Gold Facts

As we head towards another Diwali, here are some gold facts to keep you motivated to make regular purchases in the physical product.Repeat ;physical and no version of paper gold.

1.With every 1 per cent rise in income, gold demand climbs by 1 per cent. But when prices rise 1 per cent, gold demand falls only 0.5 per cent.

2.For a 1 per cent increase in inflation, gold demand increases by 2.6 per cent as investors turn to gold to protect themselves against inflation.

3.Rural consumers show a pronounced preference for plain gold jewellery, while urban consumers are likely to buy gold set with precious and semi-precious stones.Plain gold jewellery accounts for some 88 per cent of purchases in rural India while the corresponding figure for urban areas is 57 per cent. In the days of rampant lab simulated diamonds sold as natural ones,a body is likely to help themselves by choosing plain gold pieces or simply discounting the price of “diamonds” while buying ornaments.Better assume them to be fake and be pleasantly surprised if they turn out otherwise.

4. Chains and necklaces account for nearly half of the retail sales of gold. Bangles, although lighter than chains, account for 30-40 per cent of the retail sales of jewellery. And as far as investments go,its a good idea to stick to neck pieces and bangles.

5.Urban millennials are less likely to buy gold than older Indians.Just about 33 per cent in the younger age group are likely to buy fine gold jewellery, compared to 42 per cent in the older age group.The younger group is also more likely to spend on designer and luxury fashion and smartphones. Rural India’s affinity with gold, in contrast, is strong across all ages.

6.Marriages drive gold demand in India. A bride from an upper middle class Kerala family is likely to be given 320 grams of gold jewellery on an average at her wedding.Brides from upper middle class families of Tamil Nadu and Andhra Pradesh are likely to receive 300 grams on an average.As against this,a Gujarati bride from a similar economic background on an average receives 180 grams and its slightly higher at 190 grams for Rajasthani and Sindhi brides.India’s middle class is growing and its aspirations are unlikely to abate.

Keep all this in mind even as you read a plethora of articles and ads touting alternative financial products and consumer goods and experiences.A bit of gold,bought sensibly, might serve you pretty well in the long term in an uncertain world.Grannies who bought farm land and gold didn’t do worse than moms who banked salaries.