A Study on Perception of Investors Towards Gold as an Investment Avenue in India

Topics: Gold standard, Bretton Woods system, Gold as an investment Pages: 51 (14091 words) Published: March 6, 2013
“A study on perception of investors towards gold as an investment avenue in India”


The perception about gold in India has come a long way from the days when its main function was to merely adorn and act as a status symbol. The emotional investment in the metal was so huge that parting with it seemed unthinkable. Now, however, it is becoming clear that an increasing number of Indians are realizing that gold deserves a place not just in the cupboard at home or the bank locker, but also in their investment portfolio.

Gold jewellery represented around 75 per cent of the total Indian gold demand in 2010, the remainder accounted for by investment and technology. Our macroeconomic forecast to 2020 shows India is poised for a very strong period of economic growth and this has significant, positive implications for all forms of gold purchasing in India. With 50 per cent of the Indian population, below 25 years and approximately 150 million weddings anticipated over the next decade, which will drive gold consumption. The objective of the study is to better comprehend the ever-growing demand for gold in India irrespective of the continuous escalation in its price. The study is based on the hypotheses that shows the factors which influence the investment in Gold in India. The concluding observation is that demographic variables like Age, Marital Status and Occupation had an impact on the perception towards investing as well as not investing in Gold.



1.1 Gold in Monetary System
Economic and financial transactions among different countries require some sort of arrangement that could facilitate settlement of payments. These arrangements form the (basis) subject matter of the International Monetary system. IMS we find today is the result of a century – long evolution going back to the days of the gold standard and even earlier when costly metals

were used for making payments. Gold has been used as the currency of choice throughout history. The earliest known use was in 643 B.C in Lydia (present-day Turkey). Gold was part of a naturally occurring compound known as electrum, which the Lydian’s used to make coins. By 560 B.C., the Lydian’s had figured out how to separate the gold from the silver and so created the first truly gold coin. In those days, the value of the coin was based solely on the value of the metal within. Therefore, the country with the most gold had the most wealth. That's why Spain, Portugal and England sent Columbus and other explorers to the New World to get more gold so they could be wealthier than each other.

Bretton Woods
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid-20th century. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.

Preparing to rebuild the international economic system as World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference. The delegates deliberated during 1–22 July 1944, and signed the Agreement on its final day.


Setting up a system of rules, institutions, and procedures to regulate the international monetary system, the planners at Bretton Woods established the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which today is part of the World Bank Group. These organizations became operational in 1945 after a sufficient number of countries had ratified the agreement.

The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge...
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