Gold By Country:
2013 Demand: 974.8 tonnes
Jewelry/Coin & Bar: 612.7 tonnes/361.8 tonnes
Reserves: 557.7 tonnes
% of Total Forex Reserves: 8.18%
2013 GDP: $4.96 trillion
Gold has long drawn the adoration of the Indian people. It is not only seen as carrying good fortune and happiness to newlyweds, but also has strong ties to religious ceremony. The tradition of giving gold as a gift to one's children when they get married is strictly adhered to, among a number of other important events which warrant the gifting of gold. Further, as the national currency, the rupee, continues to fall, Indian families are finding increased comfort in holding their wealth in gold for the long run.
Current account deficits have led the Indian government to curb gold imports by implementing enormous taxes, tariffs, and duties on incoming gold. In addition, the new regulations require that gold buyers must re-export 20% of the gold they bring into the country, making at least a modest dent in the trade deficit. While these new policies have drawn a great deal of animosity from the people, the state has no choice but to attempt to stop the rupee's precipitous decline.
It is estimated that only 6% of rural Indians have access to banking services, rendering gold an alternative form of saving for many families. Many government-owned banks in the country are even offering loans against gold, which are accompanied by interest rates comparable to credit cards.
A traditional unit of measure for gold weight in India is the tola, which equals 11.664 grams. This is why tola bars are a popular choice when Indians buy another form of gold other than jewelry. In fact, gold jewelry exports dropped by nearly 40% in 2013, signaling the preference of Indian citizens to hold gold rather than sell it, especially with lower prices.
Due to historical prohibitions on owning gold bullion (but not gold ornaments), many Indians used to fashion their gold into “coiled bars,” which resembled jewelry and could be worn as necklaces. Nonetheless, jewelry is far and away the most common form of gold in the country. At traditional Indian weddings, the amount of gold jewelry that adorns the bride—provided by relatives from both families—is considered a visible sign of the family's pride and well-being. In addition to offering security for their posterity, gold also serves Indians in certain spiritual purposes. The Diwali Festival in the Fall, during which Hindus, Jains, and Seikhs celebrate peace and happiness, is also typically a large gold-buying event in India. Take a moment to consider that the amount of gold coins and gold jewelry left as offerings at Hindu temples in India is approximately equivalent to half of the gold held at Fort Knox. Even more staggering, Indian housewives are estimated to collectively hold four times the amount of gold at Fort Knox, roughly 15,000 tons!
Did You Know?
With more than 10 million weddings annually, the customary headdress of the Indian bride has come to define the culture of Indian weddings. These, often elaborate, headdresses come in a variety of styles, each with their own name, that usually reflect the cultural values of the particular region of India from which they are worn. Specifically, the southern region of India is especially well known for some of the more elaborate iterations of these intricate adornments, which are often combined to create a very elaborate look. The Maang Tikka is one of the more common headdresses that is worn along the parting of the hair. The Surya and Chandran are two brooches that are worn on either side of the part, often in combination with the Maang Tikka, that symbolize the Hindu deities of the Sun (for health and brilliance) and Moon (for romance and peace). Outside of jewelry, gold is not particularly popular in coin form in India. This is ironic given that India minted some of the world's earliest gold coins nearly 2 millennia ago. The fact is that, with their love for gold, many Indians likely melted down these historic gold dinars for jewelry over the years.