Indians may be falling out of love with gold

P.N. GADGIL & SONS, a jewellery shop in Thane, a suburb of Mumbai, is gearing up for the wedding season—a busy time for gold sales, even if demand is brisker still during Hindu festivals, when jewellers stay open almost round the clock. Free samosas and Pepsi are offered to those queuing outside; inside, the noise and bustle are non-stop.

Indians have long regarded gold as the surest store of wealth. Brides bring it as dowry. Newborns are given bangles and anklets. Astrologers prescribe gold rings for stress. Indian households own 23,000 tonnes, three times more than the bullion held by America’s Federal Reserve. In the year to March 2018 gold imports, at $74.7bn, ranked after only oil.

The government has tried repeatedly to break Indians’ addiction, increasing import duty fivefold since 2013. In 2015 it began a scheme allowing investors to exchange gold for interest-bearing bonds and get it back when the bonds mature. Television commercials nudge viewers to invest in mutual funds instead.

Such efforts long seemed unavailing, but something seems to have shifted. Demand has fallen by a fifth since 2010.

Consumer preferences are one reason: many prefer lighter jewellery for daily wear. Millennials, a third of the population, spend more than older generations on mobile phones and other electronic...



via The Economist: Finance and economics Business Feeds

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