All that glitters...

Gold has been one of the best performing assets in the last 5 years. Though Equities (selectively) may have outperformed, Gold remains a much safer asset class.

Did you know that there is $200 billion gold in homes? The value of gold held by Indian households is more than double the market value of the equity stock they own. At $ 200 billion, it is almost a third of India’s GDP.

Gold holdings among Indian households at current market value is about 2.5 times the current equity stock holding of $80 billion.

While the share of gold in household savings declined during 2000-2002 to 5 per cent, it has been on the rise once again in the last two years.

It was 8-10 per cent during the quarter ended March 2005. If instead of investing its annual sayings in gold, India were to invest this in productive business assets, its annual GDP growth would be higher by about 0.3-0.4 per cent.

As per World Gold Council (WGC) estimates, Indian households own about 15,000 tonnes of gold accounting for about 10% of the world-wide stock. At current market values, gold accounts for about 10-15% of the Indian household balance sheet.However, I feel with the new Indian youth aspiring to consume more (buy cars, mobile phones, computers etc), it is quite likely that the Gold locked in Indian households may come into the market.