Indians love gold. This love affair has little to do with luxury but gold has cultural significance in India. One can boldly proclaim, that gold is pretty significant in Indian society. Everyone buys gold, even the poor buy gold.

This is the main reason that analysts and people in the gold market look to India when they make predictions about the price of gold. The country is the second largest consumer of gold in the world. The Indian gold market has a significant impact on the world global market. In 2016, the demand for gold was not as big as it has been this year. We are in the second quarter if the year and Indians have already bought more gold than they did throughout the entire 2016.

Gold symbolized prosperity and wealth. People buy gold in India for the same reason that it is used in Chinese Feng Shui- to bring good fortune. It is used in auspicious celebrations like weddings, Dhanteras. Diwali and Akshaya Tritiya. The attitude that the Indian people have towards god can teach us a thing or two about the wisdom of owning gold.

Indian people have a lot of faith in gold. It plays a large role in the religion and customs of Indian people. Most gold is bought in the form of jewellery and ornaments but there are other economic reasons that drive people to own gold. It is regarded as an excellent way to preserve the value of one’s wealth. Indians know that, as long as you own gold you are in a better economic position than someone who hoards paper currency. And besides, you can easily pawn or sell your jewellery when you are in need of an urgent cash injection.

Gold can withstand any political turmoil and economic meltdown. It became even more apparent earlier this year when the Indian government launched a demonetization scheme. The reason behind the move was to push people who have cash in the bank to bring it out. This policy resulted in severe shortages of case in certain parts of the country. Instead of bringing hoarded or “black money” out in the open, the government drove people into buying gold with their “black money”. It proved that when things are bleak and the economy is under threat of collapse, gold would always be there.

Indians love gold and value it so much that they are wing to risk their freedom for it. Smuggling of gold is a serious problem in India. Tons of gold are smuggled into India every year. Official data suggests that more than 100 tons of gold is brought into the country illegally.

Most people wait for the price of gold to go down before they decide to buy, in India, the price is not a significant factor. People will buy gold even when the price is high. Weather has a bigger significance on the Indian gold market than the spot price of gold. People expect the demand to surge when there have been good rains. Rain means a good harvest and when the harvest is good, rural purchases also increase. India suffered from drought for three years until 2015. There was rain in 2016 but then demonetization happened. Now that this is over, this year’s good weather forecast is likely to increase the amount of gold that will be bought in India. The bottom line is that when Indians have more money they know that the best way to spend it is to buy gold.

Sources:

1. https://schiffgold.com/key-gold-news/indian-gold-imports-top-2016-total-gold-continues-flow-west-east/
2. https://www.paisabazaar.com/gold-rate/