As Indians prepare for the auspicious festival of Dhanteras, the annual debate returns, should you buy gold, silver, or diamonds?While these glittering assets symbolize prosperity, experts say each behaves differently as an investment and each carries unique tax implications that buyers often overlook.
Gold Still Rules the Festive Market
Hetal Vakil Valia, Former National Chairperson of IBJA (Indian Bullion and Jewellers Association) Ladies’ Wing, says gold continues to dominate festive portfolios.
“As the festive season grips the nation, investors are flocking to gold, reaffirming its position as the most trusted asset class,” says Valia. “Dhanteras and Diwali purchases have pushed prices higher amid strong retail sentiment.”
Gold remains deeply rooted in Indian tradition, valued for both emotional and financial reasons.
“Silver, while gaining popularity due to its affordability, remains a riskier bet,” she adds. “It’s driven by both consumer and industrial demand, making its price movements unpredictable. Diamonds, on the other hand, lag behind due to limited resale value and lack of standard pricing.”
According to her, gold offers stability, silver offers volatility-driven opportunity, and diamonds offer sentiment-driven value, appealing to different investor mindsets.
Gold Outlook: A Shining Resurgence Amid Global Shifts
Sugandha Sachdeva, Founder of SS WealthStreet, says gold’s remarkable rally this year goes beyond tradition.
“Gold has delivered an extraordinary performance this year, surging nearly 67% and reaffirming its place not just as a commodity, but as a financial cornerstone,” she says. “It reflects a tectonic shift underway in the global financial system – a move away from a U.S. dollar-centric world toward a multi-polar, asset-backed ecosystem.”
She adds that gold is reasserting its role as a universal currency that transcends politics and monetary intervention.
“As central banks diversify reserves and global investors grow wary of endless money printing, gold and silver are reclaiming their historic role as true stores of value,” she explains. “Persistent geopolitical risks, U.S. trade uncertainty, inflationary pressures, monetary easing by the U.S. Fed, accelerating de-dollarization, and strong ETF inflows have all reinforced gold’s strength.”
The ongoing U.S. government shutdown, rising fiscal instability, and global trade unpredictability have made gold the world’s most trusted hedge. Over the past five years, it has delivered a CAGR exceeding 17% – preserving wealth while generating returns.
“Despite prices hovering near record highs, the long-term structural bull run remains intact,” Sachdeva notes. “But caution is warranted, gold may be entering overbought territory with short-term exhaustion signals.”
What Could Trigger a Correction in Gold Prices
While bullish long-term, Sachdeva lists key triggers that could cause short-term corrections:
A stronger U.S. dollar:
“If the dollar index breaks above the 100 mark and sustains, it could pressure gold.”
A hawkish U.S. Fed tone:
“The Federal Reserve has guided two rate cuts this year. But if it pivots to a more hawkish stance, gold could face headwinds.”
Easing geopolitical tensions:
“Any ceasefire in the Middle East or progress in the Russia-Ukraine conflict could reduce gold’s risk premium. President Donald Trump’s meeting with Ukrainian President Volodymyr Zelensky at the White House hints at potential diplomatic progress.”
Resolution of U.S. budget and trade disputes:
“If the U.S. government shutdown ends or trade tensions with China ease – especially with the upcoming Trump-Xi meeting – gold’s safe-haven appeal could soften.”
Even then, she insists the larger structural bull run remains strong.
“This Diwali is like an annual SIP festival – buying gold and silver is not just cultural, but a financial safeguard,” Sachdeva explains. “Over the past 20 years, gold has given returns of over 1,700%, preserving wealth across cycles.”
She advises phased investing over lump-sum purchases.
“Prices may correct slightly, but buying gold in small tranches, via ETFs, digital gold, or SGBs, is the best strategy,” she says. “Gold could move towards ₹1.45-₹1.5 lakh per 10 grams by next Samvat.”
Silver’s Industrial Edge and Price Outlook
While gold dominates for wealth preservation, silver offers a blend of monetary and industrial demand.
“Silver has been in deficit globally for the last four years, with this year’s shortfall around 187 million ounces,” Sachdeva notes. “Its use in solar, electric vehicles, and electronics makes it structurally strong for the medium term.”
However, silver’s high volatility, almost twice that of gold, means investors must tread carefully.
“Silver may deliver higher short-term returns, but it carries downside risk,” she warns. “We recommend small, phased purchases through ETFs or coins – avoid lump-sum buys.”
She adds that any correction between ₹1.45 lakh and ₹1.8 lakh per kg offers good entry points, with potential upside toward ₹2 lakh-₹2.15 lakh by next Samvat.
Diamonds: Beauty Over Returns
Diamonds continue to captivate buyers emotionally but disappoint as investments.
“Diamonds lack a transparent pricing mechanism and liquid resale market,” Valia says. “Their value depends on brand, cut, and certification – not on global demand. They’re best for adornment, not as an investment.”
Tax Talk: How to Buy Smart and Stay Compliant
Gaurav Makhijani, Chartered Accountant and Seasoned Tax Professional, highlights that festive purchases often carry tax obligations people overlook.
“Tax on precious metals can be significant because of their high value,” he says. “Gold or silver coins and bars attract 3% GST, while jewelry has 3% GST on metal and 5% on making charges. Diamonds attract 0.25% GST.”
If you sell later at a profit, the rules depend on the holding period:
Held over 36 months → Long-term gains taxed at 12.5%
Held under 36 months → Short-term gains taxed per your income slab
He also warns against ignoring cash transaction rules.
“Sellers cannot accept over ₹2 lakh in cash for a single purchase,” Makhijani notes. “Any transaction above that must include PAN details and reflects in your Annual Information Statement (AIS) as a high-value entry.”
Digital Gold and Sovereign Gold Bonds: Smarter Alternatives
Today’s buyers are shifting toward digital gold and Sovereign Gold Bonds (SGBs) – both offering traceability and long-term benefits.
“Digital gold follows the same tax treatment as physical gold,” Makhijani explains. “However, SGBs enjoy complete capital gains exemption at maturity, making them the most tax-efficient way to invest in gold.”
Investors with annual income above ₹50 lakh must also report such holdings in ITR-2 under the ‘Assets and Liabilities’ schedule.
Gifting Rules and Tax Exemptions
Gifting gold or silver during Dhanteras is common, but not always tax-free.
“Gifts to defined relatives, parents, siblings, spouse, or children, are exempt from tax,” Makhijani says. “But when the recipient sells the gift, capital gains apply based on the original cost and holding period of the giver.”
Gifts to non-relatives exceeding ₹50,000 a year are treated as income and taxed as per the recipient’s slab.
Expert Tips for Festive Investors
Go for phased buying: Avoid lump-sum gold or silver purchases at current highs.
Diversify smartly: Combine physical gold with ETFs or SGBs.
Silver for opportunity: Buy on dips, keep it a small portfolio portion.
Diamonds for emotion: Best for adornment, not resale.
Mind your cash use: Avoid cash payments above ₹2 lakh.
Maintain bills & invoices: Ensures traceability and tax compliance.
The Bottom Line
Whether you’re drawn to gold’s stability, silver’s industrial promise, or diamonds’ sparkle, experts agree on one thing: knowledge is your best investment this Dhanteras.
This Dhanteras, celebrate tradition, but invest with strategy.