Sizable segment of Indian investors in Gold
In the Retail gold insights: India Investment Report, World Gold Council (WGC) say, “We have identified a sizable segment of Indian investors that have never previously invested in gold but would consider doing so, provided the industry is able to allay key areas of concern. A level of mistrust in the Indian gold industry is undermining potential investment.”
Somasundaram PR, Managing Director-India, WGC also expressed crucial in his forward. He inks, India’s retail investment market is changing. Government-led financial inclusion programmes, the role of technology in consumer finance, and increasing investor knowledge are re-shaping how households manage their savings and invest for the future.
And this clearly affects the gold industry. Businesses are thinking about how they can leverage technology to make gold more accessible to retail investors. But so too are other product categories. We only have to look at the rapid expansion of India’s mutual fund industry to see how competitive the retail investment space is.
To help the gold industry better understand the market we conducted an in-depth survey of more than 2,000 retail investors. Our insights are broad, covering the entire purchase journey, delving into demand moments and identifying investor typologies.
The research confirms that there is a high penetration of gold among Indian retail investors: two thirds of those we surveyed had bought gold in the past. But one fact leaps out to me: 29% of retail investors have never bought gold in the past but are open to the idea of buying gold in the future. So, there is a significant opportunity for the industry to seize upon and grow the market.
And this is what captures my imagination. Individual business will develop their own marketing strategies to target specific investor segments – but, at a high level, what does the industry need to do to grow and thrive in the changing retail investment landscape?
Three issues stand out to me,
1. Trust: 61% of those that have never bought gold in the past but would consider buying in the future say that a lack of trust in the product or industry is a barrier to purchase. We are working with the industry to address this. We recently launched the Retail Gold Investment Principles (RGIPs) and are collaborating with the industry to operationalise these so we can help build trust in the eyes of potential gold investors.
2. Education and awareness: 65% of potential gold investors say they have gaps in their knowledge around gold; for example, they do not understand what drives the gold price or feel that the process of buying it is too difficult. There is clearly scope to do more collectively as an industry to make it easier for investors to understand gold and the gold buying process.
3. Innovation: India’s gold industry is jewellery-led; it is both beautiful and a sound investment. But as the retail investment market evolves, so too must our industry. These insights will help businesses to understand retail investors better and to tailor new products or marketing strategies that meet their needs. Only through innovation can the industry thrive.
These are the issues that matter to me. We have a wealth of data and insight beyond this report and we know the gold investment market has room to grow. We welcome deeper conversations with the industry to explore how we can help to realise that potential.
Conclusion the report says, Gold investment is entrenched in India. It has an established role in protecting wealth and generating long-term returns for rural and urban investors alike. But in an increasingly digitally connected, competitive investment market, gold faces threats to its dominant position.
