This article analyzes private demand for gold and silver in India and examines the constitution and trading procedures of the Bombay Bullion Market in the 1920s. Precious metals were in high demand as a savings vehicle among Indians because of the unstable political situation and the poor banking facilities in India. This savings habit was so deeply rooted that its fall in the near future could not have been anticipated at the time. On the other hand, the Bombay Bullion Market, dealing with both spot transactions and forward and options contracts, was one of the most advanced and dynamic bullion markets in the world. A large variety and number of speculative bullion dealers operated in the market. Though India’s monetary system at that time, which was the gold exchange standard system, was intended to restrict India’s absorption of gold, it could not interfere with these situations. This was one of the reasons that India continued to import a large amount of gold.