Young People in India Are Buying Gold

by Peter Schiff, Schiff Gold:

Young people in India are buying gold.

Indians have traditionally invested in the yellow metal. Based on sales reported by a new digital platform in the Asian country, it appears the upcoming generation has embraced their elders’ love of gold.

The Indian digital wallet company Paytm launched Digital Gold in April. Company officials say they have sold around 100 kg of gold through the application, with a 100% month-on-month growth since its launch. Paytm senior VP Krishna Hegde told the Economic Times of London that most of the customers are young people.

Customers can purchase gold for as little as Rs 1 ($0.02) through the Paytm application. This is not an electronic gold fund. Customers buy 24 karat, 999.9 gold. The company holds the physical metal in fully insured and secured vaults of MMTC-PAMP, an Indian government-promoted partnership between a Swiss and Indian precious metals company The company also facilitates shipping of physical metal weighing more than 1 gm to its customers.

While digital wallet application are primarily used for transactions, but it seems young Indians are taking advantage of the platform to accumulate savings in gold, according to the Economic Times.

The country’s 400 million young population accounts for 61% of India’s Internet base, and they could be using digital gold as a savings option because of the convenience, security and the attractive pricing, said Hegde. Paytm has a user base of 225 million. Products like these allow consumers to park bigger amount of money in their wallets and increase customer stickiness, which is vital for their banking business.”

A majority of Digital Gold customers are within 25-35 years. Young adults are attracted to it owing to the flexibility and low ticket price it offers.”

India ranks as the world’s second largest gold market. Gold is a central part of the Indian economy. Indians traditionally buy and hold gold. The yellow metal is interwoven into the country’s marriage ceremonies and cultural rites. Indians also value gold as a store of wealth, especially in poor rural regions. Indians demonstrated their hunger for gold last April during the celebration of Akshay Tritiya, an important Hindu holiday. They bought some 23 tons of gold in a single day.

The early success of Paytm’s platform indicates young people in India also recognize the value of buying and holding physical gold. While the platform may be high-tech, younger generations are doing exactly the same thing their parents did – using gold to preserve and expand their wealth. It is fundamentally no different than buying a gold coin or gold bar because the electronic transactions represent actual physical metal.

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