India has a love affair with gold, and it goes beyond buying small “pretties” to adorn the body. In India, the dream is to acquire gold – and as much of it – as you can afford. For there, gold isn’t merely a component of jewelry, it’s a wearable display of riches.
Gold has always played a role in Indian society; there is even a Hindu God dedicated to wealth and prosperity (among other things) called Lakshmi. One day each year is dedicated to Lakshmi. Hindus are taught that buying gold on that day will result in prosperity for the buyer. Gold buying one day before or one day after won’t have the same outcome.
Effect on World Gold Market
India’s demand for gold is so high that they represent 32 percent of the total world gold market. That’s a lot of jewelry (and bars and coins)! In fact, India ranks as the key driver of the gold market today (followed by China). Its insatiable demand for gold is nearly unprecedented. This is largely because the majority of their gold is imported, which means it has a profound effect on the world gold market. (India does have gold mining, but it represents less than one percent of the total gold mined worldwide.)
Gold and Weddings
Gold is most obvious in Indian weddings, where a show of gold equals the family’s standing in society. Dowries used to be commonplace in India, without one a woman couldn’t marry. Those were outlawed in 1961, but the expectation of heaps of gold being worn and presented at weddings still applies. The importance of gold for the woman is exemplified when a new baby girl is born. Parents begin the gold collection at that point to ensure their daughter will marry well. In fact, in 2011, fully one-half of all gold purchased was for weddings.
Gold as Wealth
In the U.S., currency is seen as the way to wealth. In India, the path to wealth is literally paved in gold. The more you have, the higher standing you have in society. With India’s economic improvements has come a growth in the upper and middle classes. These now outnumber the lower class. For a typical Indian family, gold is like another family member. Without it, life is incomplete.
Even lower class households scrimp and save to buy what gold they can. This might mean gold plated pieces, but for them, it’s still gold. Families that can’t save enough money to buy expensive pieces (Indian households save up to 30 percent of their household income, compared to U.S. households, which are lucky to save 5 percent), can arrange financing to meet their gold buying requirements.
Gold is a way of life in India. A recent 60 Minutes piece gives insight into the Indian obsession and how it’s shaping the world economy. You can view the video here. (It’s just over 12 minutes long and worth watching.)
