In this discussion with Al Korelin and Cory Fleck on The Korelin Economic Report, I talk about why people in India buy gold.

The usual Western explanation is that Indians buy gold because of tradition, weddings, or culture. These are factors, but they miss the deeper economic reason. In India, many people face negative real yields. Once inflation, currency risk, corruption, taxes, and weak institutions are taken into account, conventional savings often fail to preserve wealth. Gold becomes a rational response.

This idea remains unfamiliar to many in the West, who often assume that gold is merely a speculative asset. In India, gold is also a way to escape financial repression and protect savings from a system people do not trust.

Listen to the full discussion below:

Key Takeaways

• Indians do not buy gold merely because of tradition or weddings.
• Gold is a rational response to negative real yields and weak confidence in institutions.
• In India, conventional savings often fail to preserve wealth once inflation and currency risk are considered.
• Gold helps people protect savings from financial repression and institutional decay.
• Many Western investors misunderstand why gold remains so important in countries such as India.