Indians are known world over to be heavy consumers of gold especially gold jewelery. Gold in my opinion is a consumer product not an investment. When most people buy gold it is for ever and they normally end up passing it on to the next generation and never really get to take profits. An investment is where you reap profits one day or as dividends for regular income if you are retired. Buying a piece of gold is like buying a piece of metal which just sits there and does nothing.
Its not that gold shouldnt be bought atall but it has specific purposes and does not suit the general middle class in India. What do we need? We need to invest so we can fulfill our goals in future and what gold does is preserves your capital and nothing more then that but that too in the long run. We have seen one of the longest bull runs in Gold in the recent years and for those who bought gold some 15 years ago are laughing their way to the bank but how long could this go on for? Not for long I would say. Gold is a hedge against currency fluctuations and inflation to some extent and that is all it is nothing more.
Now compare buying a brick of gold with owning a share in a good established business or even better buy some units of some 3-4 good diversified mutual funds and let the fund manager decide for you if you dont want to have anything to do with picking and choosing stocks. You would beat gold any day. A running business will be making money for you unlike gold which would only rise in value in line with inflation and in a period of deflation if that happens in India it will loose value. Another problem with gold is that you will attract wealth tax in future and owning financial instruments do not attract wealth tax.