Gold loving India is hoarding Swiss gold, and recently accounted for 42% of total gold and silver leaving Switzerland.
According to the Swiss government, its total value of exported gold, silver and coins in the month of June stood at 3.9 billion Swiss franc ($4.3 billion), of which India accounted for 1.63 billion francs ($1.8 billion).
Indian demand for gold has taken overall Swiss exports this year to to 32.1 billion francs. And out of that total, gold exports alone to India hit 7.3 billion francs, or roughly 23% of the market.
Gold is used primarily to make jewelry in India, which is considered a store of value and used as part of many rituals, including weddings.
In the last decade, 75% of gold demand in India has taken the form of jewelry, according to the World Gold Council. More than two-thirds of that demand comes from the country’s rural population, where practical considerations of the portability and security of jewelry as an investment keep demand high even among the low income Indians.
Gold plays a big part in India culture. Income levels do not matter. Even the poor have gold... [+]
India’s appetite for gold defies market conditions. Despite a 400% rise in the rupee gold price over the last decade, gold demand from Indian consumers remains strong.
Over the next decade, there are likely to be 15 million weddings per year in India that will surely help drive up the national appetite for gold jewelry.India’s young demographics are a key indicator of future demand. Urban Indian women, many of them low income, have been adopting contemporary designs for everyday use. Affluent Indian women buy gold jewelry that reflect their heritage, status and culture, and all are willing to dish out higher prices for it.
Moreover, in a country strongly influenced by gold-laden Bollywood actresses, Indians seek to emulate the fashion sense of their favorite celebrities. Draping themselves in gold bangles and necklaces is one of the more expensive ways to do it. For Indian consumers, gold is more important than diamonds and other precious gems.
Despite the importance gold plays in everyday life, India demand was surpassed by the Chinese last year.
According to the World Gold Council, Chinese demand for gold is set to increase 20% from the current level of 1,132 tons per year to at least 1,350 tons by 2017.
