Can NRIs invest in Sovereign Gold Bonds in India?

No. As per the Union Budget 2025, NRIs can no longer purchase new SGBs. The scheme has been discontinued for everyone. However, NRIs who bought SGBs before becoming non-residents can hold them until maturity.

What is the best gold investment option for NRIs?

Gold ETFs are generally the best option. They're SEBI-regulated, highly liquid, require only 12 months for LTCG treatment, and can be bought through your NRE/NRO-linked demat account. No storage hassles, no making charges.

How much gold should NRIs have in their portfolio?

Most financial experts recommend 10-15% allocation to gold for diversification and crisis protection. Conservative investors might go lower (5-10%), while those concerned about economic uncertainty might go higher (15-20%).

Are gold ETF gains taxable for NRIs?

Yes. Short-term gains (held less than 12 months) are taxed at your income slab rate. Long-term gains (held over 12 months) are taxed at 12.5% flat. If you redeem through the fund house, TDS applies.

Is gold better than fixed deposits for NRIs?

They serve different purposes. Fixed deposits offer guaranteed returns with capital safety. Gold offers potential appreciation but with price volatility. A balanced portfolio might include both, using FDs for steady income and gold for inflation protection.

Gold vs Equity: Which Wins During Uncertainty?

Two months ago, Rajesh from Abu Dhabi asked us something many NRIs have been wondering: "Gold is up 50% this year. Should I sell my mutual funds and move everything to gold?"

His Nifty 50 fund had returned just 9% in 2025. Gold had more than doubled the S\&P 500's returns globally. The numbers seemed obvious.

But here's what we told Rajesh after running through his actual situation, a conversation that turned into a two-hour discussion in our WhatsApp community where many NRIs shared similar concerns.

The answer isn't gold or equity. It's gold and equity, in the right proportion, at the right time, through the right instruments.

This guide breaks down everything you need to know about both asset classes, specifically for NRIs in the UAE and Gulf region. We'll cover historical returns, crisis performance, tax implications, investment options available to you, and how to actually build a portfolio that works whether markets are booming or crashing.

What Happened to Gold and Equity in 2025

Let's start with the numbers that sparked Rajesh's question.

Gold had one of its best years in history. According to World Gold Council data, 24K gold prices in India rose from around Rs 65,000 per 10 grams in early 2024 to over Rs 1,35,000 by late 2025. That's roughly a 50%+ increase in just over a year.

In the past 12 months alone, gold has more than doubled the returns of the S\&P 500 Index, according to VanEck's 2025 analysis. Gold recorded its second-best calendar-year performance since 1970, with only 1979 eclipsing 2025's gains.

The Nifty 50, meanwhile, had a modest year. The Nifty had a slow year in 2025, rising only about 8-9%. For context, that's less than what many NRE fixed deposits were offering.

What drove gold's rally? It wasn't just one reason; it was a "perfect storm" of global events including US interest rate cuts, geopolitical tensions in the Middle East, and continued uncertainty from the Russia-Ukraine conflict.

👉 Tip: A single year's performance should never dictate your entire investment strategy. Gold's 2025 was exceptional, but so was 2021 for equities. Look at longer timeframes.

The 10-Year Picture: Does Gold Really Beat Stocks?

Short-term numbers can be misleading. Let's zoom out.

The Nifty 50 has given an average yearly return of 13.18% over the last 10 years. If you had invested Rs 2 lakh in the Nifty 50 index 10 years ago, your investment would have grown to about Rs 6,94,868.

If you had invested Rs 2 lakh in gold 10 years ago, you would have bought about 75.92 grams of gold. Today, that gold would be worth about Rs 7,31,399.

Surprised? Gold actually outperformed Nifty 50 over the last decade, primarily because of its massive surge in 2024-2025.

NIFTY50 delivered nearly 12.64% annualised returns from 2015–2025, driven by a combination of favourable government policies and economic conditions. This outperformed most Asian peers like Nikkei (+10%) and even the Dow Jones (+10.7%).

But here's the critical insight: If the chosen period went through a crisis or rough economic patch, gold won. If not, equities won.

Period	Gold Returns	Nifty 50 Returns	Winner
2020 (COVID crash)	38%	15%	Gold
2021 (Recovery year)	0.14%	24%	Equity
2023	13%	20%	Equity
2024	24%	9%	Gold
2025	50%+	8-9%	Gold

Source: IndMoney Research, NSE India

Why Gold Shines During Uncertainty

There's a reason gold has been called a "crisis asset" for centuries.

Generally, equities have done better than gold during periods of geopolitical stability, disinflation and steady economic growth, while gold tends to outperform during periods of instability.

The World Gold Council's research confirms this pattern. Gold returned positive performance in 8 out of the 10 worst quarters for US equities since 1973. When stocks fall hardest, gold typically rises or holds steady.

Gold becomes more negatively correlated with equities in extreme market selloffs. This negative correlation is exactly what makes it valuable for portfolio protection.

Think of 2008. When the financial crisis hit and global stocks plummeted, gold surged 78% while stocks plummeted. The COVID-19 pandemic saw similar dynamics, with gold reaching all-time highs as equity markets crashed.

For NRIs sending money home to India, this creates a useful hedge. When global uncertainty rises, your gold holdings typically appreciate even as your equity portfolio might be struggling.

👉 Tip: Track gold's performance using Belong's tools alongside your equity holdings. During volatile periods, having both helps you sleep better.

When Equities Outperform Gold

Let's be fair to equities. They've created far more long-term wealth for investors than gold in most stable economic periods.

From 2011-2019, equities soared amid a slow, low-inflation recovery in the U.S. that sent gold prices substantially lower. During this period, the S\&P 500 outperformed gold by over 300%.

Gold investing has significant risk. However, return wise, the gold rectangle is always below the equity rectangle in long-term analysis. Comparable risk but not comparable returns means, over very long periods without major crises, equities typically win.

The Indian equity market specifically has benefited from structural growth factors that gold cannot match. Government reforms played a crucial role in supporting markets. Over the years, tax reforms and increased capital expenditure boosted consumption and infrastructure growth.

Corporate earnings growth, GDP expansion, demographic dividends, these compound over time in ways that a non-productive asset like gold cannot replicate.

Gold mitigates risk during uncertain times but lacks the growth potential of equities. Equities offer higher returns but come with volatility.

How NRIs Can Invest in Gold in India

Here's where it gets specific for UAE-based NRIs. Your options are different from resident Indians, and understanding this matters.

What NRIs CANNOT Do: Sovereign Gold Bonds

Bad news first. NRIs are not allowed to purchase SGBs as per the Reserve Bank of India (RBI) and the prevailing FEMA guidelines.

This is frustrating because SGBs were arguably India's best gold investment, offering 2.5% annual interest plus gold price appreciation, with tax-free gains at maturity.

Budget 2025 announced the discontinuation of the Sovereign Gold Bond scheme entirely. So even resident Indians cannot buy new SGBs anymore. The scheme is closed due to rising borrowing costs for the government.

If you bought SGBs before becoming an NRI, you can still hold them until maturity. As a resident Indian, if you had invested in SGBs in the past, you are permitted to hold them up to their maturity or opt for an early redemption.

What NRIs CAN Do: Gold ETFs

Gold Exchange-Traded Funds are your best alternative. Gold ETFs offer NRIs everything SGBs promised (minus the 2.5% interest), with better liquidity, simpler taxation, and zero compliance headaches.

Here's how Gold ETFs work:

A gold ETF is a mutual fund scheme that invests in physical gold of 99.5% purity. You can buy or sell gold ETFs on major stock exchanges such as NSE or BSE, just like stocks.

Benefits for NRIs:

No physical storage needed
Prices track actual gold prices
High liquidity (sell anytime during market hours)
Can be purchased through NRE or NRO accounts
SEBI regulated and transparent

You can invest in gold ETFs with funds from either your NRE or NRO bank accounts. Your investments in Gold ETF shall be done through Non-PINS account only.

You'll need a demat and trading account linked to your NRE/NRO account to buy Gold ETFs.

👉 Tip: If investing through NRE account, your Gold ETF redemption proceeds (principal + gains, net of taxes) can be repatriated without limits.

Gold Mutual Funds

Gold mutual funds are fund of funds that invest in various forms of gold, such as physical gold, gold ETFs and/or related assets.

The advantage? You don't need a demat account for gold mutual funds. You can invest directly through your NRE/NRO account via fund house websites or platforms.

Digital Gold

Several platforms now offer digital gold where you can buy gold online, stored in insured vaults.

Digital Gold allows NRIs to invest in 24K real gold online, securely stored in insured vaults by trusted entities like SafeGold. Investments can start with as little as Rs 1.

However, note that digital gold is convenient but is not SEBI- or RBI-regulated. We generally recommend sticking to regulated instruments like Gold ETFs for significant investments.

Physical Gold

You can still buy physical gold in India. If you've stayed abroad for over a year, the duty-free limit is 40 grams for women and 20 grams for men when bringing gold to India.

For larger purchases, you'll pay customs duty. Physical gold also comes with storage costs, security concerns, and making charges if buying jewelry.

Tax Rules on Gold Investments for NRIs

This is where many NRIs get confused. Let's simplify.

Gold ETFs Tax Treatment

Gold ETFs in India are taxed based on the holding period. Capital gains from short-term holdings are taxed according to income tax slab rate, while long-term gains are taxed at flat 12.5% without indexation, as of 1 April 2025.

The holding period threshold for Gold ETFs is 12 months:

Sold within 12 months: Short-term capital gains (STCG) at your income tax slab rate (typically 30% for NRIs)
Sold after 12 months: Long-term capital gains (LTCG) at flat 12.5%

TDS applies only when NRIs redeem Gold ETF units directly through the fund house. If the units are sold on stock exchanges, no TDS is charged, but investors are required to calculate and pay tax themselves while filing income tax returns.

Physical Gold and Digital Gold Tax

Physical gold, gold coins, and digital gold are treated similarly for capital gains taxation.

Held for 24 months or more: LTCG at 12.5% without indexation
Held for less than 24 months: STCG at your slab rate

Note the difference: Gold ETFs need only 12 months for LTCG treatment because they're listed on exchanges. Physical gold and digital gold need 24 months.

Gold Mutual Funds Tax

Gold mutual funds held for 24 months or more attract LTCG at 12.5% without indexation. Held for less than 24 months, STCG is taxed at your slab rate.

Gold mutual funds are unlisted, so the 24-month period applies.

👉 Tip: If you're planning a gold investment, Gold ETFs offer tax advantages since you reach LTCG status faster (12 months vs 24 months for other gold instruments).

How NRIs Can Invest in Indian Equities

Now let's look at the equity side.

Direct Stocks via PIS Account

NRIs can invest in Indian stocks through a Portfolio Investment Scheme (PIS) account. This requires:

A demat account
A trading account
A PIS-designated NRE/NRO account
RBI approval

It's more paperwork than gold, but gives you direct control over stock selection.

Mutual Funds (The Easier Route)

For most NRIs, mutual funds are simpler than direct stocks.

You can invest in Indian mutual funds through your NRE or NRO account. Equity mutual funds don't require a demat account in most cases.

Some popular categories for NRIs:

Index Funds: Track Nifty 50 or Sensex passively
Large Cap Funds: Invest in India's biggest companies
Flexi Cap Funds: Manager decides across market caps
International Funds: Access global markets from India

For NRIs specifically, GIFT City mutual funds offer unique advantages. Since GIFT City is treated as an offshore jurisdiction, there's no capital gains tax for NRIs/OCIs on these investments.

Check out funds like the DSP Global Equity Fund or Tata India Dynamic Equity Fund available through GIFT City.

Tax on Equity Investments for NRIs

Equity mutual fund taxation differs from gold:

Short-term (held less than 12 months): 20% flat tax
Long-term (held more than 12 months): 12.5% tax on gains exceeding Rs 1.25 lakh

The DTAA between India and UAE can help you avoid double taxation on capital gains.

The Right Portfolio Split: How Much Gold vs Equity?

This is the million-dollar (or should I say million-dirham) question.

The expert consensus seems to be that 10% to 15% of your portfolio in gold is a good percentage for most people.

Let's break this down by investor profile:

Conservative Investors (Near Retirement, Low Risk Tolerance)

For investors over 55 or those prioritizing capital preservation, experts recommend 5-10% total precious metals allocation.

A suggested split might be:

40% Fixed Income (GIFT City USD FDs, bonds, debt funds)
40% Equity (large-cap focused, index funds)
10-15% Gold (Gold ETFs)
5-10% Cash/Liquid funds

Moderate Investors (10+ Years to Retirement)

Many advisors recommend allocating 2% to 5% of a portfolio to gold and other metals. However, in the current environment:

For most investors, targeting 10% precious metals allocation makes sense in 2025 - higher than historical norms but justified by current conditions.

A balanced split:

60% Equity (mix of Indian and international)
25% Fixed Income
10-15% Gold

Aggressive Investors (Young, High Risk Tolerance)

Morgan Stanley CIO Michael Wilson recommended a 60/20/20 strategy, swapping half of the bond portfolio for gold to serve as a "more resilient" inflation hedge.

For growth-focused NRIs:

60-70% Equity (including small/mid caps)
10-15% Fixed Income
15-20% Gold

👉 Tip: Use Belong's investment tools to compare fixed deposit rates across banks and build a diversified portfolio. Many NRIs in our community use a combination of GIFT City FDs for safety and mutual funds for growth.

Practical Steps for UAE-Based NRIs

Let's get actionable. Here's how to actually implement a gold-equity strategy from the UAE.

Step 1: Check Your Residential Status

Before investing, confirm you're classified correctly. Use our Residential Status Calculator to verify if you're NRI, RNOR, or Resident.

Your tax obligations change dramatically based on this status. Get this wrong, and you could face compliance issues.

Step 2: Open the Right Accounts

For equity and Gold ETFs:

NRE or NRO savings account with a bank that has UAE presence
Demat account (NRE-linked for full repatriation)
Trading account with PIS approval for stocks

For mutual funds only:

NRE or NRO account is sufficient
KYC completion through your fund house or platform

Step 3: Decide Your Allocation

Based on your age, goals, and risk tolerance, decide your gold vs equity split. Remember:

Gold is for protection, not growth
Equity is for wealth building over time
Neither should be 100% of your portfolio

Step 4: Choose Your Instruments

For Gold:

Gold ETFs (recommended) via your trading account
Gold mutual funds via direct plans

For Equity:

Index funds for beginners (Nifty 50 or Sensex tracking)
GIFT City mutual funds for tax efficiency
Direct stocks only if you can actively monitor

Step 5: Set Up Systematic Investments

Don't try to time the market. "The smart move isn't to panic and go all in overnight. Buy a little over time, especially when the market pulls back."

Set up SIPs (Systematic Investment Plans) for both gold funds and equity funds. This averages out your entry price over time.

Step 6: Rebalance Annually

Reassessing your gold position once a year ensures it remains aligned with your financial goals and market conditions. Rebalancing helps maintain your target allocation if gold's value rises or falls significantly.

If gold has a stellar year (like 2025) and now represents 25% of your portfolio instead of 15%, consider selling some gold and buying equity to return to your target allocation.

What About Silver?

We get this question often in our community.

Silver has had an even better year than gold in 2025. If you invested Rs 1 lakh in silver five years ago, it would be worth roughly Rs 3.15 lakh today, that's even better than gold.

However, Silver has seen sharp fluctuations. Five out of the 10 years have seen a negative return on silver. So, it is not a very reliable source of high returns on investment.

Silver is more volatile than gold, both on the upside and downside. If you want silver exposure, keep it small (2-3% of portfolio) and use Silver ETFs rather than physical silver.

Common Mistakes NRIs Make

From our experience helping NRIs at Belong, here are mistakes to avoid:

Chasing Last Year's Winner

Just because gold returned 50% in 2025 doesn't mean it will repeat. In 2024, gold emerged as the better-performing asset, but equities are poised for recovery. Markets are cyclical.

Ignoring Currency Impact

When you invest in INR-denominated assets from the UAE, currency movement matters. The rupee has depreciated roughly 3-4% annually against the dollar over the long term.

Gold priced in INR includes this depreciation benefit. But so does any INR asset. Consider USD-denominated options in GIFT City for currency protection.

Buying Physical Gold Abroad and Storing in India

This creates customs headaches, storage concerns, and documentation issues. Stick to paper gold (ETFs, funds) unless you specifically want jewelry for personal use.

Not Claiming DTAA Benefits

Many NRIs pay more tax than necessary because they don't file properly or claim DTAA benefits. The India-UAE DTAA can significantly reduce your tax burden on capital gains.

Consider using professional tax filing services to ensure you're not overpaying.

The Verdict: Gold or Equity?

Coming back to Rajesh's question: should he sell his equity funds for gold?

Our answer: No. But he should add gold to his portfolio.

Diversifying across gold and equities allows investors to balance risk and reward, ensuring steady returns regardless of market conditions.

Gold is not about getting rich. It's about staying rich when markets crash. Gold's unique ability to protect portfolios during crisis periods while providing steady long-term appreciation makes it a valuable portfolio component.

Equity is about building wealth. From a long-term viewpoint, stocks are likely to continue to be the best investment option for growth-focused investors.

The winning strategy isn't choosing one over the other. It's owning both in proportions that match your life stage and risk tolerance.

Your Next Steps

If you're an NRI in the UAE thinking about your India investment strategy, here's what we suggest:

Join our WhatsApp community at Belong's NRI WhatsApp Group. Many NRIs discuss their gold vs equity decisions daily, and you'll learn from real experiences.
Download the Belong app at app.getbelong.com/LywZ/blogs to access our investment tools, compare FD rates, and explore GIFT City options.
Use our calculators to check your residential status, compare NRI FD rates, and ensure compliance.
Start small. If you've never owned gold ETFs, begin with 5% of your portfolio. If you're all in on gold, consider adding equity exposure.

The best portfolio isn't about predicting which asset wins next year. It's about building resilience for whatever comes.

Sources:

Disclaimer: This article is for educational purposes only and should not be construed as investment advice. Investment decisions should be based on individual circumstances. Consult a SEBI-registered investment advisor before making investment decisions. At Belong, we are committed to helping NRIs make informed financial choices, but all investments carry risk.

Gold vs Equity Investments for NRIs - Which Performs Better During Uncertainty