIC – ROLE OF GOLD IN GLOBAL PORTFOLIOS

Indian obsession with gold is puzzling. There are reports of massive gold holdings by Indian households (~30x RBI gold). Unfortunately, that’s lot of capital locked away in this unproductive asset.

A simple explanation is that’s a defensive move necessitated by rapidly falling rupee (& resulting inflation). Buying & hoarding gold is easily understood & widely accepted by Indian masses. This has taken hold over centuries & it would be hard to change by the urging of financial advisors or speeches by politicians. The trend of lower custom duties for gold was only recently reversed as total gold duties/fees went up from 6% to 15%.

Long-term comparison of gold with other assets would show that Indian stocks & real estate have performed comparably or better than gold, but those investments require some knowledge & experience. Gold has outperformed Indian stocks only since 10/2025.
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BTW, gold isn’t popular among the US investors because relatively stable dollar makes this unproductive asset lag vs other investments – stocks, bonds, alternatives. Europeans seem more appreciative of gold.

So, here are some practical guidelines for the Indo-US community:

1. Your residential home doesn’t count as investment – you have to rent or own. But rental properties are genuine investments.
2. Look at diversified portfolios of stocks, bonds & alternatives (including gold, real estate). Higher investments in productive assets will boost Indian economic activity. Be aware that US investors may have too little gold while Indian investors may have too much gold & an appropriate allocation to gold may be in between.
3. Salaried people should use payroll plans (AIP/SIP/DCA, retirement plans, 401k/403b) that offer equity & fixed-income funds.
4. Use conservative options strategies such as call-writing to boost stock/ETF income that caps some capital gains. Leave speculative options strategies for the experts.
5. Don’t chase fads such as meme-stocks, illiquid & leveraged private-investments (nontraded/unlisted), cryptos & prediction markets.

For more information, see https://ybbpersonalfinance.proboards.com/