, Market Expert, the best way to bet on gold is to keep 10-15% allocation in gold at all times. That is the best way to play. It has just gone up. It is costly, but it is not expensive. It is an alternative asset and there is talk of gold becoming the new reserve currency, replacing dollars. If that is the case, then these values of Rs 90,000 or whatever, have no meaning at all.

An expert made a very interesting observation that whenever the gold prices actually top out, it has not turned that great for the equity markets. Do you concur with this particular view and what is your overall take with the kind of asset allocation that we have? Is it the time to make some changes there?
Sunil Subramaniam: Historically, gold had a negative correlation to equities. Because there is a negative correlation, and that is when we saw these things happening. But what has changed in the dynamic for gold? For me, fundamentally why gold is moving is de-dollarisation. It is the big nations of the world who are holding dollar securities, Japan is holding one trillion dollar debt, China has $770 billion in debt, and they are trying to reduce their risk with the US because of the tariff wars, and because they probably see the dollar in decline.

So, from that point of view, they are buying more gold. One of the things that is going to stop especially considering that thanks to Trump's pressure, it does not look like a BRICS counter currency to the dollar is going to come up. India has distanced itself from any kind of BRICS currency. So, in that context, gold will continue to be an alternative for sovereign.

In India, the RBI has been among the higher purchases of gold this year in terms of their allocation, that is number one. Number two is the likelihood that the US, in a bid to control its fiscal deficit, might revalue their gold reserves. Now, if that happens, then again that could be a trigger. So, there are too many uncertainties. I am not an expert on gold, but to me, the best way is to keep 10% to 15% allocation in gold at all times. That is the best way to play. It has just gone up. It is costly, but it is not expensive.

So, how do you say what is the right price for gold? It is an alternative asset and I read somewhere that gold is the new reserve currency. It is replacing dollars. So, if that is the case, then these values of Rs 90,000 or whatever, have no meaning at all. It is like the Sensex valuation. If you take a 12% compounding, the Sensex today is 80,000, and in 18 years, it will be 6,40,000. Now will you say the Sensex at 6 lakhs is too expensive? No. It is a natural part of the nominal GDP growth of the world getting reflected in stock prices and gold is an alternative asset class.

So, it is very hard to call the tops and bottoms. Having a steady 10-15% allocation in gold is what my philosophy has been and that should work well for everybody because then you would not feel unduly happy or unduly sad when gold goes up.

Till date, we have the numbers coming in from all these private banking majors, from the likes of ICICI and Axis. There has not been a big disappointment coming in till date and look at the move in the stock price, many of these counters are at their all-time high levels. But now that we have SBI numbers too, which amongst the private and the public banking names would you like to go with and why so?
Sunil Subramaniam: I would still back the private sector barring a few large public sectors which is okay. But in a broader pack of the private sector, the reason is very simply that from a rates perspective, any rate cut from there, these banks will be sharp enough to gain market share in the retail space as we know public sector banks are stronger on corporate and MSME lending.

But in terms of the retail space, private banks have far better turnaround times, efficiency of operations and reach, number one. Number two is when the Rs 100,000 crore of the tax giveaway comes in the system, it is either going to get saved or spent. And in spending, it is going to be in auto, housing loans, and basically consumer loans. There again the private sector banks are at a better position to grab the market share.

The third is that of these Rs 100,000 crore, some of it will go into savings and investments and all of these banks have very good distribution networks both for insurance and for mutual funds. They will get a good share of the fee-based income from sales of those kinds of products. So, to that extent in the immediate scenario, it is the consumption growth pack of Rs 1 lakh crore and some savings and investments coming through. Private sector banks are positioned, they are more nimble to grab it and more than just the earnings, the asset quality levels are also showing up well for the private sector bank. As for the public sector banks, wait and see.