An Empirical Analysis of Motivating Factors Behind Purchase of Gold Investment

Abstract

This study is based on a sample of 613 respondents chosen using judgement cum convenience sampling to understand the gold-buying behaviour of individual investors. The paper attempts to explore the various attributes that investors consider important while investing in gold. Six underlying factors of importance are extracted, namely, family and cultural influence, diversification properties, safe haven properties, financial security, wealth preservation and liquidity. The influence of family and culture is evident from the results, with buying at weddings and festivals being a major reason to purchase gold, followed by investment purposes. Furthermore, the attitude of investors towards the imposition of taxes and tariffs on gold by the government is found to be negative, which could adversely affect investment in gold. Taking the findings into consideration, regulatory authorities could devise strategies to formulate a comprehensive gold policy to help gold contribute more to the exchequer instead of adversely affecting the current account.