Glimmering $5 Trillion — India's Household Gold May Have Become Bigger Than Its Economy

Every Indian household has a gold story. A grandmother’s bangles locked away for decades. Wedding jewellery that doubles as family insurance. Coins bought on Akshaya Tritiya and forgotten until prices flash across TV screens. Gold, in India, is never just an asset — it’s memory and security.

Add all the gold up, and the number is staggering. With global gold prices surging past $4,500 an ounce, the value of gold held by Indian households may have crossed $5 trillion, potentially exceeding the size of India’s entire economy.

According to a Morgan Stanley estimate from last year, Indian households own about 34,600 tonnes of gold. At recent peak prices, that stockpile is worth well over India’s GDP of roughly $4.1 trillion, as per International Monetary Fund.

On paper, it should. Morgan Stanley has argued that rising gold prices create a positive 'wealth effect', strengthening household balance sheets at a time when lower interest rates and tax cuts are also boosting disposable income.

But gold, for most families, is something you own — not something you monetise unless you have to. Research by Emkay suggests that past gold rallies have not translated into higher consumption, and the reason is behavioural. Nearly 75–80% of household gold is held as jewellery, not as a marked-to-market investment.

India remains the second-largest gold consumer globally, accounting for about 26% of world demand, just behind China, according to the World Gold Council. Jewellery still dominates, but investment demand is changing.

Bars and coins now make up nearly a third of retail gold demand, up from about 24% five years ago — a sign that gold is increasingly being seen as a financial hedge, not just adornment.

Additionally, the Reserve Bank of India has added roughly 75 tonnes of gold since 2024, taking its total reserves to about 880 tonnes, or nearly 14% of India’s forex reserves, according to Morgan Stanley's reserach.

Wars, inflation scares, financial crises and geopolitical stress consistently drive investors — and households — towards gold. Recent central bank buying, particularly by China, has added fuel to the rally as countries seek to diversify away from dollar dependence.

Yet gold remains a paradox. Economically, it is largely idle. It generates no income and does little for productivity or capital formation. Governments have tried — through gold ETFs, sovereign gold bonds and digital gold — to channel household savings into more productive assets.

Success has been limited. For many households, gold is not just an investment, but insurance — something that can be pledged, sold or passed on in times of distress.

However, imports affect the current account deficit and currency stability. At the same time, gold functions as a shadow financial system by unlocking liquidity. That tension defines India’s gold dilemma. A $5 trillion pile of wealth that sits mostly still.