Mumbai: The World Gold Council’s (WGC) latest India Retail Investor Insights report revealed that 29% of retail investors have never bought gold in the past but are open to the idea of buying gold in the future. 52% of investors already owned some form of gold, with 48% having invested in the 12 months preceding the survey. Gold jewellery and gold coins remained two of the top five investments held by Indian investors across the board – a position that has been a permanent fixture for some years.
India’s gold market is one of the largest and most well-established in the world, augmented by the nation’s traditional affinity and age-old cultural associations with gold. This is further substantiated as gold also occupies a prominent role in investment portfolios – the investment case for gold is ingrained in India, protecting wealth and generating long-term returns for rural and urban investors alike.
The main five key findings from the report are as follows:
A clear rural/urban distinction exists. Gold currently has a deeper penetration among urban investors: 76% of this group have invested in gold in the past. And 21% are open to buying gold in the future, having never previously invested. On the contrary, 37% of rural investors would consider buying gold in the future despite never having done so before. And while these rural gold considerers offer a lower value opportunity than their urban counterparts, they offer significant growth potential.
There is a common need for simplicity and reassurance. There are shared attributes between rural and urban investors, key among which is a desire for simplicity and reassurance from their investments. The gold industry is well poised to capitalise on this need by highlighting gold’s relevant attributes to unlock a portion of this latent demand.
Gold is struggling to find a foothold at certain key investment occasions. There are a number of universal demand moments, defined by the specific set of needs to which investors are responding when they make an investment choice. Today, gold falls short in meeting the needs of investors on some of these occasions. There are ways in which the industry could raise gold’s profile: emphasising its role as a low-risk wealth protection vehicle would help in certain moments; while in others, developing accessible gold products packaged in a more exciting way would attract demand.
Trust and education are key barriers for those yet to invest in gold. There is a significant pool of investors who have never previously bought gold but would consider doing so in the future. The primary hurdles in reaching this audience are a lack of trust in gold, a need for education around investing in gold, and reassurance in its risk profile. But there is, nonetheless, a sizable opportunity to increase penetration of gold investment among the Indian retail investor base. In total, almost one third of Indian investors who have not bought gold before are open to doing so in future. We call this group ‘gold considerers’ and they represent a significant pool of untapped demand
Our global consumer survey report ‘Retail gold insights 2019’ revealed that a lack of trust was a key challenge for gold across six key markets: 48% of global considerers were deterred from buying gold due to a lack of trust. The data for India shows it to be a far bigger issue here than elsewhere: 61% of Indian considerers identified issues around trust as a barrier to buying gold.
The gold industry has the potential to appeal to a sizable new audience. Technology can play a key role in opening up new avenues for gold investment; easy online accessibility is a must in this era of increasing global digitisation.
Mr. Somasundaram PR, Managing Director, India, (WGC) commented, “India’s retail investment landscape is evolving, underpinned by government-led financial inclusion programmes, the surge of fintech, and increasing investor knowledge. And this clearly affects the gold industry. Businesses are constantly striving to leverage technology to make gold more accessible to retail investors. To help the gold industry better understand the market we conducted an in-depth survey of more than 2,000 retail investors. Basis this in-depth survey, we have been able to uncover broad insights, extending across the entire purchase journey, delving into demand moments and identifying investor typologies. One statistic that leaps out to me and captures my imagination is that 29% of retail investors have never bought gold in the past but are open to the idea of buying gold in the future. We welcome deeper conversations with the industry to explore how we can help to realise that potential.”
Few key issues addressed in the India Retail Investor Insights report are as follows:
Trust: 61% of those that have never bought gold in the past but will consider buying in the future said that a lack of trust in the product or industry is a barrier to purchase. The World Gold Council is working with the industry to address this, recently launching the Retail Gold Investment Principles (RGIPs) and collaborating with the industry to operationalise these to build trust in the eyes of potential gold investors.
Education and awareness: 65% of potential gold investors said they have gaps in their knowledge around gold; for example, rural considers cited lack of understanding of what drives the gold price as a barrier (29%) while for urban considerers, perception that gold is unaffordable was the main barrier (29%). Common to both groups was the lack of knowledge of how to buy gold – 23% considerers identified this as a barrier to investing, stating that the process of buying was too difficult or opaque.
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 delivery strategies that meet their needs. Only through innovation can the industry thrive.
The report also deep dives into insights concerning other facets critical to the industry’s growth such as financial inclusion, understanding the behaviour and attitudes of different types of retail investors, the role of gender in urban and rural India, and the rise of financial technology, among others. There is a clear scope to work collectively as an industry to make it easier for investors to understand gold and the gold buying process through tailormade solutions and innovations, helping the industry thrive.
Methodology:
Building upon the World Gold Council’s 2016 survey, this research programme’s survey was conducted in partnership with global research agency, Hall & Partners. The study captured the opinions of more than 12,000 global active retail investors, gathering insights into retail investment via a quantitative survey of at least 2,000 men and women (aged 18 to 65) in China, India, Germany, the US, Canada and Russia. Within India, 1005 face-to-face interviews were conducted with rural investors and 1,280 online interviews conducted with urban investors. Fieldwork surveys took place in Q2 and Q3 2019.
