Another issue, investment experts point out, is the low number of tax payers.
"Only three-four per cent of people pay tax in India. They convert the black money into gold," says another investment expert.
No wonder, Finance Minister P Chidambaram's and RBI Governor Duvvuri Subbarao's job is already cut out.
On the one hand, high imports of gold are one of the main culprits of the current account spiralling to a deficit at 5.4 per cent of the gross domestic product in the July-September quarter.
On the other, people are rushing to buy gold because other financial instruments are not giving substantial returns.