Global Crises Fuel Demand for Physical Gold Among Wealthy and Indians

Physical gold has become a popular asset among both the wealthy and Indian households due to its perceived value as a protection against inflation, societal collapse, and currency devaluation.

The recent global crises, including the ongoing war and dollar debasement trade, have driven demand for physical gold, leading to an increase in underground vault construction to store valuable assets. The FT article explains that this trend is not limited to the wealthy, but also applies to Indian households who have been storing gold for centuries.

According to Jefferies estimates, Indian households hold 25,000 tonnes of physical gold worth $3.9 trillion as of March this year, with 15% of total household gold holdings now being monetized through loans. Gold loans in India have grown by 73% over the past two years and currently account for 7% of total bank and non-bank credit.

The entry of large organized gold jewellery chains like Titan and Kalyan Jewellers into the cash-for-gold segment is also a notable trend, as they offer to buy back household gold in exchange for cash. This shift in consumer behavior is driven by pressure on profit margins due to rising gold prices.