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GOLD INVESTMENT RECENT TRENDS IN INDIA
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GOLD INVESTMENT RECENT TRENDS IN INDIA
RAMANAA M K
LOYOLA COLLEGE CHENNAI
[email protected]
ABSTRACT
This study aims to comprehend gold as both a conventional and contemporary investment in
India, where it stands uniquely in both financial and cultural contexts of life. In Indian society,
gold is not a mere metal; it represents security, wealth, and status, often bought during weddings,
religious occasions, and as a savings instrument for the future. The research examines the many
avenues available to invest in gold, be it physical like jewellery, gold bullion bars, or gold coins,
or more recent financial intermediaries like gold deposit schemes, gold Exchange-Traded Funds
(ETFs), gold mutual funds, E-Gold, or trading in futures and options. All of these investment
options possess distinguishing characteristics that appeal to different classes of investors
depending on their risk appetite, investment objectives, and liquidity requirement. Jewellery is
the most widespread and culturally appropriate mode of gold investment, but it also usually
entails making charges and is not pure investment. Gold coins and gold bullion bars are regarded
as more suitable for investment since they are accompanied by higher purity and easier resale.
Gold certificates and gold deposit schemes provide the advantage of earning interest without
having to hold the metal physically. Gold ETFs and mutual funds are a paperless and convenient
means of investing in gold while monitoring its market value. E-Gold and futures and options
trading provide market and digital exposure to the prices of gold, which are for experienced
investors. This research also examines the gold price trend and the influence that several factors
such as inflation, international crude oil prices, foreign exchange movements, stock market
behavior, and the global economy exert on the same. In comparison to other investment
instruments such as fixed deposits, provident funds, real estate, and mutual funds, gold tends to
do better in times of economic recession, serving as a hedge against inflation and currency
devaluation. The objective of this study is to present a clear picture of the role of gold in the
investment portfolio of Indian investors by examining previous studies and existing trends. It
assists in analyzing the advantages and disadvantages of various gold investment schemes, how
individuals' choices are evolving with digital literacy, and what place gold still holds as a safe
and lucrative investment. This comprehensive analysis will assist prospective investors, financial
experts, and policy makers in making well-informed choices about gold investments in the
Indian economy.
KEYWORDS
Gold investment, Traditional investments, Indian economy, Consumer behaviour, Investment
trends, Asset diversification, Inflation hedge, Safe haven asset, Jewellery, Gold coins, Gold
bullion bars, Gold deposit schemes, Exchange Traded Funds (ETFs), Gold mutual funds, E-Gold,
Futures and options, Digital gold, Investment safety, Financial planning, Portfolio management.
INTRODUCTION
Gold has always been close to the hearts and homes of Indians. It is not just a valuable metal but
also a representation of wealth, prosperity, and security. Indian families have been purchasing
gold in different forms like jewellery, coins, and bars for centuries for cultural, religious, and
investment reasons. In most Indian families, gold purchase is a tradition that has been handed
down from generation to generation. Besides its use in weddings and festivals, gold has also
been regarded as a secure investment when the economy is uncertain.
Gold investment in India has experienced a number of changes over the past few years. With the
development of technology and financial services, individuals are no longer restricted to
purchasing physical gold. New types of gold investment have also gained popularity, including
Gold Exchange Traded Funds (ETFs), Sovereign Gold Bonds (SGBs), Gold Mutual Funds, and
Digital Gold. They provide investors with a simple, secure, and paperless means of investing in
gold. They also minimize the risks and expenses associated with storing physical gold. Thus,
there is an increased number of individuals, particularly the younger population, interested in
contemporary forms of gold investment.
The cost of gold relies on numerous elements such as inflation, in’erest rate, global trend, value
of currency, and economic policies. When there is financial crisis or the economy slows down,
gold prices tend to rise. It is because people regard gold as a “safe haven” whereby they can
guard their money. India witnessed fluctuations in gold prices over the last few years because of
a series of events such as the COVID-19 pandemic, inflation in the world, and fluctuations in
global trade. These events had a bearing on Indian investors’ buying patterns.
Moreover, government schemes and policies have also significantly influenced the way people
invest in gold. To illustrate, the introduction of Sovereign Gold Bonds by the Reserve Bank of
India has made investors opt for secure and interest-generating alternatives to physical gold. The
government has also facilitated transparency and dissuaded illicit gold trading by stimulating
digital payments and registered sale of gold.
This article seeks to research the current trends in gold investment in India, identify the reasons
for the shift in investors’ preferences, and examine the effects of different forms of gold
investment. It also seeks to address how investors are moving away from physical gold to
financial and digital gold products. It is crucial for any individual who seeks to make a well-
informed decision regarding gold investment in the current rapidly evolving financial
environment.
REVIEW OF LITERATURE
Application of Gold and Investment Decision Making with Reference to Gold
Rate in India – Vanitha S., Saravanakumar K. (2019)
This research describes how Indian individuals invest in gold primarily due to cultural purposes
such as marriage and also as a secure financial alternative. The authors compared gold with other
alternatives such as fixed deposits, mutual funds, and stock markets. They discovered that gold is
regarded as a secure investment since it can be easily sold for cash. The research also noted that
the prices of gold are affected by other financial markets and world factors such as oil prices.
Generally, this research assists individuals in comprehending how gold is compared to other
forms of investment and why it remains a favorite option in India.
A Study on Gold as a Safer Investment Option – Ramesh B., Lakshmi Devi K.
(2020)
The study examines why gold is regarded as a safe investment under volatile economic
conditions. It states that in the event of inflation or recession, investors invest in gold because its
value appreciates or remains stable. The study compared with real estate, stocks, and bank
deposits and found that gold fared better during financial crises. The authors also stated the way
gold is used as a "hedge" against inflation. This review demonstrates the way investors believe in
gold more when other possibilities appear risky.
Gold Price Volatility and Investment Pattern – Priya T., Karthik M. (2021)
The paper examines the impact of gold price changes on investment decisions. It discovered that
when gold rates rise and fall quite often, some investors are anxious while others take it as a
chance to make profits. The research also saw that many Indian investors follow the gold rate
often before taking the decision to purchase. It also mentions that the rise in digital platforms
such as online gold trading apps has altered the investing culture. This research provides an
insight into how investor behavior is influenced by gold price movements.
Emerging Trends in Gold Investments in India – Shalini R., Deepak N. (2022)
The authors of this research talk about the emerging ways individuals in India are investing in
gold, e.g., through Gold Exchange-Traded Funds (ETFs), Sovereign Gold Bonds, and online
gold platforms. The study found that young investors are now more interested in paper gold
rather than physical gold due to safety and convenience. It also pointed out the role of
government schemes in promoting safe gold investments. This review is useful to understand the
shift from traditional to modern gold investment forms.
Factors Affecting Gold Investment in Urban India – Meena S., Raj Kumar V.
(2023)
The study investigates why investors in urban areas like gold more and what aspects drive them
towards it. According to the study, income levels, knowledge about investment opportunities in
gold, and peer influence make a significant impact. The study further states that festive periods
and promotional offers trigger additional gold purchase. The authors are of the opinion that more
financial literacy will lead to increasing people opting for wiser choices of gold investment such
as mutual funds of gold and digital gold.
RESEARCH GAPS
Limited awareness and adoption of modern gold investment options like ETFs and Digital Gold.
Lack of research on gold investment behaviour among young adults aged 18–30.
Insufficient studies on gold investment trends in rural and semi-urban areas.
Minimal exploration of the impact of FinTech and mobile apps on gold investments.
Few comparative analyses between gold and other investment avenues like stocks or mutual
funds
SIGNIFICANCE OF STUDY
Understanding Gold Investment Trends in India:
This research assists in recognizing the way in which gold is being utilized as an investment
medium in India. It illustrates how individuals are diverting from customary practices such as
purchasing gold jewelry to new modalities such as gold exchange-traded funds (ETFs), digital
gold, and gold mutual funds. From analyzing these tendencies, we learn what drives people and
how the patterns of investments are evolving with time.
Giving Advice to Potential Gold Investors:
The research is a valuable guide for anyone who wishes to invest in gold. It illustrates the pros
and cons of different gold investments. Through this research, new investors can make improved
financial choices. They can pick the appropriate type of investment according to their budget,
objectives, and the extent of risk they can tolerate.
Facilitating Financial Institutions to Enhance Their Services:
Banks, financial institutions, and bullion dealers can employ this study to map customer
preferences and behavior. Analyzing the recent trends, they can come up with new products or
enhance current gold investment schemes. This will assist them in attracting more clients and
enhancing customer satisfaction with the investment schemes that suit prevailing market
demands.
Facilitating Policymakers and Government Officials:
The research presents valuable information that can assist policymakers in formulating more
effective financial policies regarding gold investment. Because gold is an important sector of the
Indian economy, the government can utilize the findings to govern the gold market, encourage
digital gold investment, and decrease reliance on imported gold through carefully devised
schemes and campaigns.
Providing Educational Value for Academics and Researchers:
This study is extremely useful for students, instructors, and scholars of finance, economics, and
commerce. It gives up-to-date information and hands-on knowledge regarding gold investment
patterns in India. It can be taken as a reference for carrying out further academic studies, case
studies, or project assignments. It also assists in creating strong fundamentals of knowing how
investment attitudes change with time and technology.
STATEMENT OF PROBLEMS
In India, gold has always been close to the hearts of people, not only as a valuable metal but also
as a symbol of prosperity, wealth, and financial security. For generations, people and families
have viewed gold as a secure and traditional investment. It is usually bought during festivals,
weddings, and other special occasions, usually in the form of jewellery. But in recent times, the
trend of gold investment has started changing. With the development of technology and the
launch of new financial products, new methods of investing in gold like Digital Gold, Gold
Exchange Traded Funds (ETFs), Sovereign Gold Bonds (SGBs), and Gold Mutual Funds have
come into existence. These newer instruments are safer, more flexible, and potentially rewarding
than physical gold but are still not preferred by many investors due to emotional appeal, cultural
attachment, or ignorance.
Even with the rise of these new instruments, a majority of the population is unaware of the
benefits they provide. There is little knowledge among small and medium investors regarding the
operation, risks, advantages, and returns of these newer investment vehicles. This lack of
financial knowledge typically keeps them from making well-informed decisions. In addition,
some external economic factors like inflation levels, currency, crude oil prices, and changes in
the International market have a major role in influencing the price of gold, which makes gold a
dynamic but intricate asset to invest in. Individuals who lack access to quality financial advice
may not time their investments correctly, which results in lower returns or even losses.
Another significant area is the absence of studies on gold investment by individuals from various
parts of India. Variables such as financial literacy, income level, availability of banking and
financial services, and taste vary extensively between urban and rural India. This indicates a need
to investigate in-depth these disparate investment behaviors and tastes. To know these variations
will enable improving financial literacy programs and gold investment products for different
segments of society.
OBJECTIVES
1. To analyze the various means of gold investment in India
This objective intends to examine and describe the many ways in which individuals in India
prefer to invest in gold. In the past, gold used to be invested in predominantly through jewellery,
coins, or bars, mostly reserved for events like weddings or celebrations. But in recent times,
there have been a number of new ways available like gold Exchange Traded Funds (ETFs), gold
mutual funds, digital gold via mobile apps, and government-sponsored ones like Sovereign Gold
Bonds. This research will give us a comprehensive knowledge of all these options so that we can
observe how investment in gold has shifted from physical to financial and digital platforms.
2. To study the patterns and trends of gold investment by Indian investors
This goal is concentrated on getting to know the way the investment in gold is evolving with
time in various regions of India. It will examine if individuals now opt for digital forms instead
of physical gold and the way the variables such as age, income status, education, and place of
residence (urban or rural) influence their decisions. The research will attempt to determine if
more individuals are investing in gold for profit or if they still purchase it largely for
conventional or emotional purposes. By examining such trends, we can determine investors'
present behaviors and speculate what future trends would be like.
3. For comparing conventional gold investments with current gold investment
patterns
This objective aims to assess the advantages and disadvantages of traditional gold investment
modes such as jewellery and coins, compared to recent modes like gold ETFs, mutual funds, and
digital gold. The research will investigate which mode offers superior returns, which is safer,
more convenient, and more popular with the masses. It will also factor in aspects such as storage
charges, purity issues, and market risks. By comparing the two methods, this study will assist
investors in knowing which one is more effective and appropriate for their needs today.
4. To determine the factors that affect people's investment choices
This goal attempts to discover what makes people invest in gold. Individuals might be swayed
due to cultural or emotional motivations, e.g., purchasing gold for wedding occasions, while
others might use gold as a hedge against inflation or financial instability. The research will
consider dimensions such as trust, income, awareness of risks, gold price volatility, and
government measures that can influence an individual's investment decision. Knowledge of the
role played by these influences can assist financial advisors, banks, and the government in
creating sounder policies and investment products related to gold.
5. To analyze the contribution of government schemes and digital platforms
towards encouraging gold investments
The last goal is to learn about how digital apps, online trading websites, and government
schemes like Sovereign Gold Bonds have assisted in transforming gold investment strategies.
With the rise of technology and mobile usage, many people are now using apps to buy gold in
small amounts. At the same time, government-backed bonds have made gold investment safer
and more profitable. This research will explore how much these platforms and schemes are being
used, how aware people are of them, and how they have impacted the overall trend of gold
investment in India.
RESEARCH METHODOLOGY
Research Design
Research design refers to the fundamental plan or framework that determines how the research
will be conducted. For this study, a descriptive research design is applied. This indicates the
researcher is interested in describing and comprehending the existing scenario pertaining to gold
investment in India. Descriptive research can be helpful if you need to know “what is going on”
in some area without attempting to alter or manipulate anything. It merely captures, observes,
and examines what people feel, believe, and do. For this study, descriptive research helps to
collect real information from investors about their habits, preferences, and knowledge regarding
different types of gold investments such as physical gold, gold ETFs, digital gold, and so on.
Data Collection Methods
Data collection is the most crucial process in research. It assists the researcher in gathering data
necessary to respond to the research questions and meet the objectives. Two approaches to data
collection are utilized in this study:
Primary Data: This is data gathered directly from the individuals (respondents) using a
questionnaire. The questions are easy to comprehend, basic, and regarding how they invest in
gold, what kind of gold they invest in, and their awareness regarding digital gold. This provides
new, first-hand information that pertains to the subject.
Secondary Data: These are the data that are already available with others. These are gathered
from credible sources like newspapers, financial publications, government reports, journals,
websites, and research reports. Secondary data provide support to the findings and indicate the
background and overall trends in gold investment in India.
Sampling Method
Sampling is the process of choosing individuals who will be involved in the study. In this
research, the convenient sampling technique is employed. This implies that the researcher selects
individuals who are readily available and willing to answer the questionnaire. It is a form of non-
probability sampling, whereby not all individuals in the population have an equal probability of
being chosen. The technique is beneficial since it conserves time, money, and effort. It enables
the researcher to gather data rapidly, particularly when working with a vast and diverse
population.
Sample Size
Sample size is the number of individuals who are chosen for the research study. In this study, 100
respondents are chosen as the sample size. These respondents comprise individuals from various
age groups, occupations, income levels, and locations (urban and semi-urban areas). The
population sample consists of students, professionals, homemakers, and retirees. The diversity
enables the researcher to determine the ways in which various kinds of individuals invest in gold
and if their investment decisions differ depending on age, earnings, or status.
Tools for Analysis
Once the data has been gathered, the second stage is to simply and clearly examine it. Statistical
tools are here employed to carry out the simple analysis of responses in this research. These
statistics are:The percentage analysis, which determines which percentage of people like what
sort of gold investment.Bar diagram and pie charts to present visually the results such that they
may be easily grasped.Tables to arrange the data in a methodical manner to facilitate comparison
and observation easily.
FINDINGS AND DISCUSSION
Physical Gold Investment Remains a Favorite in India
In India, individuals still like to invest in physical gold such as jewelry, coins, and bars. Most of
the respondents in the study indicated they feel safer when they can hold and see their gold. This
is particularly widespread in families where gold is transferred from generation to generation.
Individuals also purchase gold for significant family occasions such as weddings or celebrations.
Emotional attachment to gold is extremely high in Indian society. Despite the rise in digital
options, the majority of individuals, particularly rural and semi-urban, continue to prefer
conventional forms of gold for savings as well as personal consumption.
Digital Gold Investment is Slowly Gaining Popularity
The research indicates that new forms of gold investment such as digital gold, ETFs, Sovereign
Gold Bonds, and gold mutual funds are becoming increasingly popular with younger and more
tech-friendly investors. Individuals using mobile applications and internet banking are likely to
use these new ones. These formats are simple to purchase and sell using only a smartphone. They
also don’t need to be stored like safes or lockers. But the adoption remains slow in most places
because of lack of awareness, fear of internet fraud, and suspicion that digital gold is not “real”
gold. With greater awareness efforts and security measures, digital gold can become widespread
in the future.
Safety and Liquidity are Major Issues for Investors
The majority of investors reported that safety of their funds and ease of converting the money to
cash (liquidity) matter most when they are investing. Physical gold is usually regarded as a
secure asset as it can be converted into cash in an emergency. It can also be used as collateral for
loans. However, there are also digital gold options, and these provide security since they are
backed by the government or reputable companies. People are not that cautious, though. Based
on the research, if investors know more about how secure and practical digital gold is, in future
years they can redirect their investments from physical to digital forms.
Gold is Regarded as a Secure Investment During Inflation
When good and service prices rise, most people think gold serves to shield the purchasing power
of their money. This is referred to as a hedge against inflation. From the study, most investors
prefer gold since its price rises during times when the economy is shaky. Gold also performed
well when other investments such as stocks or mutual funds didn’t do so. Due to this, individuals
believe in gold to provide them with good returns in the longer term. It is generally used instead
of bank fixed deposits or savings accounts since they don’t appreciate as quickly as gold during
inflation.
Family Traditions Strongly Influence Gold Investment
The research also identified that family habits and societal values have a large part in individuals’
choice of investing in gold. Most of the respondents reported that they began investing in gold
because their grandparents or parents used to invest in gold. It is also usual to present gold on the
occasion of weddings, birthdays, and religious ceremonies. Gold makes people proud, and they
feel it is a status symbol and security. All these practices are still very dominant, particularly in
smaller towns and villages. As a result, people are more likely to invest in gold even if they have
limited income or other options.
Main Reason for Gold Investment:
Reason for Investment Frequency Percentage (%)
Long-term wealth 37 46.25%
preservation
Short-term gains 20 25.00%
Cultural or traditional 12 15.00%
reasons
Hedge against inflation 11 13.75%
Total 80 100%
Interpretation:
The survey indicates that 46.43% of respondents invest in gold for long-term
wealth preservation, making it the most common reason. Short-term gains
motivate 21.43% of investors, while 14.29% invest in gold due to cultural or
traditional reasons. Additionally, 17.86% consider gold as a hedge against
inflation. These findings highlight that most investors see gold as a reliable
long-term asset, while others view it as a means for short-term profit or
cultural significance.
Gold Allocation in Investment Portfolio:
Reason for Investment Frequency Percentage (%)
Long-term wealth 37 46.25%
preservation
Short-term gains 20 25.00%
Cultural or traditional 12 15.00%
reasons
Hedge against inflation 11 13.75%
Total 80 100%
Interpretation:
The survey shows that most respondents (34.52%) invest less than 10% of their total portfolio in
gold, indicating that gold is a small part of their investments. Around 32.14% allocate between
10-20%, showing a moderate interest in gold. About 21.43% invest 20-30%, reflecting a
higher level of trust in gold as an asset. Only 11.91% of respondents invest more than 30%,
suggesting that a small group strongly prefers gold investments.
SUGGESTION
Raise Awareness of Digital Gold Investment
Most investors are still not aware of the convenience and security of digital gold products such as
ETFs, Sovereign Gold Bonds, and e-Gold. The government, banks, and fintech firms should
conduct awareness campaigns, advertisements, and financial literacy programs to make people
aware of how to invest in digital gold safely and conveniently. This will prompt more investors
to move from physical gold to digital ones, which are usually more secure and convenient.
Enhance Access to Gold Investment Portals
Investment portals in digital gold must be simplified to access, particularly for individuals
residing in semi-urban and rural areas. Websites and mobile applications must be easy to
navigate and support regional languages to appeal to a broader range of customers. Banks and
financial advisors can also assist customers in opening digital gold accounts and assist them in
making well-informed decisions.
Market Gold as a Long-Term Investment Vehicle
Gold is purchased in India primarily for weddings, festivals, or contingencies. There should be
greater efforts to position gold as a long-term investment vehicle that can provide steady returns
in the future. Banks and financial advisors can design gold-based investment schemes catering to
various income groups and investment objectives, fostering systematic savings in gold.
Foster Small and Regular Gold Savings Schemes
To encourage low- and middle-income segments to invest in gold, banks and businesses can
provide small monthly investment plans, like gold SIPs (Systematic Investment Plans). These
enable individuals to invest small sums of money at regular intervals, which can add up over
time to a substantial amount of gold. This also lightens the load of making a big one-time
payment and creates a saving habit.
Enhance Trust Through Regulation and Transparency
Individuals tend to be reluctant to invest in paper or electronic gold because of fear of fraud and
concealed charges. The government and regulatory authorities such as SEBI and RBI must
ensure that all gold investment websites adhere to stringent transparency and safety rules.
Investors must be explicitly informed regarding taxes, fees, and the storage of their gold.
Investors feel safe and are more inclined to venture into new and contemporary methods of
investing when they feel secure.
Conclusion
The research on gold investment and its current trends in India has established that gold is still
one of the most favored and trusted forms of investment among Indian individuals. It is not only
regarded as a symbol of tradition and wealth but also as a secure financial instrument that
ensures security during economic uncertainty. With the increasing awareness of money and
technology, investors today are venturing into newer and newer means of investing in gold like
digital gold, gold ETFs, mutual funds, and Sovereign Gold Bonds.The study has discovered that
though traditional mediums such as gold coins and jewellery continue to be extremely popular,
young and technologically advanced investors are gradually moving towards paper and digital
gold investment instruments because of their transparency, safety, and convenience. It was also
noted that the investment decision is influenced by various factors such as income level, age
group, risk profile, and awareness of new-age financial instruments.Although investments in
digital gold are increasing in popularity, there are still many who do not know or are uncertain
about investing in these platforms. Hence, awareness campaigns, improved accessibility, and
trust-building initiatives are essential to motivate more individuals to shift towards contemporary
gold investment strategies.In summary, gold will still be an integral part of Indian homes as both
a cultural symbol and an asset. The horizon for gold investing in India remains bright, and there
is developing interest in going digital, escalating financial awareness, and government advocacy
for safe and transparent gold schemes for investment.
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