Rising Gold Demand in India
Gold has played a crucial role in the history of India both as an investment and store of value, and this interest in gold has continued to today. Its beauty and rarity have made it a top investment choice among Indians.
Historically, gold has played a crucial role in India both as a form of money and store of value. The unique properties of gold have allowed it to serve many uses culturally. In modern times, cultural trends and currency instability have made India among the top consuming nations of the yellow metal.
The properties that have made gold so valuable globally and among Indians in particular are its rarity, durability, malleability, beauty, and divisibility. The ability for jewelers to shape gold into jewellery for Indians to wear, especially during weddings and festivals, has been an important driver for gold sales within India. According to the World Gold Council, India surpassed China last year in retail and investment gold demand, with demand at 842.7 tons compared to China’s 813.6 tons. During Akshaya Tritiya, a festival which starts April 21 of this year, the sales of gold coins and jewellery featuring Jain and Hindu gods and goddesses are likely to spur gold consumption nationally. A growing Indian middle class with an appetite for gold and more disposable income has also been a big factor in Indian gold buying.
Because of rising trade deficits due in part to Indian gold demand, the Finance Ministry of India raised the tax on imported gold to 10 percent to discourage gold buying. This tax has hurt Indian jewellers by forcing them to pass on the extra cost to consumers, including foreign consumers. However, the decline in the value of gold since 2011 has largely offset the impact of the tax. Additionally, the decline in the value of the rupee, which has lost about 50 percent of its value against the American dollar since the same year, has spurred Indians to purchase gold as a hedge to the depreciation of the currency.
The growing global currency wars are also taking a toll on the value of currencies, including the rupee. Nations are currently depreciating their currencies in the hopes of boosting their exports. Such currency wars have had the effect of encouraging speculation in emerging markets, as investors seek returns in an environment of low interest rates, though the recent tightening in monetary policy by the Federal Reserve of the United States has created instability in emerging markets, causing money to be pulled away from these markets, adversely affecting the rupee and other emerging market currencies. Investors can thus protect their wealth in an environment of currency wars by purchasing gold.
Bullion India customers can purchase gold and take possession of it or have it stored by a trustworthy agent in a secured storage facility. Customers can purchase gold at wholesale prices and can take physical delivery in one-tenth, one, five, 10 or 20 gram denominations, and can request physical delivery of their gold at any time. Bullion India offers a 24-hour, seven-day a week trading platform so that customers can check their accounts at any time. Customers can create an account with Bullion India at any time for free.