India is one of the biggest consumer of gold in the world. The romance of India with gold has been for centuries. Approximately 700- 1000 tonnes, or approximately 30-35% of all gold mined in over the world is consumed in India. This causes India the biggest importer of gold. When you think about Gold, your mind will focus on India-world's 2nd largest consumer of Gold. The World Gold Council (WGC) Official said India gold demand could be 900 tonnes in 2013, from its previous forecast of 1,000 tonnes. This number is based on data gathered from the import bullion banks, government agencies and non-resident Indians pleaded imports. This excludes the gold jewelry imported by Indians returning from travel abroad and smuggled gold in India. If so large amounts of food is imported, it is perfectly understandable; it would be feeding people. But what is mainly the use of gold? It may not have a sound rationale, but Indian have traditionally been buying gold. Indian buy gold for a variety of reasons, for due to its auspicious feeling; as an investment (Gold still has value over the long term, a tag of being a safe haven); protect against inflation; asset allocation, etc. Gold also involves a high perceived value and a high emotional quotient. It strengthens the proximity of relationships. Gold coins in smaller mainline denominations as well longer considered suitable for corporate gifts and rewards for competitions and for memorial gifts. Without a lot of successful, of course. Indians love gold. They be positively fancy to the metal. Most people think that Indians are crazy about gold. While this statement may not be entirely negative, the truth is that gold has always had a special meaning for all ages in India.From rural housewives in India and the 27-year-old would-be bride to generating black money, gold is simply a store of value or an international currency - is part of a lifestyle, a demonstration initial wealth, status, position, etc. Gold is provided as a means to various memorial commitments as golden anniversaries, weddings jubilee, gold medals, gold Credit Card, etc. In addition to its safe haven status during times of need. Over the centuries, certain festivals of India have been the moment to splurge on gold. Festivals including Akshay Trithiya and Dhanteras are believe auspicious time to buy the precious metal.Let's get into some basic concepts, Why Indians Love Gold so Much:Worldwide roughly 52% of the gold produced is used for making jewelry, about 12% is used for industrial purposes, 18% as gold investments (ETF Holdings) and the remaining 18% is holdings of central banks. Outside 52%, jewelry around the world intake most occur in India. About a middle-class home purchase Rs 15-80 lacs worth of gold jewelry in life.The key reasons for the purchase of gold jewelry has its roots in Indian culture, especially during weddings. Lot of impaired has happened to our traditions, but buying gold for the wedding has not changed much. Although the new generation is not overly fond of using or showing off gold jewelry, jewelry demand for gold has not gone down. We ended up ordering about 900-1000 tonnes of gold each year. At one point through time it had 97% of income tax in India. This led to the large-scale tax avoidance. Widely dispersed of the population in a significant area and the lack of proper computerized are a few other reasons for tax avoidance. Tax reforms in the last years have effectively shortened the level of evasion. Much remains to be done. It is thought that there is a shadow economy running in the country. The cash component of been missing wealth can not be sustained in the banks (if kept in banks should be considered). This unexplained wealth may not be saved in the vaults, because it has to be hidden from the tax authorities. Gold jewelry is most suitable option because it takes up very small space (so easy to hide) and has the risk of getting damaged during storage. Gold is regarded as a cash equivalent: Gold is high liquidity and portable as value or asset. You can convert into cash at any moment when an emergency arises and it is considered a friend in need. Gold is seen as a symbol of status: Especially in India gold symbolizes riches. In Indian weddings gold brought by the bride showing the status of his family and richness. Is thought that a bride wears 24k gold on their wedding to bring luck and joy in married life. Gold is an excellent investment: Gold is an asset that has grown steadily in value and thereby considered a safe investment. Over the last five years, gold has provided more than 20% annual return. It is considered as effective diversifier which helps to reduce portfolio risk. A big population in India living in villages. A huge number of very poor people to live in inadequate homes. These poor people have very little assets. Irrespective the little they have in their possession be kept 24 hours a day (you do not have even a house to hold your belongings). Gold jewelry used in its self is the only option. When in crisis, they mortgaging or selling. As floods and droughts obliges many people living at the village level fleeing to a safer place. It is easy to wear gold jewelry as they fled in danger. Owing to the import duties and other restrictions of imports, gold prices in India always greater than the international prices. Therefore, India is importing gold years after year. India Government wants to discourage the import of gold and thus have recently been hiked import duties. We think this could not gets too much impact on demand as people may absorb price increases and they can even end up assuming that created wealth. Increased import duties can be encouraged smuggling and black market. If the Finance Minister, openly declares that the import duty was shot down on a specific date, then investors may refrain from investing in gold, until that period. We as commodity advisory in India do not suggest you boycott entirely gold as investment. But make sure you not exceeding 15% of the total body of investment. And rather than buying physical gold watch gold ETFs and gold mutual funds. The prices of gold have been falling for more than 2 years. With the problems of currency and stock markets worldwide and a billion Indians supporting gold demand. It may be in the next century if the global economy dating back to the gold standard, and the Indians will be richer then. Source: Free Articles from ArticlesFactory.com The author of this article is an employee at KheloMCX Commodity Research Services. For gold investments and trading guidance, you get free tips registered here: http://khelomcx.com/free-trial-commodity-tips