Why Shankar Sharma Calls His First Gold Investment a Disaster — A Warning Against Recency Bias in 2025’s Gold Rush
Introduction: The Golden Trap Many Investors Are Falling Into
Shankar Sharma: As gold prices soar to historic highs in 2025, many retail investors are rushing to invest, lured by the dazzling returns of recent months. However, veteran stock market investor Shankar Sharma offers a sobering perspective: “Don’t fall for recency bias.” In a candid post on social media platform X (formerly Twitter), Sharma shared a personal story of how his first-ever investment — in gold — turned out to be a long-term failure, despite promising short-term gains.
His warning comes at a crucial time, as gold continues to dominate headlines with its meteoric rise. But Sharma’s experience is a powerful reminder of why investors should base their decisions on long-term fundamentals, not short-term trends.
Shankar Sharma’s First Investment Mistake: A Lesson from the 1980s
Sharma was just a teenager when he made his first investment. After the death of his father, he approached the State Bank of India (SBI) branch manager in Dhanbad for financial advice. The manager suggested converting his fixed deposits (FDs) into gold, which was then seen as a superior investment for long-term returns.
Trusting the advice, Sharma made the switch. But over the next two decades, his gold investment barely delivered half the returns he would have earned from sticking with FDs.
“It turned out to be an utter disaster,” Sharma wrote in his post.
Here’s why: In 1981, gold was priced at approximately ₹1,670. By 2001, it rose to around ₹4,300 — translating into a Compounded Annual Growth Rate (CAGR) of just 4.8%. In contrast, fixed deposits during that period offered more stable and often higher returns.
Gold’s Recent Performance: A Meteoric Rise with Hidden Risks
Fast forward to 2025, and gold is enjoying a spectacular rally. In the last 12 months alone, gold prices in India have surged by nearly 40%, jumping from ₹72,000 to ₹1,00,000 per 10 grams. Internationally, too, gold has broken through key resistance levels due to:
- Geopolitical tensions
- Weakening US dollar
- Stock market volatility
- Rising inflation and interest rate concerns
- New US tariffs adding global uncertainty
A report by the World Gold Council revealed that demand for gold in Q1 2025 was the highest for the first quarter since 2016.
But Sharma warns investors not to be blinded by these recent returns. He says what happened to him in the 1980s can very well happen again — if investors ignore the lessons of history.
What Is Recency Bias and Why Is It Dangerous?
Recency bias is a psychological tendency where people give more weight to recent events than to long-term data. In investing, this can lead to poor decisions like over-investing in an asset that has recently performed well — only to see it underperform over the longer term.
In the case of gold, while recent returns have been phenomenal, history shows that its long-term performance has been inconsistent and often underwhelming when compared to diversified portfolios or even traditional bank FDs.
The Smarter Strategy: Diversification and Long-Term Thinking
Instead of being swayed by short-term returns, Sharma recommends a more balanced approach: asset diversification and long-term planning. This means spreading investments across equities, debt instruments, real estate, and gold — rather than going all-in on one asset class based on recent performance.
“Every investor, no matter how experienced or new, should remember that investing isn’t about chasing the last trend. It’s about anticipating the next one — wisely,” Sharma advised.
📊 Gold vs Fixed Deposit Returns: 1981–2001
| Investment Type | 1981 Value | 2001 Value | CAGR (%) | Risk Level |
|---|---|---|---|---|
| Gold | ₹1,670 | ₹4,300 | 4.8% | Medium to High |
| Fixed Deposit | ₹1,670 | ₹9,000+ (approx.) | ~8.5% | Low |
🤔 Q&A: Making Sense of Sharma’s Warning
Q1: Why did Shankar Sharma say his first investment was a disaster?
A: Because he invested in gold based on short-term advice and ended up with much lower returns over 20 years compared to fixed deposits.
Q2: What is recency bias in investing?
A: Recency bias is the tendency to make financial decisions based on recent performance, ignoring historical trends and long-term data.
Q3: How has gold performed recently?
A: In 2025, gold has delivered nearly 40% returns in one year, reaching ₹1,00,000 per 10 grams in India.
Q4: Does this mean gold is a bad investment?
A: Not necessarily. Gold can be a good hedge during uncertain times, but relying on it alone without diversification can be risky.
Q5: What should investors do instead?
A: Follow a diversified investment strategy with a long-term view. Avoid chasing recent trends blindly.
Conclusion: The Gold Rush Needs a Reality Check
Shankar Sharma’s candid confession about his early mistake is a lesson every investor should heed. While gold might look like a golden opportunity now, past patterns show that what glitters in the short term might not always shine in the long run. By staying grounded, avoiding psychological traps like recency bias, and building a diversified portfolio, investors can protect themselves from potential financial regrets down the road.
For more market insights, follow our news.
Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resource like MoneyControl, ET, NSE India.