Gold dominates household portfolios in India. This has been labelled as irrational behaviour by financially illiterate households. In this paper, we show that household preference towards gold is not irrational in the context of the Indian financial and macroeconomic environment which includes high inflation, financial repression, and capital controls.
This working paper was accepted to the 4th Annual Conference of India Gold Policy Centre at IIM Ahmedabad
Investment in gold by Indian households is motivated by social, economic, and cultural