Gold is old: noble metal in Indian economy through ages

Abstract

For millennia, gold is considered auspicious in India and consumers have a fascination for possessing gold, gold jewellery, and gold coins. In this paper I document the sacredness associated with gold, the ancient Indian references to gold jewellery, availability and technology of extracting gold in those times, minting of gold coins and its function as a medium of exchange and store of value, and accumulation of gold stock due to favourable trade with the Occident in the common era. I draw attention to Indian obsession with gold in modern times, when none is produced domestically and it contributing negatively to India’s external account. The gargantuan stock of about 24,245 tonnes of gold in India has to be considered as accumulated hoardings and not accumulated savings. Along with increasing the propensity of flow of savings going into financial markets and not in physical gold; suggestions are made to popularize and improve implementation of gold monetization scheme (GMS). This will re-channel idle stock of gold into financial markets and reduce deficit on the external account.