India’s $2 Trillion Gold Treasure Lies Idle — HDFC AMC’s Navneet Munot Proposes a Bold Way to Unlock Its Potential
India, the world’s second-largest consumer of gold, is sitting on a staggering $2 trillion worth of idle gold and silver assets, most of which lie locked away in homes, safes, and bank lockers. According to Navneet Munot, Managing Director and CEO of HDFC Asset Management Company (AMC), these assets represent a massive unproductive reservoir that could, if tapped strategically, fuel India’s economic growth and capital formation.
Speaking at a recent industry event, Munot urged policymakers and financial institutions to rethink how India manages its precious metal wealth. He suggested channeling household gold and silver into equity-linked instruments that can generate productive returns for the economy while offering investors compelling benefits.
“If we allow gold and silver to be sold and put that into equity—say, through an ELSS with a five-year lock-in and no tax—there’s a real possibility that a lot of people would monetise those holdings and put them to more productive use,” Munot said. “That would be very good for the country.”
India’s Hidden Wealth: Gold and Silver as Idle Assets
India’s cultural and emotional attachment to gold spans generations. The yellow metal remains a preferred form of wealth preservation and gifting, particularly during weddings and festivals. However, this tradition has led to large-scale hoarding, with an estimated 25,000 tonnes of gold held privately across Indian households — an amount valued at over $2 trillion at current market prices.
Unlike financial assets such as equities or bonds, these precious metals generate no economic return. Munot emphasized that this vast stockpile, if even partially monetized, could inject massive liquidity into the financial system, support infrastructure growth, and strengthen the domestic capital markets.
He noted that India’s challenge is not just in accumulating wealth but in deploying it productively. “A lot of this wealth is sitting idle. If we can channel it into avenues like equity markets, it can become a catalyst for job creation, innovation, and economic expansion,” Munot explained.
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Gold and the ‘Reverse Wealth Effect’ in India
One of the key behavioral insights Munot shared was the unique psychology of Indian investors regarding gold and silver. Unlike equities or real estate, where rising prices create a “wealth effect” — encouraging people to spend more — gold behaves differently in the Indian context.
“When stock prices rise, people feel wealthier and are more confident about spending. But with gold, it’s the opposite. When prices go up, people feel poorer because they think their next purchase will cost more,” Munot observed.
This inverse sentiment means that gold’s price rally often reduces consumer spending instead of boosting it, as households tend to save more to buy gold at higher prices later. This counterproductive wealth effect, he said, further underscores the importance of bringing gold into the formal financial ecosystem.
Transforming Precious Metals into Productive Capital
To make this transition feasible, Munot proposed financial innovation through instruments like Equity-Linked Savings Schemes (ELSS). His idea revolves around incentivizing individuals to convert physical gold and silver into equity investments with tax efficiency and a lock-in period.
Such a structure would not only protect long-term investors but also channel household wealth into capital markets, where it can directly contribute to industrial growth and job creation.
“This is not about taking away people’s gold; it’s about giving them an opportunity to make it work for them and for the economy,” he said. “If properly structured, this could become one of India’s biggest wealth mobilization initiatives.”
Bringing Gold into the Formal Financial System
India has made several attempts to formalize gold holdings in the past — through schemes such as the Gold Monetisation Scheme (GMS) and Sovereign Gold Bonds (SGBs) — but the results have been modest. Participation levels remain low due to trust issues, lack of awareness, and complex processes.
Munot believes that new-age financial products, coupled with digital transparency and tax benefits, could make the difference this time. “If we can combine ease of investment with tangible incentives, even a small percentage conversion of idle gold into financial assets could unleash billions into the economy,” he noted.
He also highlighted the gradual shift already taking place as gold ETFs and gold mutual funds gain traction. “As holdings increasingly move into ETFs and gold funds, we might eventually see some wealth effect,” he said. “But the bigger question remains — how do we channel this vast, unproductive stock of gold and silver into productive uses for the nation’s growth?”
A Potential Game Changer for Economic Growth
Experts agree that monetizing even 10% of India’s gold stock could have transformational effects. Such capital could be used to fund infrastructure, reduce external borrowing, and stabilize the current account deficit. Additionally, by integrating precious metals into the formal economy, India could enhance financial inclusion and reduce its dependency on foreign capital inflows.
If implemented thoughtfully, Munot’s proposal could redefine how Indians view and utilize gold — not merely as an emotional or cultural asset, but as a productive financial instrument that supports national progress.
Conclusion: Turning Tradition into Economic Power
Navneet Munot’s remarks highlight a powerful idea — transforming India’s traditional affinity for gold and silver into a modern tool for financial empowerment. As India strives to become a $5 trillion economy, the unlocking of $2 trillion in idle household wealth could provide the much-needed push to achieve that goal.
