Gold and Silver ETFs Touch Record Highs: Should Investors Book Profits or Stay Invested?

As global markets remain on edge due to persistent geopolitical tensions, slowing economic growth in key regions and policy uncertainty, Gold and Silver prices are trading near historic highs. This sustained rally has propelled gold and silver exchange-traded funds (ETFs) to record levels, significantly boosting portfolio values for investors.

The sharp rise has attracted strong participation from retail investors, many of whom have started systematic investment plans (SIPs) in precious metal ETFs. However, with prices already stretched, a pressing question now confronts investors — should they buy more, hold on, or start booking profits?

STRONG RALLY IN PRECIOUS METALS

The rally in precious metals over the past year has been exceptional. Gold prices have climbed nearly 80 percent, while silver has witnessed an even more dramatic surge of around 190 percent during the same period.

This momentum has been mirrored in ETF performance. Gold ETFs have delivered returns of over 80 percent in the last year, while silver ETFs have generated gains close to 188 percent, making them among the best-performing asset classes.

As a result, both gold and silver ETFs are now trading close to their lifetime highs. While this has strengthened investor wealth, it has also raised concerns about the risks involved in entering these assets at elevated levels.

WHAT MARKET EXPERTS ADVISE INVESTORS

Market experts caution that after such a steep and sustained rally, aggressive fresh investments may not be ideal, especially for investors with a long-term horizon. Those who already hold gold or silver can continue to remain invested, but adding substantial new exposure at current prices may not be prudent.

Experts recommend that investors review their overall portfolio allocation and slow down fresh investments in precious metals. Booking partial profits at record levels and waiting for a correction before re-entering could be a more balanced approach.

WHY INVESTING AT RECORD HIGHS CAN BE RISKY

Financial experts warn that when asset prices rise sharply, it often triggers FOMO, or fear of missing out, among investors. This emotional response can lead to buying at inflated prices, which may result in losses if markets correct.

Historical trends suggest that strong rallies are frequently followed by periods of consolidation or pullbacks. Investors who enter near the peak may face lower returns or prolonged stagnation. This is why caution is advised when prices are already at all-time highs.

SHORT-TERM RISK, LONG-TERM POTENTIAL

Rajesh Minocha, Founder of Financial Radiance and a certified financial planner, believes that silver continues to have a positive long-term outlook due to its industrial demand and strategic importance. However, he notes that the sharp price surge has significantly increased short-term risk.

Given that silver prices have risen by nearly 200 percent, Minocha advises against deploying large amounts of fresh capital at current levels. Long-term investors can stay invested, but any new exposure should be limited and executed in a disciplined, staggered manner.

PROFIT BOOKING MAY GAIN MOMENTUM

Sagar Shinde, Vice President of Research at Fisdom, also believes that risks have risen as silver prices approach record highs. He suggests that investors who have already made substantial gains should consider short-term profit booking to protect returns.

A similar approach is advised for gold. With gold prices also hovering near historic peaks, experts recommend waiting for stability or a correction before increasing exposure. While holding gold for long-term financial goals remains sensible, fresh investments at current levels should be approached cautiously.

Overall, experts agree that gold and silver remain important components of a diversified portfolio, but disciplined allocation, timely profit booking and patience are crucial when prices are at elevated levels.