Gold as Wearable Wealth: More Than a Fad in India

American women are fond of saying "Diamonds are a girl's best friend." Not as well-known are the origins of that saying, which can be traced to a 1947 De Beers mining company advertising campaign.

In the Indian culture, "No gold, no wedding" is a popular saying. That underscores the significance of gold in the fabric of Indian society. Rare is a marriage that takes place without some sort of gold being presented to the bride. Gold coins are common gifts. Even in the poorest family a simple gold nose ring is presented.

In India, families build and save their wealth in the form of physical gold. This is often in the form of extravagant jewelry pieces worn by the women of the family. The finest Indian wedding dresses include thread made of actual gold. These gowns are wrapped away in protective coverings and stored in family homes as a protection against hardship or a "rainy day."

Indian households control an estimated $600-$800 billion of gold, at 2014 estimates and prices, or four times the amount of gold held in Fort Knox. Given the significant price increase in gold in recent years that number is even higher now.

Owning physical gold in India is a type of "insurance policy." Women stockpile gold. It begins as gifts from their mothers and extends to gifts from in-laws, her husband.

Facts about India:

  1. The economy is healthy in India. The IMF forecasts the Indian economy to expand at a 7.2% pace in FY 2017-2018.
  1. It is the world's largest democracy.
  1. It is the second largest country in the world by population, home to over 1.2 billion people.
  1. India is the world's second largest gold market. Indians typically buy and hold gold – for generations. Gold is passed down from generation to generation.

What this means to American investors:

The Indian economy continues to develop. As more individuals and families become educated and get well-paying jobs, they will continue to funnel a portion of their assets into saving in gold.

Indian gold demand is a long-standing driver of upward pricing in the metals market. And, it is not going away. Instead, it is expected to continue to grow as Indian citizens are lifted out of poverty and into the middle class. This will mean even more gold demand in the future.

American investors turn to gold for many reasons. A portfolio diversifier, an inflation hedge, a protection against paper money devaluation. Indian investors turn to gold as a cultural wealth building tool. It is deeply ingrained in their culture and gold demand will grow as more Indians have the ability to purchase the metal. More demand means higher prices.

Gold that you are buying now will help preserve and grow your wealth too.

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