Understanding India's Role in the Gold Bull Market

For investors observing the gold rate in India as well as gold's investment demand, it should come as no surprise that gold is the most sought after investment in India. This is due to several factors. This article will explain some of them.

From people young and old in India, gold has attracted investor's with it's inherent qualities of attractive color, durability and most importantly it's status symbol throughout India. Unlike in the U.S. in India gold is an accepted asset class and very rarely are people who own gold looked at as strange or contrarian. It's understandable though, given India's long history with gold that dates back as far as any culture.  Gold is simply a way of life in India.

Another interesting fact is that in India, more than 80% of the population owns gold, whereas in the United States and other countries that number is much lower. As I mentioned earlier, gold ownership is just a given in most Indian families. In America, people will think you're a bit off the wall if you mention that you own gold. To further explain, most Indian families purchase gold for special occaisions and family events like weddings. In India giving someone gold for their graduation or presenting a newlywed couple gold is like a rite of passage or a symbol of such. Also, gold is seen as money and given as a back up or insurance for tough times. In general gold symbolizes wealth in India. It is considered much more acceptable to own gold than a local currency or stocks and bonds.

Beacuse of their history, Indians view gold as an ever increasing investment that is both a safety net and a way to build wealth. This isn't to say that Indians will buy gold at any price. On the contrary, Indians are somewhat savy investors and very familiar with the gold buying season. Another interesting fact is that gold symbolozies the Hindu goddess of wealth and prosperity. Generations of Indian families typically pass down their gold from one generation to the next.  This helps explain the strong family bond that is noticable in most Indian families.

With gold prices reaching historical levels, the overall wealth in India is increasing as well. In some cases the rise in gold prices have helped many Indian families weather the financial crisis over the last few years. Most people aren't aware of India's long history with gold. However, when observing the gold market, India makes up a large portion of the investment demand and should be paid attention to.