India's Gold Rush: A Rational Response to Inflation Fears

India's gold imports have surged, widening the current account deficit, but this is not a cultural quirk to be moralized about. It's a rational decision by households seeking an inflation hedge and liquid collateral.

The conventional explanation focuses on India's ornamental tradition and jewellery as a status symbol, but these are only half the story. The sharper explanation is economic: gold is more liquid than property and less burdened by paperwork than financial securities.

Gold loan industry growth underlines its appeal as collateral universally trusted by lenders. Add durable cultural preference to these advantages, and the result is sophisticated portfolio behaviour, not eccentricity.