Gold and Silver
Geography › Mineral and Energy Resources · Topic 21.8
Gold and silver are precious metals valued for jewellery, investment and industry. Gold occurs in quartz veins and placer deposits, and silver is largely a by-product of lead, zinc and copper mining. China, Australia, Russia and Canada lead gold mining, and Mexico and Peru lead silver. India has very little gold: the Hutti mine in Karnataka is the main producer, and India is among the largest importers and consumers of gold in the world.
5 min read · UPSC Prelims · Geography · Mineral and Energy Resources
At a Glance
- Gold occurrence Quartz veins, placers
- Silver Mostly by-product of lead-zinc and copper
- Indian gold mine Hutti in Raichur, Karnataka
- Closed Kolar Gold Fields, in 2001
- Trade India imports about 700 to 800 tonnes of gold a year
- Exam link UPSC Prelims, Geography: Mineral and Energy Resources
Where Does It Fit?
This is the eighth topic of the macro on mineral and energy resources. The previous topic covered lead and zinc, which give silver as a by-product, and this one covers the precious metals. The next topic covers manganese and chromite. Previous topic: Lead, Zinc and Pyrites. Next topic: Manganese and Chromite.
How Do Gold and Silver Occur?
- Gold: found as native metal in quartz veins in old crystalline rocks, mainly Archaean greenstone belts, and as fine particles in river sands and gravels called placer deposits. Gold is also recovered as a by-product of copper mining. It does not tarnish, is easily worked, and is a store of value, with uses in jewellery, central bank reserves, electronics and dentistry.
- Silver: found with lead, zinc and copper ores, and so mostly a by-product, with some primary silver mines. It has the highest electrical conductivity of all metals and is used in jewellery, coins, photography, electronics, solar panels and medicine.
- Gold purity: measured in carats, with 24-carat being pure gold; silver purity is measured in fineness.
Placer gold forms when running water carries gold out of eroded veins and drops it in river beds because it is very heavy, as in Fluvial Landforms and Drainage Patterns. Mining of hard rock gold needs crushing, and extraction uses cyanide or mercury, which raises environmental concerns.
Where Are Gold and Silver Found?
| Region | Details |
|---|---|
| World gold | China is the largest producer, followed by Australia, Russia, Canada and the United States; South Africa’s Witwatersrand, once the largest, has declined; Ghana, Peru and Indonesia are also major producers |
| World silver | Mexico is the largest producer, followed by China and Peru, with Russia, Poland and Chile |
| Karnataka | Nearly all of India’s gold: the Hutti mine in Raichur district, run by Hutti Gold Mines Limited, and the Kolar Gold Fields, once among the deepest mines of the world, closed in 2001 as unprofitable |
| Andhra Pradesh | Ramagiri in Anantapur and the Jonnagiri area in Kurnool |
| Jharkhand | Placer gold in the Subarnarekha river sands, which gives the river its name |
| Others | Rajasthan (Banswara), Madhya Pradesh and Odisha have prospects |
| Indian silver | Mostly from the lead-zinc smelters of Hindustan Zinc in Rajasthan, which make India a large producer of by-product silver |
India’s production of gold is only a few tonnes a year, against demand of around 700 to 800 tonnes, so it imports almost all of its gold, mainly from Switzerland, the United Arab Emirates and South Africa. India has resources of several hundred tonnes of metal, and exploration for new deposits, including by the private sector, was opened up under reforms in mineral laws.
Why Does India’s Gold Matter?
- Gold imports and the current account: gold is among the largest import items by value, after crude oil, so it influences the current account deficit and the rupee, and customs duty on gold has been changed several times to manage this.
- Household savings: gold is held as jewellery, bars and coins as a store of value, and as a gift at weddings, so large stocks of gold lie idle in households and temples.
- Policy to mobilise gold: the Gold Monetisation Scheme and Sovereign Gold Bonds were launched in 2015 to bring household gold into the formal system and to offer paper gold instead of bullion. New issues of Sovereign Gold Bonds were stopped after 2024 because of the cost to the government when gold prices rose.
- Hallmarking and recycling: mandatory hallmarking of jewellery by the Bureau of Indian Standards is in place, and a good deal of gold is recycled from old jewellery.
- Prices: gold prices rose to record levels in 2025 and 2026, so current values should be taken from recent sources, and the cost of imports has increased.
As an analytical point, gold is a case where geology and economy diverge: India has little gold in the ground, but one of the largest demands. The policy aim is therefore not mining but moderating imports and channelling savings into financial assets, while using exploration to find limited domestic resources, as in Mining and Quarrying.
Why Is This Topic Important?
- Facts Kolar and Hutti asked
- Economy Imports and bonds
- Link Lead-zinc by-product
What Came Next?
The next topic describes manganese and chromite. Next topic: Manganese and Chromite.
Key People and Terms
- Placer deposit Metal in river sands
- Carat Gold purity measure
- Hallmarking Purity certification
- Gold Monetisation Scheme Scheme to deposit household gold
- Sovereign Gold Bond Government paper gold
- Greenstone belt Old gold-bearing rock zone
Exam Corner
Points to Remember
- Hutti is India’s working gold mine.
- Kolar mines closed in 2001.
- Silver is mostly a by-product.
- 24 carat means pure gold.
- Gold is India’s major import after crude oil.
Do Not Confuse With
- Kolar and Hutti Closed mine versus working mine
- Lode and placer gold In rock veins versus in river sands
- Gold Monetisation Scheme and Sovereign Gold Bond Depositing old gold versus buying paper gold
Memory Hook
Hutti works, Kolar sleeps; silver tags along with lead and zinc; India digs little and buys a lot.
Mains Angle
Questions ask about geography against demand. These points add depth.
- Supply Small domestic mines
- Demand Cultural and investment
- Policy Imports and monetisation
A Question You May Face
An original practice question, not a past paper question.
“India has little gold but is among its largest consumers. Discuss the distribution of gold in India and the policy challenges.”
How to Answer
- Occurrence Veins and placers.
- Places Karnataka and others.
- Demand Imports.
- Policy Monetisation, bonds.
GS Relevance
Frequently Asked Questions
Which state is the main producer of gold in India?
Karnataka is the main producer of gold in India. The Hutti Gold Mines in Raichur district are the only large working gold mine, and the Kolar Gold Fields, once among the deepest mines in the world, were closed in 2001. Smaller deposits are found in Andhra Pradesh and Jharkhand.
Why did the Kolar Gold Fields close?
The Kolar Gold Fields in Karnataka, worked for over a century, were closed in 2001 because the ore had become low in grade and the mines were very deep, which made production costly and unprofitable. The area has since been proposed for redevelopment, including mining of old tailings.
How is silver produced in India?
Most silver in India is obtained as a by-product of lead and zinc smelting, mainly by Hindustan Zinc in Rajasthan, and a small amount comes from copper refining. Silver is used for jewellery, coins, electronics and solar panels, and India also imports silver.
What are placer gold deposits?
Placer deposits are accumulations of heavy gold particles in river sands and gravels. Rivers erode gold-bearing rock and carry the particles, which settle in places where the current slows. The Subarnarekha river in Jharkhand is known for placer gold and gets its name from it.
What is the Gold Monetisation Scheme?
The Gold Monetisation Scheme was launched in 2015 to bring gold held by households and institutions into the banking system by allowing them to deposit it and earn interest. It aims to reduce the import of gold, with Sovereign Gold Bonds offered as a paper alternative to physical gold.
PYQ Practice — Statement Analysis
1 Hutti in Karnataka is a gold mine.
It is in Raichur district.
2 The Kolar Gold Fields are still the largest producers in India.
They were closed in 2001.
3 Most silver in India comes from lead and zinc smelting.
It is a by-product.
4 India is largely self-sufficient in gold production.
It imports nearly all its gold.
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