ET Wealth Expo: Why market veteran S Naren thinks investors are getting gold, silver and asset allocation all wrong

“Anti-asset allocation” means buying an asset because it has already performed exceptionally well. Investors feel reassured when many others are making the same choice. But past returns do not assure future gains. Naren uses the term to describe behaviour driven by popularity and recent performance rather than balance or valuation.

His example was silver. After a 216% rise, investors rushed into silver ETFs. They cited silver’s industrial uses, artificial-intelligence applications and expected supply shortages. Yet silver later fell 27%, behaving much like the small-cap stock Naren had compared it with. Gold attracted similar interest after gaining 116%.

Naren says this pattern keeps repeating, including in South Korea’s stock market. Genuine asset allocation is harder because it involves buying after a correction or when an asset is unpopular. That requires patience and conviction, especially when market sentiment is weak.

January 2026 saw an extraordinary rush into gold and silver exchange-traded funds. Inflows into these ETFs exceeded the money flowing into equity mutual funds during the month. S Naren described this as unprecedented, saying he had seen no similar occurrence before or since.

The immediate trigger was performance. Silver had delivered a 216% return, while gold had gained 116%. Those large gains made the metals difficult for investors to ignore. Many investors appeared to join the rally after seeing how much prices had already risen. Their enthusiasm reflected the appeal of a popular, successful investment theme.

The episode also exposed the danger of entering late. Both metals peaked in January before declining, although silver’s subsequent correction was sharper. Naren used the event to show how quickly investors can move toward an asset after strong returns, even when the underlying risks remain significant.

Silver’s earlier gain was enormous: 216%. Gold also rose strongly, but its gain was smaller at 116%. These figures helped explain why investors became interested in both metals, especially silver. The size of the earlier returns made the assets appear highly attractive, even after much of the rally had already happened.

The reversal was especially clear in silver. After investors rushed into silver ETFs, the metal corrected 27%. Naren had warned that silver carried risks similar to a small-cap stock. The decline showed that industrial uses, artificial-intelligence applications and supply concerns could not remove the risk of buying after a major rise.

Gold also peaked in January and then declined, although the article does not give a percentage fall for gold. The figures illustrate Naren’s broader warning: spectacular past performance can attract investors just before momentum weakens.

Investors rushed into silver and gold after seeing unusually strong returns. Silver had gained 216%, and gold had gained 116%. The rally created fear of missing out and made the metals appear difficult to resist. Investors also offered a convincing fundamental story, pointing to silver’s industrial uses, artificial-intelligence applications and supposed supply shortage.

The key mechanism was performance chasing. People bought after prices had already risen sharply because the recent past seemed to validate the investment. That confidence did not eliminate market risk. Silver subsequently corrected 27%, much like a small-cap stock, as Naren had warned. Gold also peaked in January before declining.

The episode showed that a persuasive investment case can coexist with poor timing. Naren says investors repeatedly move into markets that have already performed well, including South Korean stocks. When momentum reverses, late buyers discover how quickly popular assets can fall.

Naren defines genuine asset allocation as buying after an asset class has corrected and become unpopular. The aim is not simply to follow recent winners. It is to spread attention across opportunities, including areas that investors currently dislike. This matters because strong recent performance can make an asset expensive and crowded.

The contrast appeared in the silver episode. Investors entered after a 216% rally because the story around industrial demand and supply shortages sounded persuasive. By comparison, buying an unpopular asset after a fall offers little social reassurance. The investor must accept uncertainty without seeing everyone else making the same choice.

Naren says anti-asset allocation is easier because popular investments provide comfort. Genuine allocation requires patience and conviction. The same pattern later appeared in South Korea’s stock market, where investors again turned toward an already successful market. The implication is that discipline matters when momentum and sentiment dominate decisions.

Central banks increased their interest in gold after the impounding of Russia’s oil and gold reserves. The episode made them reconsider how dependent their reserves were on currencies such as the US dollar. It raised concerns about keeping all reserves in currencies and encouraged greater attention to gold as an alternative reserve asset.

Naren links this shift to gold’s longer-term support. He noted that gold had previously been significantly undervalued relative to equities, although it became expensive briefly during the Covid period, then cheaper again before its strong rally. The central-bank change adds a structural reason for continued interest beyond recent price performance.

Naren does not expect gold to return to its earlier relative valuation levels. He believes central-bank demand could continue supporting the metal until the underlying reserve-related issue is resolved. However, this does not remove the risk of buying after a substantial rally.

Asset allocation is the practice of choosing investments across different asset classes rather than concentrating on one market. In Naren’s description, it also means buying after a correction and considering unpopular assets. This matters because investors can otherwise become heavily exposed to whatever has recently performed best.

For example, investors crowded into silver after its 216% rise. They then faced a 27% correction. A portfolio that relies heavily on silver would be especially vulnerable to that fall. Holding different asset classes can reduce the effect of one asset’s decline because losses in one area may not affect every other area in the same way. This is the basic benefit of diversification.

The article’s broader lesson is behavioural as well as mathematical. Genuine allocation requires patience when sentiment is weak. It helps investors avoid chasing rallies in silver, gold, or Korean stocks and reduces reliance on a single market’s momentum.