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Gold Still The Best Investment Avenue For Most Indian Households, Finds Study

| Updated: July 1, 2024 11:15

Gold can never lose its glitter for Indians. No matter how poor or rich a person is, a piece of gold jewellery will always be a staple asset in his locker. It is a financially prudent move to invest in gold.

A study has found that an average Indian household has 18% of their total investment in gold.

Conducted by India Gold Policy Centre (IGPC) at IIM Ahmedabad (IIM-A) with PRICE, a research centre, the survey covered more than 43,000 households from across the geographies, income groups and education levels in India

The study says for the top 20% households with high income, the share of gold in their investment portfolio was 21%, whereas for the bottom 20%, it was 16%. The top 20% income groups were found to having about 39% of the total purchase, whereas the bottom 20% income household had 6%.

Across income groups, however, gold products constitute about the same percentage of the overall savings of the household. On average, about 18% of the savings of each income quintile were in gold products. Even affluent households that presumably have access to financial products, which are not linked with gold, seem to prefer gold-based products, said the study.

The results indicated that gold jewellery was the most preferred form of purchase which accounted for more than half (52%) of the total gold investment.

It was followed by gold coins and bars (18%) and then digital gold (13%). Some of the major reasons for purchase of both gold jewellery and bars/coins include high status, financial security, traditional wear and true value for money.

IGPC governing committee includes IIM-A director Prof Bharat Bhaskar, IGPC chairperson Prof Sundaravalli Narayanaswami, IIM-A faculty representative Prof Joshy Jacob, World Gold Council India MD PR Somasundaram, and industry representative Prof Rama Bijapurkar.
The study also indicated that the average physical gold investment increases with level of education – while those who had no formal education had about 10% of gold holdings, those who were graduates and postgraduates had 16% and 21% physical gold, indicated the survey.

The most striking impact of education was seen in ‘paper gold’ or investment in non-physical gold products. While those with primary and secondary-level education had about 0.9% and 2.4% of total investment in the form of paper gold, the ratio rose to 5.5% for those with postgraduate degrees.

‘Typically, households appear to be relying on their perception of the jeweller for assessment of the purity of physical gold purchased rather than other information (such as hallmarks) … Among those who did not refer to the hallmark symbol, we observe several were altogether unaware of its utility or did not completely understand it. Further, we observed that there was no obvious correlation between the level of education and awareness and knowledge about hallmarking,’ mentioned the study, as only 27% surveyed said that they knew the Hallmark symbol and 7% relied on government certification. On the other hand, 46% relied on jewellers for purity assessment.

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