“Sone ki Chidiya” (Translates to golden bird) is a phrase most of us have heard in our childhood, be it a song or a movie. But what is even more peculiar is sighting a Sone ki Chidiya. Yes, it is possible. Go to any reputed jewellery store in the country and you will find it there. Of course, it cannot fly but what does soar is the demand for gold in India. So, the question arises, What is the amount of gold In India?
Gold has been a popular form of investment and a store of wealth for people in India for centuries. Gold has been a popular form of investment and a store of wealth for people in India for centuries. Various factors act as a catalyst for the amount of gold in India.
In this blog post, we will explore the extent to which people in India buy gold and how much they typically purchase.
How much Gold does India have?!
The World Gold Council estimates that India is the fourth-largest consumer and recycler of gold in the world, behind only The United States of America.
According to the council, the demand for gold in India was approximately 618 tonnes in 2020.
In India, the state of Karnataka is the highest contributor for the amount of gold in India. Karnataka is also known as the “Land of Gold”. Kolar gold fields in Kolar are the largest gold mine in the country.
To get some perspective, check out how the value of a gold ring is calculated in India here.
How much Gold do Indians own?
- When it comes to the amount of gold people in buy in India, the World Gold Council estimates that the average Indian household holds around 23 grams of gold per capita which approximates 25000 tonnes of gold per household.
- Indian household gold reserves are found to be one of the highest in the world. The total gold reserves in India are more than $ 1 trillion in value. $22Bn worth of gold was discovered in the Padmanabhaswamy temple in Kerala. And this is just one temple out of many. This is significantly higher than the global average of around 2 grams per capita.
- The World Gold Council estimates that India is the fourth-largest consumer of gold in the world, with an estimated demand of 618 tonnes in 2020. But here is the twist, this amount is the gold reserves available with the government and does not account for any gold which belongs to a common household in the country.
- Additionally, the average Indian household holds around 23 grams of gold per capita, which is significantly higher than the global average.
- It’s important to note that gold demand in India is not limited to the wealthy; it’s a popular investment option for people of all income levels.
The Reasons for High Demand for Gold in India
Various reasons make up for the ever-rising demand for the amount of gold in India.
Cultural significance
- One of the main drivers of gold demand in India is cultural significance. For many people in India, gold is more than just an investment; it’s also a symbol of wealth and status.
- Gold is traditionally given as a gift for special occasions such as weddings and festivals and passed down through generations, as a form of inheritance.
- This cultural significance can make gold a more appealing investment option, as it may hold more sentimental value than other investments.
Hedge against inflation
- Another factor that drives demand for the amount of gold in India is the desire to hedge against inflation.
- Gold has the ability to hold its value during times of economic uncertainty and volatility, making it a popular choice for those looking to protect their wealth.
Store of value
- Gold has been used as a store of value for centuries due to its unique properties.
- It is a rare and precious metal that is universally recognized and valued. Its value has remained relatively stable over time, making it a reliable store of wealth.
- Gold is also durable, meaning it does not corrode or deteriorate, and is easy to transport and store. It is not subject to inflation, making it a valuable hedge against economic uncertainty.
Lack of Alternative Investment options
- The lack of alternative investment options is also a significant factor driving the demand forgold in India.
- For many people, particularly those in rural areas, gold is the only viable investment option.
- Additionally, traditional savings options such as fixed deposits and bonds may not provide sufficient returns to keep up with inflation.
How does India Meet its Demand for Gold?
- India meets its demand for gold through imports, as the country does not have a significant mining industry.
- However, the Indian government has implemented various measures to encourage the use of domestically mined gold and reduce dependence on imports.
- These measures include increasing import duties on gold and promoting the use of gold monetization schemes.
Takeaways!
In conclusion, gold is a popular form of investment and store of wealth for people in India.
The demand for gold in India is operated by a variety of factors which include its cultural significance, its protection from inflation, and the lack of other investment options.
As the gold market is constantly changing it is always wise to keep an eye on the market and consult with a financial advisor before making any investment decisions.