There’s a close affinity between monsoons and gold in India. But if you were thinking along the lines of rain rituals and offerings, you’d be on the wrong track. It’s more about rain helping gold than the other way round. “Last year the monsoon was excellent,” said Prithviraj Kothari, president of the Bombay Bullion Association. “That’s one of the main reasons why prices of gold soared here.” India is one of the world’s biggest consumers and importers of bullion.
Most sales happen in workshops like that of Pranood Soni, a 48-year old goldsmith from Rajnagar, a dusty village in Madhya Pradesh state just a few kilometers outside Khajuraho, famous for its world heritage temples. Mr. Soni’s customers come predominantly from the surrounding countryside and nearby villages. “Most of my clients are farmers,” said Mr. Soni, handling molten gold as he sat crossed-legged in one of his workshops. He is just one of the many jewelry artisans who set up shop in Rajnagar.
By far the biggest buyers of gold in India are farmers, who almost exclusively invest in gold and, to a lesser extent, in silver. According to the Bombay Bullion Association Ltd., around 70% of gold and silver is bought in rural areas. A lot of it has to do with popular customs. “There’s a widespread belief [in rural communities] that the price of gold and silver will always go up,” says bullion expert Bhargava Vaidya, the director of B.N. Vaidya & Associates. Many farmers invest in precious metals also because few can or want to have a bank account. “They don’t trust banks, they trust their jeweler,” Mr. Vaidya added.