Wearing A Golden Nest Egg

Anilu Anand, a middle-class Indian housewife, sports three 22-carat gold bangles on her right wrist, two 22-carat gold rings on one finger, a 22-carat gold necklace with a 22-carat gold pendant, and a pair of 22-carat gold posts in her ears.

"This is for rough use, day to day,'' she explains. "We need a lot more heavy gold for weddings and festivals - and for our security."

Mrs. Anand typifies Indians' attachment to the yellow metal. She owns more gold jewelry than she could ever wear. In fact, most of it sits in a bank safe. But she continues to accumulate.

"You can never have too much gold,'' according to Anand.

Never mind that gold is losing its glitter as an investment worldwide. Central banks from Australia to Switzerland are dumping gold because they no longer regard it as a safe reserve. In the United States, wary individual investors are ditching gold as well.

Gold prices have plummeted from $873 an ounce in early 1980 to just above $298 an ounce Feb. 18.

But Indians' faith in gold appears to be unshakable. Despite being a poor country with an annual per capita income of just $350, India is the world's largest consumer of gold.

In 1997, demand surged 45 percent to 737 metric tons, compared with 508 tons a year earlier.

India is the fastest-growing gold market in the world, according to the Geneva-based World Gold Council, and demand is unlikely to slacken.

"We don't have a gold culture, we have a gold obsession,'' says Rashmi Vaidyalingam, a New Delhi lawyer. India's obsession with gold is centuries old. Gold and jewels cascade down effigies of Hindu gods, such as Lakshmi, the goddess of good fortune.

The lure and importance of gold among Indian women cuts across caste and economic boundaries. During the holiday season, disheveled peasants wearing only a tiny gold nose stud as well as matronly types dripping in gold line up outside jewelry shops to buy gold across India, in villages and big cities.

In this society where most women don't hold property, bank accounts, or other assets, gold is considered stree dhan, Hindi for woman's wealth. For a woman to enter a marriage without it is inconceivable. Most families will not marry a daughter until they can give her a trousseau containing at least two gold bangles, a gold necklace, earrings, a ring, and a nose pin, altogether worth about $1,600 at current prices.

Though part of her dowry, gold jewelry is for the daughter to keep: It is meant both to beautify her and to hold her secure.

"Gold is the savior of Indian women in times of crisis,'' explains G.S. Pillai, New Delhi manager of the World Gold Council. "If her husband dies or throws her out of the house, she has her gold. Nobody can touch it.''

As Mrs. Vaidyalingam puts it: "This is my asset. It's my buffer. I have complete control over it.''

To most Indian women it's unthinkable to sell any of their treasure even as they acquire new jewelry. Many form informal clubs and throw "kitty parties,'' in which members pool money and hold a lottery each month over lunch. The winner usually heads to the jewelry store.

Others, like Amita Sharma, use part of the monthly household allowance they receive from their husband to buy gold. Mrs. Sharma is decked out in thick gold bangles, diamond rings and earrings, and a gold chain from which hangs a gold medallion the size of a playing card. But she is in the market for another pendant, she says, without lifting her eyes from a velvet tray covered with several chunky pieces.

"We buy year-round,'' chimes in Kajal Ilmi, another customer. "We don't need a reason.''

Many poor women deposit meager savings, as little as $1, with a local jeweler who keeps it until clients have enough to buy something. Indeed, any woman in India is likely to be wearing at least $30 worth of gold, the price of a tiny 22-carat nose stud.

Indians have a strong preference for high-carat gold because it is purer. Twenty-two carat gold is about 92-percent pure compared with 14-carat gold, which is 58 percent pure and is popular in the United States.

As voracious as Indian women shoppers seem, dealers say that Indian men buy even more gold - mostly as gifts for women.

According to the World Gold Council, India holds at least 7 percent of the world's gold stock, or about 9,500 tons. But nobody really knows how much gold there is in India. Some experts believe the actual figure is closer to 30,000 tons.

Steep taxation on income and traditional assets, such as property, led many Indians to convert cash into gold during decades of socialist-style rule. Though the government has lowered tax rates in recent years, the overwhelming majority of Indians still pay cash for their gold purchases and prefer not to leave any trace of the transaction.

"Gold is a subject that most people are not willing to discuss," says Mr. Pillai of the gold council. "No shopkeeper will disclose how much he sells. Most gold is sold without receipts."

While other forms of investments increasingly are drawing educated, wealthy Indians, gold is virtually the only viable and attractive investment for rural Indians, who make up about 70 percent of the population.

"A farmer living in a village that's virtually inaccessible by road can't contemplate investing in the Bombay stock exchange or in the New Delhi property market,'' says Pillai. "What he knows is the yellow metal, which he keeps in his house.''

Though it seems impossible to find an Indian who is concerned that the role of gold as a store of value may be slipping, some experts are beginning to worry about the repercussions of a long-term decline in gold prices. "In a society where the low-income class has invested their life savings in gold, this could be a disaster waiting to happen,'' says Narendar Pani, an Indian economic columnist.

Mr. Pani believes that the government needs to devise schemes that would encourage Indians to redirect some of their gold investments into other forms of savings. The government, he says, has failed to address "the basic problem of an excessive fondness for gold among Indians.''

In this society where most women don't hold property, gold is considered stree dhan, Hindi for woman's wealth.