Kotak Institutional Equities has warned Indian households that buying gold jewellery is a poor investment compared to financial gold. In a recent note, the brokerage highlighted that gold ETFs, coins, bars, and bullion offer superior efficiency, transparency, and liquidity. Despite soaring household gold holdings, mostly in jewellery, Kotak emphasized that the perceived wealth effect is overstated. High making charges and precious stone costs, many of which have declined in value, reduce overall returns. Between FY2011 and H1 FY2026, household jewellery delivered an internal rate of return of just 10.3%, below gold’s 12.5% compounded price rise. Strong global demand has driven gold prices higher, sparking FOMO among Indian retail investors who increasingly favor gold ETFs over equities. Kotak notes that jewellery requires gold prices to rise another 25–30% to break even, assuming stone prices remain stable, whereas ETFs and pure physical gold avoid these costs. Most Indian gold is held by lower-income households for financial security and life events. The preference for gold over financial assets raises imports, widening the trade and current account deficits, while reduced foreign inflows increase economic vulnerability.
Gold jewellery, a poor investment!
