Gold Glitter Makes Indian Households $400 Billion Richer

Chennai: With gold glittering as the best asset class in a world fraught with uncertainties, India emerged as one of the foremost beneficiaries to a stupendous 22 per cent rise in the yellow metal’s price in the last nine months.

According to World Gold Council estimates, Indian households could have gold stocks in the range of 23,537 tonnes and 25,537 tonnes by September — the largest that households of any country hold in the world.

At the gold price of Rs 75,549 per 10 gm, the gold stock of 23,537 tonnes is valued Rs 178 lakh crore ($2.11 trillion) and 25,537 tonnes is valued Rs 193 lakh crore ($2.29 trillion) — which is 22 per cent or $400 billion more than its valuation in January 2024.

By the end of the year, gold stock value is likely to touch Rs 200 lakh crore ($2.37 trillion), getting closer to the country’s GDP of Rs 295.36 lakh crore.

At the end of December 2023, the gold stock was valued between Rs 146 lakh crore and Rs 158 lakh crore as the stocks of 23,000 – 25,000 tonnes were valued at Rs 63,396 per 10 gm. The gold stock value rose 22 per cent in the nine-month period.

According to WGC and Metal Focus, which have come out with the estimate of the gold stocks, the primary component has been imports since the 1990s when the Gold Control Act was repealed. Though in the first decade since the repeal, the imports were lower, it has remained around 700 -800 tonnes in the past two decades.

“It also includes part of the gold lying idle with the temples, religious trusts and other organisations, which could roughly come around 4,000 tonnes. We have around 700 temples which own gold, including ones like Sri Padmanabhaswamy temple in Thiruvananthapuram, Tirupati Tirumala temple, Vaishno Devi temple and Siddhi Vinayak temple.” said Chirag Sheth, founder, Metal Focus.

As per reports, Sri Padmanabhaswamy temple owns around 1300 tonnes of gold and Tirumala temple 10.3 tonnes.

However, a large majority of the gold stocks is owned by Indian households. The legacy gold lying with them prior to 1990s and for centuries have under-caratage issues. A large part of them would have come out into the market as recycled gold. In 2023 itself, recycled gold accounted for 117 tonnes.

“Official gold stocks are estimated to be around 25,000 tonnes, but the real stocks could be even higher. Prior to the repeal of the Gold Control Act, gold was smuggled into the country and it was rampant during the period with high import duties,” said Sheth.

According to WGC, India has the highest above-the-ground gold stocks. Apart from households, RBI has gold reserves of 854.73 metric tonnes as of September-end