India's love affair with gold is timeless, spanning centuries and millennia.
"In India, it always was and still is, much more than just a precious metal. It is part of the fabric of our culture and an inseparable part of our belief system. It is the essence from which the universe was created. In a dark and lifeless universe, the Creator deposited a seed in the waters he had made from his own body. The seed became a golden egg, bright and radiant as the sun. From this cosmic egg of gold was born the incarnation of the Creator Himself - Brahma. From the root word Hri meaning imperishable, comes Hiranya, the ancient name for gold. Brahma is referred to as Hiranyagarbha - the one born of gold"(1).
In Hindu mythology, some of our goddesses are described as golden-hued, the ultimate in beauty. Gold, as the basis of so much purity and beauty, is referred to as the seed of Agni, the God of Fire. Manu the ancient law-giver decreed that golden ornaments should be worn for specific ceremonies and occasions. "Mythological tales tell us how our Gods and Goddesses rode on golden chariots. Gold has always been considered a sacred item in the Hindu way of life and is a must in every religious function, the explanation being that gold is pure having passed through fire in its process of evolution."(2). Over centuries and millennia, gold has become an inseparable part of the Indian society and fused into the psyche of an Indian. Indians see the metal as a symbol of purity, prosperity and good fortune.
Over a few thousands of years, many kings, emperors and dynasties featuring countless wars, conquests and political upheavals have ruled the Indian sub-continent. Different dynasties ruled different parts of India with different monetary systems. Gold acted as a common medium of exchange or store of value across the monetary systems of different kingdoms across the sub-continent. Hence wealth could still be preserved in spite of wars and political turbulence. Gold also helped preserve wealth through natural calamities and disasters and for centuries was the only means of saving in rural India, land being the other main asset of economic value. This has largely helped formulate, or evolve, the Indian sentiment and fanatical passion for gold, which holds true even today. India is estimated to hold more than 11,000 tonnes of gold.
As with most old civilizations, traditions are very strong in the Indian society and that much more so in rural India - still 70% rural. India is a vast country - a culture which is a heterogeneous mixture of different sub-cultures, communities, customs, food and dress habits, but the love of gold is universal across the length and breadth of the country! Gold is the only item that permeates every strata and class of the Indian society, it is equally sought by a wealthy urban businessman or a poor farmer in a village (2). Indians see the metal as a symbol of purity, prosperity and good fortune. Media and the times have eroded / influenced these traditions in urban India in favour of occidental culture and values.
Gold is acquired continuously over the years, as money is saved and available. Thus the acquisition is done over generations. Except for the last few decades, gold was the only form of savings that was practical. Gold purchase in India is entwined with religious and cultural beliefs. Indian customs demand buying gold for special occasions like weddings, births, birthdays, celebrate various festivals or offer gold to Indian deities. Gold is mainly acquired all over India for the Diwali (around October-November) festival. Regional festivals are also very important occasions for the purchase of gold, for example Onam and Pongal in the South, and Durga Puja in the East. The Indian Hindu calendar even has auspicious days to buy gold during these festivals like Dhanteras, & Dassera. In rural India, harvest festivals are big occasions to buy gold, and the farmers are flush with money.
In the Indian society, the custom of gifting gold in marriages is deeply ingrained. So much so that families of average means start saving soon after their children are born - for "stridhan" and dowry, in case a daughter is born. Gold gifted to the bride is called "stridhan" and this is exclusively her property in her new house. She has full rights on this gold, which also acts as an insurance against hard times and only she can decide on what to do with this gold. Women were not independent and educated which left them vulnerable to social pressures in case of unfortunate events like the death of husband or drought situations due to poor harvests. In such circumstances, gold would provide some protection to the family.
Life's earnings go into weddings, especially if a daughter is to be married (in Indian society the bride's father bears a large part of the wedding expenses). Depending on the customs in each community, either a fixed amount of gold is given or gold for a fixed amount of money is gifted to the bride. Gold and jewellery expenses constitute between 30-50% of the total marriage expenses! The emphasis on gifting cash in close family is less, as cash is too transient whereas gold is eternal! The gold jewellery is exhibited in the marriage so that the guests can see what is given to the bride and this also reflects on the status in a very status-conscious society.
The gifting of gold is so pervasive that provisions are made in wills to gift gold to yet unborn grandchildren or to unmarried children/grandchildren on their marriage. At times when inheritances are to be decided, chits are drawn to see who inherits what jewellery in the family.
"Gold to us Indians is that ultimate love object… not only does it adorn our bodies, it also acts as a good investment… Gold is ancestral. From mother to daughter to granddaughter, (father to son to grandson) gold has a tendency of getting passed down from generation to generation. So for Indians at least, gold will never lose its sheen."(1). In fact the mentality is so possessive for gold that it will be sold as a last resort only and before that most of the other assets will be liquidated.
May 24, 2002
Pinank Mehta is a director with Métier Capital Management Pvt. Ltd. advising on wealth management. He can be contacted at métier@bol.net.in