On November 8, Indian Prime Minister Narendra Modi took to the airwaves to declare that Rs500 and Rs1,000 banknotes—which made up 86% of the currency in circulation—would be invalid effective from midnight. While the policy created chaos at banks, the real story lies elsewhere.
When rumors of a ban on gold spread two weeks later, Indians began rioting. To quell the panic, the Finance Ministry was forced to release a statement saying there was “no plan to restrict gold holdings.”
So, Indians took demonetization lying down, but rioted on the rumor of a gold ban. The people of India have a deep-rooted affinity for gold. As such, they understand it is a store of wealth and intrinsically valuable. Rupees? They are just paper.
Gold is known as an inflation hedge; however, its role as a crisis hedge is even more important. Gold is antifragile, to use the term coined by risk analyst and bestselling author Nassim Taleb. When currencies collapse and economies falter, gold can ensure your survival—financially and literally.