In high-income economies like the US, households allocate a large share of their savings to financial assets that fund productive investment. In contrast, household balance sheets in developing countries are dominated by non-financial and often unproductive assets such as gold. This paper quantifies the development costs of unproductive savings. We focus on the case of gold in India, where private gold holdings account for nearly one-fifth of aggregate assets. We develop an equilibrium model of households’ portfolio choice and entrepreneurial investment in the presence of financial frictions. The model incorporates three main reasons for holding gold (social norms, hedging and returns, and liquidity) and matches key macro and micro moments of the Indian economy. We find that unproductive savings matter, but policies that narrowly focus on discouraging gold holdings will backfire. If idle gold could be utilized productively, output would increase by 13%. However, taxing gold leads to welfare losses and no output gains.