Following a historic rally, gold and silver are consolidating. Is this a structural reversal or just a healthy pause? Rahul Khetawat, Fund Manager at 360 ONE Asset, breaks down the macro triggers ahead—from Fed rate cuts to central bank buying. Discover why a 12–15% allocation is optimal today and how to tactically play the gold-to-silver ratio.
Edited excerpts from a chat:
Given the intense global macroeconomic uncertainty, where do you see the next big trigger for gold and silver as both have been consolidating in a broad range after hitting lifetime peaks earlier this year?
After a strong run to lifetime highs, precious metals are in a consolidation phase — which, in our view, may be a healthy technical pause rather than a structural reversal. The next meaningful catalyst is likely to come from the US Federal Reserve’s rate cycle. A cut in the Fed Funds Rate might put downward pressure on real interest rates, and historically have tended to support precious metal prices, and the current setup seems similar. Beyond monetary policy, continued central bank accumulation of gold globally and any re-escalation of geopolitical tensions could add further momentum. We believe the medium-term setup for precious metals remains constructive.
While gold often steals the spotlight during geopolitical crises, silver is traditionally viewed as a high-beta play on the yellow metal. How should an aggressive investor tactically allocate between gold and silver right now?
Silver’s dual character — part monetary metal, part industrial commodity — gives it higher volatility relative to gold, making the allocation between the two an important tactical decision. To decide between gold and silver, one should evaluate the near-term price movement in both the assets.
One useful framework is the gold-to-silver ratio, which reflects the relative value between the two metals. Historically, when the ratio is closer to 50, gold is relatively cheaper, and the trade tends to favour it. When the ratio climbs toward or above 85–90, silver is historically cheap relative to gold and may offer a more compelling risk-reward. Investors should track this ratio as part of their entry and rebalancing discipline.
That said, regardless of market conditions, gold should anchor the precious metals allocation given its relatively lower volatility and safe-haven characteristics. Silver may serve as a tactical satellite position for investors with a higher risk appetite seeking enhanced upside.
Many modern wealth managers advocate for a permanent 5% to 15% allocation to precious metals. In your view, what is the optimal percentage of gold and silver required to truly de-risk an institutional-grade multi-asset portfolio today?
In the current macro environment — characterised by elevated geopolitical uncertainty, sticky inflation in parts of the global economy, and ongoing currency debasement concerns — we believe a 12–15% allocation to precious metals is optimal for a well-constructed multi-asset portfolio. This range may provide meaningful diversification opportunities, given gold’s low-to-negative correlation with both equities and fixed income. For institutional-grade portfolios seeking true risk-adjusted resilience, this allocation acts as a strategic buffer without materially compromising long-term return potential.
Within the 360 ONE Multi Asset Fund, how do you mathematically determine when to scale up your precious metal allocation versus when to trim it and retreat to equities or debt?
Asset allocation in the 360 ONE Multi Asset Fund operates within clearly defined ranges for each asset class. Commodities, including precious metals, gold and silver ETFs, exchange-traded commodity derivatives are managed within a range of 25–40% of the portfolio. Within this band, the decision to be overweight or underweight is driven by a combination of factors: the relative valuation of individual assets, the prevailing inflation regime, and broader global macro signals. This disciplined, framework-driven approach ensures that position changes are anchored in fundamentals rather than near-term market noise.
As a mutual fund investor bullish on gold and silver, one has two options: buy a multi-asset allocation fund or buy gold and silver ETFs. What factors should one look at before making a call on which product is suited for them?
The choice between gold/silver ETFs and a multi-asset fund ultimately comes down to the investor’s objective and the breadth of their conviction. If an investor has a specific, high-conviction view on precious metals and wants direct, transparent exposure to price movement with minimal complexity, ETFs could be a more suitable instrument. They offer purity of exposure, liquidity, and lower cost.
However, if the investor’s goal is broader wealth creation — where precious metals are one component of a diversified portfolio also including equities and fixed income, managed by a professional team with dynamic allocation capabilities — then a multi-asset fund could be suitable. The multi-asset route also takes away the burden of rebalancing across asset classes, which requires ongoing expertise and attention. Investors should assess their own knowledge, time horizon, and portfolio sophistication before making a decision.
What is the likelihood of gold going back to its previous lifetime peak level in the next 12 months?
In our view, the conditions remain supportive for gold to revisit its previous peak levels over the next 12 months, given the macro tailwinds still in play. The fundamental drivers underpinning the precious metal — expectations of monetary easing by the U.S. Federal Reserve, sustained central bank demand, and a structurally uncertain geopolitical landscape — remain firmly in place. The current consolidation phase, in our assessment, is building a base for the next leg higher. Investors with a medium-term horizon may consider using this consolidation phase to gradually build exposure to gold.
