'$3 trillion in household lying ideal...': Nithin Kamath of Zerodha on gold utlisation beyond gold loans

As India enters the festive season, gold once again takes centre stage — both in jewellery stores and in conversations about wealth. With international gold prices breaching $4,000 per ounce and domestic rates crossing Rs 1.2 lakh per 10 grams, the yellow metal has outshone most asset classes in 2025. Yet, amid this glittering rally, Zerodha CEO Nithin Kamath has raised an important question: can India make its massive gold holdings work harder for the economy?

In a post on X (formerly Twitter), Kamath pointed out that Indian households collectively hold around $3 trillion worth of gold, according to World Gold Council data. “While equities fund business growth, most of this gold remains locked away, earning nothing,” he wrote. “We need better ways to financialize this gold beyond just gold loans.”

Kamath’s observation highlights a long-standing paradox: India is one of the world’s largest consumers of gold, but much of that wealth sits idle in vaults and homes. Meanwhile, Indian companies rely on equity and debt markets to raise capital, even as vast reserves of privately held gold remain underutilised.

Gold vs equities

So far in 2025, the Nifty 500 index has gained just 2.84%, while gold has skyrocketed nearly 56% — from Rs 78,000 to Rs 1.2 lakh per 10 grams. The contrast underscores gold’s recent dominance, following a 44% return in 2024, its strongest in nearly three decades. By comparison, the Nifty 500 rose 33% last year — one of the few times both gold and equities delivered together.

However, history shows that gold shines brightest during economic uncertainty. For instance, in 2008, when the Nifty 500 crashed 57%, gold gained 25%. Similarly, in 2011, gold surged 38% even as equities fell 26%. There have been at least five years — 1998, 2001, 2008, 2011, and 2018 — when gold protected capital while stocks slumped.

Why gold keeps outperforming

Experts attribute gold’s current strength to several interlinked factors:

Central Bank Buying: Nations like China, Russia, and Turkey have been steadily increasing their gold reserves, adding a powerful layer of demand.

Inflation and Interest Rates: Although inflation has moderated, real interest rates remain low, making non-yielding assets like gold attractive.

Currency Impact: Gold has gained roughly 17% in dollar terms, but the rupee’s depreciation has amplified domestic returns to over 44%.

These factors, combined with festive demand and ongoing geopolitical uncertainty, have fueled gold’s relentless rise through 2024 and 2025.

Beyond gold loan

Kamath’s call for better “financialisation” of gold extends beyond the traditional gold loan model, where individuals pledge gold for short-term credit. India has experimented with Gold Monetisation Schemes (GMS) and Sovereign Gold Bonds (SGBs), but participation remains limited.

Experts say that unlocking even a fraction of India’s $3 trillion gold reserve could deepen financial markets, support infrastructure funding, and reduce reliance on imports. “If households could earn even modest returns on their stored gold — through ETFs, gold savings products, or digital vault-linked investments — it could transform India’s savings landscape,” said a Mumbai-based wealth advisor.

For most Indian families, gold is more than an investment — it’s a symbol of security and culture. However, as Kamath’s comments underline, the challenge lies in blending emotional value with economic utility.

While gold continues to deliver stellar returns, the real opportunity may lie in turning this idle treasure into an active financial asset — helping households, businesses, and the broader economy shine a little brighter.