When Mohdi withdrew the most popular bank notes from India, many industry insiders believed the motive was to stifle Indian gold demand since much of the gold trade in India is conducted in cash.
But the Plan Backfired: Indian Gold Demand Has Gone Through the Roof:

gold banIndia has a history of gold ownership, spurred by long-term experience of a weak rupee. Only a fool leaves rupees on deposit, because they usually buy less and less every year. Alternative stores of value, such as equities, have only entered the mainstream on the back of the economic boom, and their performance on the whole has been nowhere as good or certain as gold. He knows something Westerners do not: the rise in the gold price is due to the currency going down. And so long as the currency goes down, it makes sense to continue to accumulate gold to ensure family savings retain their value. Nothing else gives this protection, and the price paid today or tomorrow is a secondary consideration. So what is the Indian government’s real agenda? There are three possible considerations: