Skip to main content

GOLD View & Outlook

Gold is seen as a symbol of security and a sign of prosperity. Indian consumers consider gold jewellery as an investment and are well aware of gold's benefits as a store of value. Gold is also recognized as a form of money in India, a tradable liquid asset.

 

It is one of the foundation assets for Indian households and a means to accumulate wealth from a long term perspective. Gold investment has been in the culture of Indian tradition and has been on rise amongst the modern investors as well due to the financial uncertainty and inflationary pressures.

 

Gold as an investment asset has given positive returns for each year during the last decade outpacing most of asset classes. Gold has provided compounded annual return 17.68 % during the decade. Gold ended the decade with a bang and moved up by 29.52 % during the year 2010 making a new high for tenth year in a row.

 

The risk of sovereign default because of higher debt burden, rising fear of inflation as a result of loose monetary and fiscal policy, uncertainties associated with global growth outlook, thrust for portfolio diversification were few of prime drivers that help gold prices move higher. Situation remains unchanged to a great extent and the concerns that kept gold prices at elevated levels are not yet addressed. The risk of sovereign debt default continues, concerns over rising inflation and weaker outlook for US dollar still remains. Central banks, having huge Foreign exchange reserves like India and China, have only started diversification away from US dollar and they will require huge quantum of gold for further diversification.

 

All these factors create a constructive environment for higher gold prices.

As per news articles physical demand in India and China remains extremely robust. As per remarks made by the chairman of Shanghai Gold Exchange, China's gold imports jumped 480% y-y to a record of 209.7 tons in the first 10 months of the current year. Mr. Wang Zhe, General Manager of Shanghai Gold Exchange stated that the imports for first 11 months totaled to 247 tons from 60 tons in FY 2009. He further added that government purchase were not behind the surge. The biggest drivers should be jewellery demand, gold bars for investment and the year end gift-giving. Similarly, Gold imports in India, the world's largest gold consumer, has likely reached a record last year driven by investment demand according to World Gold Council. As per market sources total gold imports in India amounted to around

750 tons during 2010 compared to around 557 tons of gold imports in 2009. Gold investment demand in India surges 73 per cent in the year ended Sept, 2010.

 

Gold is likely to continue to benefit due to lower interest rate regime globally, higher inflation expectation, European debts concerns and thrust for portfolio diversification. The longer term outlook for US dollar remains bearish. On a short run dollar may benefit due to concerns over European debt. But over longer term fundamental weakness in US economy will lead to dollar depreciation and that may benefit gold.

 

During the uncertain global environment gold tends to benefit due to its safe haven appeal. Volatility in global markets is likely to go up given the current macroeconomic environment and that is supportive of higher gold prices. The typical characteristic of a bubble in any financial markets are nowhere in sight for gold market and hence gold prices are expected to continue to move higher. Geo political uncertainty is the other important demand drivers for gold.

 

--Source: Bloomberg

Popular posts from this blog

Axis Mutual Fund NFO - Axis Fixed Term Plan Series 18

Axis MF has announced that the NFO period of Axis Fixed Term Plan Series 18 (15 Months) under Axis Fixed Term Plan Series 17 19 has been preponded from February 27 to February 24.        --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.   Invest Tax Saving Mutual Funds Online Tax Saving Mutual Funds Online These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)   Download Tax Saving Mutual Fund Application Forms from all AMCs Download Tax Saving Mutual Fund Applications   These Application Forms can be used for buying regular mutual funds also   Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds ) HDFC TaxSaver ICICI Prudential Tax Plan DSP BlackRock Tax Saver Fund Birla Sun Life Tax Relief '96 Reliance Tax Saver (ELSS) Fund IDFC Tax Advantage (ELSS) Fund SBI Magnum Tax Gain Schem...

Budget 2014 Highlights for Saving

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   The new finance minister Arun Jaitley has just presented his first budget. What measures does the budget contain that will specifically impact savers and investors? Here they are: 1. Housing loans exemption for self-occupied properties increased to Rs2 lakh: Earlier this amount was Rs1.5 lakhs. This move barely keeps pace with the inflation in asset values.   2. Investment limit under 80 (C) increased to Rs1.5 lakh: This is a good move again and offers some relief to taxpayers.   3. IT exemption increased to Rs2.5 lakh, Rs3 lakh for senior citizens. This comes as a minor relief for taxpayers.   4. Annual PPF ceiling to be enhanced to Rs1.5 lakh, from Rs1 lakh: This is in tune with the change in 80C.   5. Long term capital gains tax for debt funds has been rai...

Franklin India Taxshield

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   This fund maintains a quality portfolio of large-cap orientation. The fund manager adheres to a bottom-up investment approach and looks for companies whose current market price does not reflect future growth prospects. Investments are in companies that can drive future earnings growth. Stocks are selected based on the company's financial strength, management's expertise, growth potential within the industry, and the industry's growth potential.   The portfolio is well-diversified across sectors and market capitalisation and follows a blend of value and growth style of investing. The fund follows a predominantly large-cap allocation of over 70 per cent, with small-cap allocation never exceeding 10 per cent since inception.   Performance The fund doesn't dev...

ELSS Funds for different Risk Profile

Match your Goals Risk Profile With ELSS Investment   DIFFERENT TRACKS Unlike funds with a clearly defined investment universe -- large-cap, mid-cap or multi-cap - Tax Saving Schemes do not specify investment focus If you are looking for an equity Linked Savings Scheme (ELSS) to pare your tax burden, the plethora of options may confuse you. Many investors simply opt for ELSS funds , also called tax saving schemes with the best return over a certain time period. However, this may not yield the best results. There are several types of ELSS funds and it requires a nuanced approach to pick the right one. DIFFERENT RISK PROFILES Unlike funds with a clearly defined investment universe -- large-cap, midcap or even multi-cap schemes in the ELSS category do not specify their investment focus. While these schemes have the flexibility to invest anywhere, most tend to follow a defined template. For instance, some funds take a distinct large-cap tilt with a limited exposure to mid or small-cap st...

Reliance Tax Saver Fund Online

Invest in Reliance Tax Saver Fund Online   ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saving Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) Fund 9. Religare Tax Plan 10. Birla Sun Life Tax Plan Invest in Best Performing 2016 Tax Saver Mutual Funds Online Invest Online Download Application Forms For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call --------------------------------------------- Leave your comment with mail ID and we will answer them OR You can write to us at PrajnaCapital [at] Gmail [dot] Com OR Leave a mis...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now