Pakistan’s Investment Shock: Is Crypto the Real Threat to Gold and Stocks?

Pakistan’s financial markets are on fire, but there’s one question on every investor’s mind: Where should you put your money? Stocks have skyrocketed, gold is setting records, and crypto—well, that’s the wildcard shaking up everything.

The numbers are staggering. The KSE-100 Index surged 84% in 2024 and is still climbing, while gold jumped by 19.2% after a massive rally. Meanwhile, crypto adoption is quietly growing, with 20 million users reportedly engaging in digital assets. So, what’s the smartest bet? Let’s break it down.

The Stock Market: The Silent Wealth Builder

Pakistan’s stock market is booming. Experts argue that stocks, especially blue-chip companies and index funds, offer long-term stability and solid returns. Over the years, the PSX has delivered an annualized average return of 20%, making it a reliable choice.

Investment banker Mustafa Fahim advises keeping 60-70% of a portfolio in stocks. Why? Because Pakistan’s market still has room to grow, and with the IMF review boosting investor confidence, some analysts predict another 35-40% return in the next year. That’s a major upside that gold just can’t match.

Gold: Safe Haven or Missed Opportunity?

Gold is traditionally the go-to asset in uncertain times. It’s stable, easy to liquidate, and has recently surged past Rs325,000 per tola. But is it the best place to park your money?

Analysts like Shankar Talreja argue that gold’s rally may be slowing down, with future gains likely to be lower than last year. Historically, gold’s long-term returns pale in comparison to stocks. While it remains a great stabilizer in any portfolio, relying too heavily on it could mean missing out on bigger opportunities.

Crypto: High-Risk, High-Reward

Here’s where things get interesting. Despite being unregulated in Pakistan, crypto has captured massive attention. Reports claim 20 million Pakistanis are using crypto, but here’s the catch—many aren’t investors. They use it for transactions, avoiding banking restrictions.

Experts remain divided. Talreja warns of crypto’s extreme volatility, while Fahim suggests that younger investors can afford to take the risk, allocating around 10% of their portfolio to digital assets. Bitcoin, being the most established cryptocurrency, is seen as the safest bet.

The Real Issue: Lack of Financial Literacy

So why aren’t more people investing in stocks? One word: education. There’s a deeply ingrained belief in Pakistan that gold and real estate are the best investments. Meanwhile, financial literacy remains low, and tax concerns discourage many from entering the stock market.

And what about those 20 million crypto users? Fahim believes this figure is misleading. Many people buy and sell crypto for practical reasons, not as an investment strategy. If Pakistan legalizes crypto, it could see even more adoption—but also taxation, which might change investor sentiment entirely.

The Verdict: What Should You Do?

If you’re looking for stability, gold is a safe bet. If you want steady growth, stocks are the clear winner. And if you’re willing to take a high-risk, high-reward gamble, crypto could be worth a small allocation.

The ultimate choice? It depends on your risk appetite. But one thing is clear: Pakistan’s investment landscape is changing fast—and those who adapt will reap the rewards.