At a time when Indian investors are shying away from assets like equities and real estate, gold is emerging as a preferred choice of investment. A large number of retail investors, who have never bought gold in the past, are now looking at the yellow metal as an investment avenue.
A recent retail survey from the World Gold Council (WGC) revealed that 29% of retail investors surveyed had never bought gold in the past, but are open to the idea of buying gold in the future.
Further, 52% of investors already owned some form of gold, with 48% having invested in the 12 months preceding the survey.
Gold jewellery and gold coins remained two of the top five investments held by Indian investors across the board — a position that has been a permanent fixture for some years, stated a release by the gold body. The survey revealed that there was a clear urban and rural divide with the former having a deeper penetration in terms of gold investment.
In urban areas, 76% of the investors surveyed had invested in gold in the past while 21% were open to buying gold in the future even though they had never previously invested in gold.
On the other hand, 37% of rural investors said they would consider buying gold in future despite never having done so before.
Lack of trust, a key issue
Importantly, lack of trust was found to be the key deterrent for potential investors looking at gold.
“Our global consumer survey revealed that lack of trust was a key challenge for gold across six key markets: 48% of global considerers were deterred from buying gold due to a lack of trust. The data for India shows it to be a far bigger issue here than elsewhere: 61% of Indian considerers identified issues around trust as a barrier to buying gold,” the release stated.
The WGC is working with industry to address the trust issue; it recently launched Retail Gold Investment Principles and is collaborating with the industry to operationalise these to build trust in potential investors.