When I was speaking to a group of women about investing, the inevitable question about gold came up. They seemed quite
hesitant to ask about the place of gold in a household’s financial planning decisions, since accumulation of the yellow metal is
not considered `modern’. But they seemed somewhat unwilling to concede that buying gold is not a sound financial decision.
Our views about gold are mired in social practices and customs that have persisted over a long time. We should question these
views.
When a girl gets married and moves into a strange home, she takes her share of the paternal property, legally recognised as
streedhan. This includes jewellery and gifts given by her parents, relatives and others on the occasion of her wedding, and she
has the right to this property at all times. The Supreme Court has held that the husband or the in-laws who may be in
possession of such property or jewellery, only hold such articles in trust and cannot claim ownership.Streedhan thus doubles as
protection for the woman in her marital home.
Over time, women have become ecoomically independent and secured their nomically independent and secured their lives
with their profession and income, but the practice of giving gold to the daughter persists, and accounts for a large portion of
gold bought in most households.
To include an asset in the financial planning basket of a household, the pertinent question to ask is: How would this asset be
used? Investment in gold must pass that test. Consider a rural household with limited access or knowledge about financial
products. A primary problem for this household is the uncertainty of income. If the crop fails, or if rains are delayed, the
household faces a cash crunch. Such households typically use gold to create a liquid asset that can be pressed into service.
When there is adequate income, gold is bought; when there is a crunch, gold is pawned to raise money . Here, gold is a source
of funding and a generator of liquidity . Gold loans were included in priority sector lending of banks, due to this prevalent
practice
