Gold vs Bank FD: Which asset class attracted more money from Indian middle class? World Gold Council reports

livemint.com:

Gold vs Bank FD: Gold in India has historically been a preferred investment option, particularly among low-income households and the rural population.  Cultural affinity, weddings, and festive gifting remain the primary factors driving gold demand in India. A household survey revealed that lower and mid-income groups consider gold a better investment than bank deposits, citing its role as an inflation hedge and its fungibility for raising short-term funds.

Plain gold jewellery is also preferred as it has better realisation value. This was revealed in the findings of the household survey conducted by the India Gold Policy Centre (IGPC). The results of the survey suggested that gold demand in low-income households is not necessarily driven by income levels but it’s the lack of access to financial and investment products that has a larger bearing on demand.

“What’s more, in the Indian context, households in lower and mid-income groups and in the rural belts of India consider gold a better mode of investment than bank deposits," revealed the findings of the survey. The role of gold as an inflation hedge is the biggest comforting factor for them. More than any formal financial training, their actual experience and intuitive understanding of inflation have guided their investment planning for years.

Here, gold has become their default option compared to other financial products, not surprisingly making gold their natural hedge against inflation and contingencies. Further, the fungibility of physical gold to raise short-term funds for urgent household needs – tested again recently the time of the pandemic – has further added to their trust in gold. As such, gold by default becomes a trusted alternative investment that has a