Over the past year, gold prices in India have skyrocketed — reaching record highs, driving the total value of gold held by Indian households to an estimated $3.8 trillion (≈ ₹ over 3 lakh crore) — nearly 89 % of India’s GDP, according to a Morgan Stanley report. This dramatic price escalation has created a “wealth effect”: even though people did not acquire new assets, the gold they already own has appreciated in value. Thus, many middle-class families now see their net worth inflated on paper.An economics professor (let’s refer to him as “Professor Sachin” for narrative) would argue that this phenomenon is partly a reflection of gold’s dual nature — cultural store of value plus speculative asset. The sharp rise is also driven by global macro forces: tightened supply, rising geopolitical tensions, a weaker rupee, and central bank accumulation. Because gold is widely held across India — in jewelry, coins, bars, vaults — it becomes a mass amplifier of perceived wealth; small gains per gram multiply across millions of owners. Even households with modest holdings feel richer.However, this apparent prosperity is fragile: the fluctuations in gold market can reverse quickly, so the “wealth” is more on paper than in liquid, usable capital. It does not automatically translate into improved consumption or investment.Moreover, for many households, gold is a locking of capital — it is not productive; it doesn’t generate income or dividends. So while the balance sheet “asset” rises, cash flow doesn’t.That said, in times of inflation or currency devaluation, gold becomes a hedge, protecting real value. This gives it a dual role — both a safe store and a prestige asset.In short, rising gold prices can make Indian households look wealthy on paper, but it is not the same as real income growth or sustainable prosperity. It’s a double-edged sword: symbolic wealth with inherent risk.