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As gold prices started surging after the WHO declared Covid-19 a global pandemic in March last year, many a mother in Indian households bemoaned the rising prices and feared that getting their eligible daughters married would now be much harder. After all, gold is an integral part of matrimonial transactions among Indian families and the rule governing its exchange is simple: the more the better. Apart from its snob value, gold has been an actual store of wealth, accumulated in ever larger quantities and passed on to generation after generation. Some surveys in the past have revealed that 96% of Indian households own some amount of gold. Not surprisingly, then, the World Gold Council estimates that Indians own more than 25,000 tonnes of gold. In contrast, the government of India owns less than 700 tonnes.

But does the young Indian investor look at gold the same way their parents did? I haven’t yet come across any reliable study on this, but anecdotal evidence seems to suggest that they don’t. When I look around and speak with some young investors—especially from the urban middle class–what I see is that they don’t seem to consider gold as an investment at all. My nieces, for example, invest in equity mutual funds, but little in gold, unless it is a small piece of jewellery for office wear. (The ones from their mothers are often chunky and designed for weddings.) Otherwise, they would rather spend their money on experiences: travelling, food, concerts etc.

One reason for the change in attitude towards gold is that the younger generation doesn’t have the traditional view of marriage. They are perfectly happy to allow their (would-be) children marry for love rather than to keep up some social arrangement. Already, many young couples are telling their parents to spend more on their destination weddings (they are big on experiences, remember?) than on pass-down gold and diamonds. As love marriages, as against arranged marriages, become the norm, gold will play a dwindling role as a means to secure a couple’s economic future.

The other reason for gold losing its attractiveness is that this generation has greater investment opportunities than their parents did. Historically, the typical Indian family has kept its money in bank deposits, followed by investment in life insurance, postal savings, precious metals, and then real estate. Equity hasn’t been high up on their list because of perceived concerns over safety of investment and sufficient returns. Evidently, the concerns are overblown, given that the Sensex has returned 500x since April 1, 1979 (its base year). Which means Rs 1 lakh invested in the index would have grown to Rs 5 crore by now.

As younger investors begin to understand the power of compounding and the importance of diversification, they are making their investment with greater thought. From an investment portfolio point of view, therefore, gold is becoming a small component of it. The modern view on portfolio allocation restricts gold to between 3 and 10% of total investment.

That said, with gold steadily declining from its $1931/oz level start of January this year to now about $1700/oz—thanks largely due to rising US treasury bond yields and improving global economic prospects due to Covid vaccination—should young investors start nibbling at it? And if yes, how? My suggestion: allocate 5 per cent of your investible surplus to gold, and buy it in the form of gold BeEs rather than gold jewellery. Gold BeEs are mutual funds whose underlying price tracks domestic gold prices. But unlike gold jewellery, you don’t have to waste money on making charges, and the price you get is that of 24 carat gold. Also, you don’t have to worry about getting robbed, since the virtual gold will be held in your demat account. Additionally, you can buy as little as 1 unit of gold, which is equal to 1 gram of gold.

Beyond a point, gold is a dead investment. If it is owned physically, then it is locked away in a safe somewhere. While gold is often considered a hedge against inflation, it is not the best asset by way of long-term returns. I dare say investment in a good company stock can deliver far better returns (we’ve seen that with the index performance, anyway), while providing much-needed capital to a company that creates economic wealth. The government of India’s gold sovereign bonds are a good bet, too. The ones who bought these in 2016 (Series II), are being allowed to redeem prematurely (the bonds have an eight-year lock-in) and walk away with a 54% return. Not bad at all.

What drives people to gold is uncertainty and devaluation of fiat currency. Neither of this is going to go away from our world anytime soon. Therefore, do invest in gold, but just a little.

(The writer is Managing Editor of TV9 Kannada, and formerly Managing Editor of ET Now and Business Today. Views expressed are personal)