A saleswoman at a store in Bangalore shows off gold jewellery.Aijaz Rahi
When India's socialist government blinked and secretly shipped 67 tonnes of gold to the Bank of England under a deal with the International Monetary Fund to avert a balance-of-payments crisis in May 1991, it was criticized as a national disgrace.
Fast forward to November, 2009.
The government of economic wizard Manmohan Singh buys 200 tonnes of gold from the IMF, sparking a global rally in the metal and drawing rare praise from foreign commentators.
The surprise move by the Reserve Bank of India pushed the government's gold holdings to the 10th largest in the world from the 14th.
"To the outside world, it signals a show of strength and display of quiet confidence," said Himadri Bhattacharya, executive vice-president at Tata Capital in Mumbai.
But the former RBI official doesn't believe the gold purchase, worth $6.7-billion (U.S.), was the outcome of any strategic thinking or vision on the part of the authorities.
"It just happened," said Mr. Bhattacharya, who has done extensive research on gold for the World Gold Council.
Also "just happening" quietly for many years was an Indian love affair with gold.
The country's insatiable appetite for gold has made it the largest retail market for the metal, consuming more than 700 tonnes in 2008 alone.
While there are no authentic estimates on how much gold is in the country, Mr. Bhattacharya said gold held by Indian households and other private groups would be close to 25,000 tonnes.
"But I must point out that some estimates put the number as high as 50,000 tonnes," he said in an e-mail to The Canadian Press.
That could be worth between $850-billion and $1.7-trillion.
In India, gold is the most favoured gift for any occasion.
"It gives apparent financial security outside an economic system controlled by private interests and centralized, government authority," said Cleo Paskal, a fellow at the Royal Institute of International Affairs in London.
"Banks, governments and currencies may come and go, but gold will still be gold," said the Canadian professor who teaches at Manipal University in southern India.
Clever marketing by the WGC and numerous retail schemes enticing consumers have played a major part in boosting the demand for gold in India in recent years.
Also feeding the situation are new jewellery stores that have sprung up in cities small and big across India.
"Not sure that I'd call it an obsession per se. It certainly isn't 'speculation' in the Western sense of the word," said Ian McAvity, a founding trustee of Central Gold-Trust, a gold bullion trust based in Ancaster, Ont.
"It's a combination of religious and cultural factors, a long history of currency control and devaluation until recent years, and the prosperity of recent years enabling greater spending and investment to buy gold and many other things."
Experts have also noticed a subtle change in buyer attitudes. It's not just jewellery any more. Consumers are going for bullion.
"Till a few years ago, the gold ornaments bought by Indian families on the occasion of family marriages and festivals were for both adornment and investment purposes," said Mr. Bhattacharya, the Tata Capital executive.
"The distinction between adornment demand and investment demand was blurred. Now we are observing a well-defined and well-entrenched market for retail investment products - gold coins and gold [exchange-traded funds]"
Joining India's gold rush last week was a United Nations organization, UNESCO.
It has released a set of gold coins depicting the country's major heritage sites, including the Taj Mahal, the monument to love.
In a country where gold coins can be bought even at the post office, it's just another excuse to buy more.
"Gold will never lose its lustre in India," said Mr. Bhattacharya.