Hoarding of Gold/Silver

‘Monetary hoarding’ as described by FORSTMANN (1952:293)²³⁹ is not considered as hoarding according to the conceptual framework of this study. However, hoarding of gold and silver as a ‘non-monetary hoarding’²⁴⁰ plays a significant role in rural Pakistan, although Islamic teachings discourage hoarding, because it puts wealth out of circulation and deprives the owner as well as the rest of the community of its beneficent use.²⁴¹

237 „The fact that one family is richer than the other does not mean that it gives valuable gifts and receives less valuable ones in exchange, nor would the poorer relative give a small gift and expect to receive a better one in return. In this connection, the Punjabi say: „‘Vartan Bhanji’ is not charity, nor is it a trade“. They say one can help a poor relative in other ways“ (EGLAR 1960:127f).

Since ‘Vartan Bhanji’ is a balanced reciprocity, a rich relative would not give expensive items to cause troubles, because the poor relative would not accept more than he could afford to return.

238 See Glossary.

239 When the hoarder keeps some of his cash aside and expects some profit on it in future, see Section 2.2.2.2.2.

240 See the discussion of ‘monetary and non-monetary hoarding.’

241 See MANNAN (1986) for the theoretical discussion of Islamic teachings on the topic.

Daughters receive it as a part of their dowry and daughters-in-law, as a wedding gift.

Mothers start saving a little amount of gold in their daughter’s childhood and keep on buying small gold items occasionally. The same is done for a son's marriage. This gold is never intended to be utilized by the daughter or her in-laws in case cash is needed. These ornaments are supposed to be kept during the whole life and transferred to the children.²⁴²

„Women often ask the husband to buy jewelry with family savings, with the thought that they can control it better than other family assets“ (MALONEY/AHMED 1988:32). On the wedding day, it is displayed and compared with the gold brought by the other party. „Villagers can assess the value of gold ornaments exactly. The weight of gold, number of ornaments represent an important criterion for assessing the total value of a wedding“ (LÖFFLER 1992:191). Daughters-in-law wearing precious ornaments reflect the family’s prosperity. The primary function of gold lies in its demonstration as a visible status symbol.

The question as to whether the accumulation of precious metals is a saving, hoarding or investment act creates a great deal of confusion among economists. The "purchase of gold, silver and other jewelry is resorted to by 8 to 18 percent of the families. It is noticeable that investment in the purchase of gold is as important, in some areas at least, as investment in durable for personal and domestic use. It amounts roughly to one third of the total agricultural investment.²⁴³ The invested amount of gold indicates that the community has not yet significantly changed its deep-rooted habits" (HABIBULLAH 1963:49f).²⁴⁴ In the relevant literature on economics, one finds similarly examples in which it is put in the category of saving and hoarding. The present study defines it as hoarding. Hoarding, as discussed within the theoretical framework, is a sterile art of saving, which is not intended to be invested or liquidated in future. In contrast, saving is defined as the postponement of current consumption, with the intention of using it actively, i.e., consumption or investment, in future without any specification of time limit.

The new concept of saving in gold has been introduced by the migrant workers in oil states. They bring stamped pieces of gold, which can easily be sold without any reduction and may perform a function of saving if converted into cash. A saving in the form of gold is either converted into hoarding (ornaments) or liquidated very soon for any consumption or investment need. There exist many reasons for this.

A saved piece of stamped gold belongs to nobody in particular and, therefore, there is no cultural sanctions against its sale. Like other assets, it also comes under the authority of the household head. It is seen as a store of cash money at home. Apart from cultural sanctions, the way of determining the value is a major factor discouraging the sale of gold ornaments.

Value is calculated by the weight and quality of gold less workmanship cost. The weight of stones is also subtracted; the number of joints in the design of a bracelet, ring or necklace also reduces its value. Usually, it is not sold but serves as credit security.²⁴⁵ Gold ornaments are actually women’s property. Therefore, they can only be liquidated when both husband and wife desire this. Otherwise, it would be illegitimate for the husband

242 See also MALONEY/AHMED (1988:32f) for a similar explanation of the importance of gold in rural Bangladesh: „Women try always to keep any jewellery they inherited or got for their marriage; this is socially recognized as their security, and it is disreputable for a husband to sell it. Mothers tend to look after their own security by bestowing their valuables on their sons, with the thought that in future the sons might support them.

243 Gold offers a security against higher inflation rate along with an increase in value in the course of time.

244 EUCKEN (1954) considers it hoarding , see Section 2.2.2.2.2 for other examples.

245 Sale and mortgage of gold are highly discreet affairs, although it is very easy to sell it in villages, yet the people prefer to sell in urban areas. See also (LÖFFLER 1992:190) for similar observations for Pakistan.

whose wife has been given ornaments to expect that he would be able to liquidate them for any of his own ventures. Such an attempt would certainly meet with strong resistance.

„Gold is a family asset, but within the family it is especially the property of the wife. [...]

the husband cannot expect to use the jewelry just as he pleases“ (SWIFT 1964:137).

Divorces are very rare, but even then these are a threat to the future security of economically dependent women. These try to collect future securities in some other form.

Accumulating gold may safeguard them and their children against future hardships.²⁴⁶ The only productive use of hoarded ornaments is 'gold mortgage.' Such transactions are usually made secretly with the banks, because they may also stain the family’s reputation.

Most of the middle and poor class households practice them at one time or the other but they should remain strictly secret. Such transactions are made with the banks located in nearby cities and villages, rather than in the area of residence. All of the gold is never mortgaged; some of the ornaments are always kept at home so that nobody notices that they are missing.

Briefly speaking, nobody leaves this gold in the saved form. There are very few possibilities to consider it as saving. Hoarded gold (ornaments) is sold only under drastically depressing conditions. This is very distressing for everybody in the family, and everyone tries to compensate for it as early as possible. The whole family feels ashamed when the women have no gold ornaments to wear on different occasions.

Table 24: Possession of gold in twelve case study households

Cases Amount Value % of annual

income

Case 1 24 tola* 96,000 17.4 %

Case 2 20 tola 80,000 17.2 %

Case 3 40 tola 1,60,000 46.0 %

Case 4 9 tola 36,000 12.9 %

Case 5 10 tola 40,000 20.5 %

Case 6 16 tola 64,000 33.5 %

Case 7 17 tola 68,000 44.9 %

Case 8 30 tola 1,20,000 88.3 %

Case 9 10 tola 40,000 31.4 %

Case 10 13 tola 52,000 66.5 %

* Tola = 12gms

Source: author’s own survey

Table 24 gives an idea of the possession of gold ornaments and of their market value in 1991-92. It is very difficult to obtain accurate information on this aspect. Therefore, the above data cannot be claimed to be 100% correct, but still helps to develop a vague idea of the situation.

Besides gold, the hoarding of brass utensils of varying size is also very common. Almost every household has a stock of brass vessels in storerooms, piled on top of one another with the largest vessel at the bottom and the smallest at the top. These expensive utensils

246 See also MALONEY/AHMED (1988:32).

are usually an essential part of the dowry, are not intended for use unless necessary, and act as a status symbol and are displayed on a shelf, high on the wall.²⁴⁷

Besides this, extra cots, usually with colorful woodwork, are hoarded in another back room. They are very expensive and used only for some special guests. The number and quality of these cots are also a sign of the family’s wealth and shows its ability to entertain guests.²⁴⁸