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Kerala's Obsession with Gold

Kerala's Obsession with Gold

October 19, 2010

With the price of gold on a steady global rise, we take a look at India's biggest gold consumers: Kerala.

There are a few commodities in Kerala that will always be in high demand. Rice, obviously, and the coconut products that invariably accompany it at mealtimes. Liquor, as previously mentioned, is on an upward consumption curve. And then there's gold. Even as ubiquitous and controversial as liquor has become, it cannot hold a candle to the influence of gold in the average Malayali's life. The desire to acquire and hoard it seems to be hard-wired, a vital element in the struggle to survive and, if you're fortunate, to be upwardly mobile. To put it simply, in Kerala, gold – like Gordon Gekko's greed – is good.

This love affair with gold apparently has its roots in the global spice trade during the years of the Roman Empire. Kerala, and in particular Kochi (Cochin), was a key port among the channels of trade and frequented not only by Roman ships but also by Greeks, Jews, Arabs and Chinese. The foreign merchants and their customers back home were so besotted with Indian pepper, cardamom and cinnamon that they were quite happy to part with increasing amounts of gold in exchange. It surely follows that if a Keralite had gold in those ancient times, he must have had some dealings involving foreigners, and would as a result be viewed by his peers with greater prestige. Thus, the value of gold in Kerala would have risen as more people wanted to increase their status by possessing that precious yellow metal.

Status remained the driving force behind gold consumption over the ensuing two millennia, but that underlying factor has been replaced by a very prominent, overriding one in the last century or so. That new factor is dowry. Dowry used to be the preserve of Muslims, Christians and the most elite Hindu families, until one day somebody hit upon the notion that marriage gives all women a meaningful life. That meaning, of course, has value. Soon, every family with a son of age was demanding a suitable dowry in the 'marriage market', with the requested amount decided by the family's economic and social conditions (and what the next-door neighbours got – status never far from the equation). In the modern age, it can take the form of beachfront land, a job in a hardware store or a new Maruti, but the most important part remains the number of gold sovereigns.

If you don't have gold in Kerala, you find a way to acquire it, especially if you have a daughter. The easiest way is to simply go to any one of Kerala's dozens of jewellery chain stores like Josco, Joyalukkas and Bhima; soon you'll be able to go to the enormous, nearly complete Gold Souk Grande in Kochi, its similarity with the modernised gold souks of Dubai forming yet another link between Kerala and the Gulf states. This walk-in option is only straightforward for the upper middle class or higher, though. When the time comes for a daughter's wedding, the majority of Malayalis have to scrimp together a couple of lakh rupees through meetings with family members close and distant, friends and neighbours, and in many cases a loan shark or two.

Naturally, the effort required in obtaining a few prized sovereigns for a dowry payment often leads to a crippling debt. If you have managed to ferret some gold away yourself, you have the option of going to a bank and pawning it to cover a particularly hard time, then buying it back later at a fixed rate. There's also the option of home-based babus offering 'private finances', which are essentially the same thing – but with interest rates of up to one percent a day. It might seem like the best option would be just to let them keep the gold and have done with the debt, but as noted in this excellent article from National Geographic, Malayalis are more desperate to keep that gold than to be debt-free. Of course, if you don't have any gold in reserve, then for many the only way to escape those mounting interest repayments is the last resort of all: suicide.

As things stand, Kerala is a state that lives and dies on gold consumption. This shiny stuff holds most of the Malayali population in its thrall, and present signs indicate that consumption will only continue to increase. If it isn't already clear, my own stance towards it mirrors that of the American investor Warren Buffett: “[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” What's your view?

A list of resources used in researching this article is available in the comments.


  • Kelly Rogers
    Kelly Rogers
    04.09.13 02:15 PM
    I didn't know that the Keralites had their origin of gold in that manner. So, gold started as payment from foreigners and became a status symbol. Keralites hoard gold nowadays. I think many Indian households hoard gold, not just Keralites.
  • jay kp
    jay kp
    13.04.13 04:01 PM
    It seems Keralites, especially who lives in God’s own country are intoxicated too much with Yellow metal. The tiny “KARELA” shaped Kerala is leading not just for consumption of liquor and meat in India (may be in Asian continent too), but procuring gold too.
    I still recall my teen days in the early 1980’s, when my Grandfather yearly offload the black Pepper & other cash crops in the market, My grandmother plead him to buy at least some ounce of gold ornament.
    In fact, at that time, Keralites had no investment option, except gold and small land and the thirst for the yellow metal was digestible, But, in the late 1980’s onwards, the extraordinary greed for gold by Keralites turned just disastrous, beyond the claim that of social status.
    More than the social status and giving maximum gold ornament to girl child at the time of her marriage, this mad investment is very much related to temptation as well as to evade tax and secure unaccounted saving at home.
    Moreover, daily mushrooming gold loan banks are ready to exploit this gold collection with heavy interest against gold deposit loan, where nationalized banks always makes silly excuses by way of lengthy documental procedure and personal security from ordinary citizen to provide even a small loan amount. Keralites are restless when it comes borrowing money from anyone and the best option is to pledge the gold and collect the fund from the lenders instantly.
    The state Govt. is totally inactive on subject matter and rarely takes their time to educate the people about their mad rush towards Gold.
    It is nothing special in Kerala, parents loading their daughter’s body with two and more kgs of gold at the time of their marriage and this vanity coated with open/ showcased dowry are not limited to upper and deep pocket keralites, but lower and middle class keralites are not far behind from their rich counterparts.
    More than 20 % of 900 MTS imported gold were pumped to Kerala in 2011 and Rs. 75,000 Crores is the yearly gold market in Kerala, which is really shocking rather than a pride.
    Highly vibrating international price of gold would gives sleepless nights to Mallus in Kearla in coming days and if the metal price start trampling, it would be financially disaster for millions of Keralites.
    Gone are the days that gold prices going up when share market sneaking in and the heavy investment made on gold by the Keralites, indeed will be a disaster may be in the near future. Further, in case of a sharp collapse, recovery of gold price would take minimum 10 to 30 years,
    The way leading Jewelers are opening Gigantic showrooms clearly indicates that the Keralites are not watching global market trend.
    No wonder, commercial capital of Kerala may have a few of the world biggest showrooms that too on the busiest street of M.G. Road, when I left Ernakulam / Kochi in the late 1980, hardly a few jewelry showrooms were on that road, but, when I last visited in 2011, many parts of the narrow yet lengthy roads were found filled with massive world class showrooms, but that ugly footpath slabs on both side of the road were unchanged and my past experience didn’t allow me to glance steadily those amazingly decorated Jewelry showrooms on that footpath while on walk, purely because I may landed in any of the hospital bed. That is GOD’S GOLD OWN COUNTRY
  • Joseph A Allappan
    Joseph A Allappan
    18.03.13 10:00 AM
    There is no doubt Kerala's people and Natures Blessings accepted by all over the world. By their hard work and talent Kerala's people spread all over the world. It is surely their purchasing power of the people is also too high. The Lulu Mall is the true relection of real purchasing capacity of the Kerala's People. Do you think anybody invest these much of money without forethinking.
  • Shijitha
    22.05.12 08:16 PM

    I agree we Mallus are obsessed with gold.At times feel boys want to get married because of this very reason. I am a mallu myself, but trust me I am not at all interested in getting married to a mallu boy(due to this very sole reason).
  • sunny
    19.09.11 09:00 PM
    This was called the Golden touch, or the (Midas)Mallu touch
  • pranav
    07.08.11 02:59 PM
    I think beauty of nature in Kerala is far superior than any type of gold
  • renjith.r.pillai
    19.07.11 05:16 PM
    Please give me the Sarapolimala's dizziness.
  • prasanna raghavan
    prasanna raghavan
    23.10.10 01:57 AM
    You see entrepreneurial spirit involves creativity, accountability, discipline, ethical business practices, planning, budgeting, business ideas etc.

    It has become now more than 20 years since, India embarked on globalisation and market economy. With the kind of money flowing into kerala from the Arab countries and elsewhere, that state by now would have become the business capital of India if its people were enterpruners.

    This is what i meant.

    Of course there will be always a few with entrepreneurial spirit. But if they were a critical mass, gold would not have been exchanged there as dowry to remain in the bank lockers as dead money. if they had invested it wisely by how many fold it would have grown.
  • tonyH
    22.10.10 05:23 PM
    The only gold I covet is the foil lining the engine compartment of a Mclaren F1. Oh to be dodging the traffic and gunning one down the highways of Kerala (with a suitable warning device of course!)
  • Barnaby Haszard Morris
    Barnaby Haszard Morris
    22.10.10 02:36 PM
    Didn't think of that. But who hoards compu-

  • Slag
    22.10.10 01:03 PM
    No utility? Try removing the gold from your computers, see how well they work.
  • Blue Lotus
    Blue Lotus
    22.10.10 11:26 AM
    Gold is considered an investment by many.But to me,it just sits around the bank locker waiting for its owner to wear it once in a blue moon.Yes,value of gold increases thanks to inflation but does it help us?
    I might not like wearing chunky gold jewelry,but there is something about it.

    Dowry system as such is annoying.How can people bargain over a relationship?For me it's a totally wrong way to start a relationship.
  • Barnaby Haszard Morris
    Barnaby Haszard Morris
    22.10.10 09:30 AM
    Hi Prasanna -

    1) No, the whole of India has something of a gold obsession, but it's apparently most pronounced in Kerala. Figures vary, but I read in one publication that last Kerala was responsible for %20 of gold purchases in all of India.

    2) This is an interesting point. I think a lot of Malayalis have that entrepeneurial spirit - can't tell you how many locals have come to me proposing business ventures - but perhaps lack the knowhow to get their ideas off the ground or make them sustainable. And yes, fom what I understand the education system is pretty poor.
  • prasanna raghavan
    prasanna raghavan
    21.10.10 07:19 PM
    1. Is this obsession exclusive to Keralites? what about the other Indian states? I am just thinking.

    2.All most all issues you have so mentioned about Kerala, in my pinion, have a common denominator- their general inability to be entrepreneurs.

    Certainly if the foreigners, as far from Rome and other places had been flocking to Kerala, in the traditional times, for doing trade, means the land was productive and prosperous once.

    You might have noted that it was not only the traders who came over there. A whole lot of asylum seekers and refugees also had migrated to the land. A commonsense question is why did they not go to Africa? Africa had plenty land then.

    So my conclusion is that Kerala had an enterprising people.

    But what happened now?

    You may read so many links and books on Kerala but you may not get an answer to that question. That is the sad thing about Kerala, to some extent, about India as well. The true history of that land is shrouded in mystery.

    You should also research on the kind of education dished out to the contemporary Keralaites by its educational institutions.

    See education has a big role in shaping up people's mind.
  • Barnaby Haszard Morris
    Barnaby Haszard Morris
    21.10.10 05:54 PM
    What DO you like, then, Bhavia? Any precious stones or metals that particularly take your fancy?

    Sujith - Gold's Own Country indeed!
  • Sujith
    21.10.10 02:43 PM
    Kerala- God's and Gold's own country
  • Bhavia
    21.10.10 12:44 PM
    i'm happy that I don't like Gold :)
    I think my parents are happier :D
  • Barnaby Haszard Morris
    Barnaby Haszard Morris
    19.10.10 03:56 PM
    Resources used in researching this article:" target="_blank" rel="nofollow">The Real Price of Gold (National Geographic)" target="_blank" rel="nofollow">Dowry Giving in Kerala -" target="_blank" rel="nofollow">Gold prices may move up further (The Hindu)" target="_blank" rel="nofollow">The Kerala Gold Rush (No Man's Land)" target="_blank" rel="nofollow">Kochi and the Spice Trade (Virtual Tourist)

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