- Gold miners' cash flow yields have sharply improved, attracting global fund managers' interest
- Indian retail investors, especially women, are driving strong inflows into gold ETFs
- Gold loans are India's fastest-growing retail credit segment, with JPMorgan optimistic
Gold's moment is playing out on three fronts at once, and none of them look like they are slowing down. Globally, brokerage Jefferies is backing gold miners as one of its highest-conviction trades, pointing to a sharp turnaround in the sector's cash generation. In India, retail investors, particularly women, are driving strong inflows into gold exchange-traded funds, as our earlier story on the AMFI-Crisil Factbook 2026 showed. And now, a third strand is emerging: Indian households and small businesses are increasingly borrowing against their gold rather than simply holding it, a shift JPMorgan says marks the start of a structural boom in gold-backed lending.
Global Fund Managers Are Buying In
The Philadelphia Stock Exchange Gold and Silver Index's free cash flow yield, a measure of how much cash a company generates relative to its market value, has swung from a negative 2.01% in June 2023 to a positive 5.07% in July 2026, and now stands at 3.74%, Jefferies said in its GREED & fear note dated August 20, 2026. Over the same period, the S&P 500's free cash flow yield slid from 4.75% in September 2022 to 2.67%, flipping a spread that was deeply negative at 584 basis points in October 2023 into positive territory, now at 108 basis points.
With gold miners "looking increasingly like they have broken out again," Jefferies said it would raise its already-large gold miner exposure across its model portfolios, having already added gold miner Zijin Gold International to its China and Asia ex-Japan portfolios in place of e-commerce major JD.com.
The bullish call comes against a backdrop of fiscal stress in major economies, including a widening US deficit, a national debt pile that has just crossed $40 trillion, and rising bond yields in both the US and Japan, all of which Jefferies says leave the US Federal Reserve and the Bank of Japan with little room to tighten policy, a dynamic that traditionally favours gold.
Indian Retail Is Already There
That global shift mirrors a trend already underway in Indian markets. Our recent story showed Indian retail investors, women in particular, driving a sharp rise in gold ETF inflows over the past year. Global fund managers now appear to be arriving at the same conclusion from a different starting point: fiscal risk rather than jewellery culture or portfolio diversification.
Now, Indians Are Borrowing Against It Too
A third gold trend is unfolding within India's credit markets. Gold loans are becoming the country's fastest-growing retail credit category, and JPMorgan believes the shift is only getting started.
Gold investment is booming on Wall Street.
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In a note initiating coverage on the sector, the brokerage said gold loans' share of system credit could rise to around 10% over the next five years, up from just 2% in FY24 and 5% now, as gold evolves from a family heirloom into a monetisable asset. Citing this structural tailwind, JPMorgan initiated coverage on non-banking financial companies (NBFCs) IIFL Finance, Manappuram Finance and Muthoot Finance, all of which specialise in gold-backed lending, with an "overweight" rating.
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Gold loans, the brokerage said in its report titled "India Gold Lenders: The Credit Gold Rush," are "secured retail credit with robust growth," and the "next phase of growth should be structural rather than cyclical." Borrowers, it added, benefit from a "300-600bps rate arbitrage" against unsecured credit, a gap of three to six percentage points in interest rates, while lenders "grow a low-risk secured book."
Despite the sharp rise in gold loan disbursements in recent years, JPMorgan believes penetration remains shallow. The brokerage estimates only around 11% of gold held by bottom-60% households, ranked by income, is currently pledged as collateral, and just 3% of that by NBFCs specifically. It also pushed back on the assumption that southern India, home to nearly 40% of the country's household gold, is a saturated market, noting that gold loan penetration in the South "is on par with other regions," leaving "ample room to grow in a market holding ~40% of India's HH gold."
Gold Loans Replacing Personal Loans
JPMorgan's optimism rests on a simple substitution story: households and small businesses are increasingly choosing gold loans over personal and business loans. Gold loans' share of retail credit disbursements jumped to 41% in FY26 from 18% in FY23, largely at the expense of unsecured personal and small business loans, whose share fell to 41% from 55% over the same period.
The brokerage said the shift is being driven by the lower cost of gold loans compared with personal loans, along with rising financial literacy among borrowers increasingly willing to monetise idle household jewellery to meet short-term needs such as education, medical emergencies and travel, as well as small businesses using gold loans for working capital. The substitution, JPMorgan noted, is "particularly pronounced" among sub-prime borrowers, those with weaker credit scores, who are drawn by the wide gap between unsecured and gold-loan pricing.
Gold loans also carry the lowest bad-loan ratio among retail credit categories, at around 0.2%, against 0.5-0.6% for mortgages and auto loans, and above 1% for unsecured products, JPMorgan said. That asset quality has held up even through sharp swings in gold prices, the brokerage said, since collateral coverage and conservative loan-to-value ratios (LTVs, the loan amount as a percentage of the pledged gold's value) of 55-65% offer a wide margin of safety. Regulatory changes on gold-backed lending, effective from April 2026, have raised headline LTV caps in a tiered manner while tightening collateral valuation norms, a shift JPMorgan expects to be broadly neutral for established gold-NBFCs, given they already operate at conservative levels.
Taken together, the three trends point to the same underlying story from different directions: as fiscal risk builds globally and gold prices stay elevated, gold is being treated less as a static store of value and more as an active financial asset, whether that means fund managers buying miners, Indian households buying ETFs, or borrowers unlocking cash against jewellery they already own.
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