A few days ago, a young man approached me after a talk and asked, Is it unpatriotic to buy gold and international stocks now? I was not sure I was convincing in my answer, so let me put my thoughts together as an article.
Caveat: I am not an economist. So please excuse the crudeness. Thankfully, we do not need complex macroeconomics to understand this.
First, the basics: Why does the Rupee fluctuate in value against the US Dollar? Two factors determine USD-INR rates. (1) The actual demand for dollars vs supply for dollars, and (2) the expected (speculated) demand vs supply for dollars.
What are the facts?
Gold: Indians buy a lot of gold. Physical gold must be settled in Dollars (remember that digital assets, except Sov Gold Bonds, also need physical gold backing). Buying more gold always weakens the INR (demand for USD increases), and its impact is more than usual in the current environment. The Prime Minister has requested us to buy less gold.
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If we sell gold (digital or physical) in the future, we help meet local demand and reduce stress on the Rupee. However, such a sale does not convert USD into INR. That is, selling gold is a closed domestic loop.
International Stocks: Buying international stocks requires converting INR to USD. If this demand increases, yes, the INR would weaken. If the international stocks or ETFs receive dividends or are sold, USD gets converted back to INR.
When international markets boom, Indian investors chase past returns (prompting immediate USD outflows), while the benefits (USD inflows) are delayed, uncertain, and entirely dependent on future redemptions.
However, the demand for equity is only a fraction of that for gold, and demand for international equity is much smaller; the strain on INR outflows due to international equity (excluding MF inflows, as they are almost saturated) should be quite small, if not insignificant.
Is it unpatriotic to buy gold now? Unpatriotic is a strong word, and I would refrain from using it. I believe it is the duty of every citizen to be aware of the current economic conditions and help the country in any small way. So I would prefer not to buy gold.
If you wish to buy gold, then it is up to you to justify the purchase to yourself. I have no right to comment on it.
Is it unpatriotic to invest in international stocks now? As noted above, its impact ought to be much lower, and it is a far more productive asset than a gold purchase. The ethical obligation here is far milder, and I prefer not to conflate the two. If the demand does increase, expect some ‘changes’ on Feb 1st 2027!
What matters more is whether you know how to manage a portfolio with another asset class, or are you driven by FOMO from too much social media? Are you ready to rebalance and periodically de-risk the portfolio, or are you simply going to let it move up and down with natural market forces and rely on luck?
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