Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
YouGov's MRP Poll Final Tory Seats Forecast Revised Down From 359 to 338, Possibly Lower? - 10th Dec 19
What UK Economy (Average Earnings) Predicts for General Election Results 2019 - 10th Dec 19
Labour vs Tory Manifesto's UK General Election Parliamentary Seats Forecast 2019 - 10th Dec 19
Lumber is about to rally and how to play it with this ETF - 10th Dec 19
Social Mood and Leaders Impact on General Election Forecast 2019 - 9th Dec 19
Long-term Potential for Gold Remains Strong! - 9th Dec 19
Stock and Financial Markets Review - 9th Dec 19
Labour / Tory Manifesto's Impact on UK General Election Seats Forecast 2019 - 9th Dec 19
Tory Seats Forecast 2019 General Election Based on UK House Prices Momentum Analysis - 9th Dec 19
Top Tory Marginal Seats at Risk of Loss to Labour and Lib Dems - Election 2019 - 9th Dec 19
UK House Prices Momentum Tory Seats Forecast General Election 2019 - 8th Dec 19
Why Labour is Set to Lose Sheffield Seats at General Election 2019 - 8th Dec 19
Gold and Silver Opportunity Here Is As Good As It Gets - 8th Dec 19
High Yield Bond and Transports Signal Gold Buy Signal - 8th Dec 19
Gold & Silver Stocks Belie CoT Caution - 8th Dec 19
Will Labour Government Spending Bankrupt Britain? UK Debt and Deficits - 7th Dec 19
Lib Dem Fake Tory Election Leaflets - Sheffield Hallam General Election 2019 - 7th Dec 19
You Should Be Buying Gold Stocks Now - 6th Dec 19
The End of Apple Has Begun - 6th Dec 19
How Much Crude Oil Do You Unknowingly Eat? - 6th Dec 19
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

An Overview OF Gold Price Trend

Commodities / Gold and Silver 2015 Mar 19, 2015 - 06:10 PM GMT

By: Submissions

Commodities

Srinivasan Rangaraj writes: We all know that Gold is the precious metal in the world. Investors put their large chunk of their capital in gold metal as a part of their investment strategy. However, in India, people are very much fond of this metal. Here, they have very much interest in wearing gold ornaments rather than going for gold investments. That too, they wear these ornaments during functions like marriages, etc. So, most of the times, approximately 20000 tonnes of the gold, are lying idle in the houses of many households or in the bank lockers.


Indian people affection towards this yellow metal always keeps India within two places in gold consumption, globally. Sometimes, India comes first and china comes in second place and vice versa.

India imports gold about 800-1000 tonnes per annum. (Reference:-http://articles.economictimes.indiatimes.com/2015-03-01/news/59642179_1_gold-deposit-scheme-new-scheme-sbi-research)

   
The present day government has also strived like their predecessors, for bringing out unemployed gold into usage by pronouncing new gold schemes substituting preceding regimes’ gold deposit and gold metal loan schemes in it’s latest union budget.  

In the new gold monetization schemes, the depositors can make interest by keeping their gold as deposits in banks. The jewelers can get loans for their gold.

The government has also put forward a Sovereign Gold Bond, with a fixed rate of interest, can be redeemed in cash at the prevailing gold price during payback period and it planned to mint gold coin with Ashok Chakra

(Reference:-http://www.thehindu.com/business/budget/union-budget-201516-proposes-steps-to-monetise-gold-contain-imports/article6945325.ece)
 

The government may allow banks to keep a part of the deposited gold in RBI like cash reserve ratio or statutory reserve ratio.

(Reference:-http://www.business-standard.com/budget/article/gold-sovereign-bonds-to-carry-1-5-3-interest-rate-115030100449_1.html)

However, some experts feel that the success ratios of these schemes hinge on fixation of interest rates for the both Sovereign Gold Bond and gold monetization schemes and, pegging of the minimum quantity of gold, for participating in a gold monetization scheme etc., by the government of India.

They say that interest rates in these schemes have to be fixed in the minimum range of 5-6 % and 50 grams are required to be the minimum size for entering into aforesaid gold schemes.

(Reference http://articles.economictimes.indiatimes.com/2015-03-01/news/59642307_1_gold-fund-gold-reserves-gold-holdings?intenttarget=no)

Bringing out of idle gold and Minting of gold coins inside is expected to discourage gold imports and there by these methods paves the way to furthermore reduce the already shrunken current account deficit.

Gold imports augmented from USD 1.55 billion in January 2015 to USD 1.98 in February 2015 by scaling up 48.78% on an annual basis.This was at USD 1.34 billion in December 2015, after a great drop.

(Reference:-http://www.moneycontrol.com/news/commodities/gold-imports-rise-to-36198-bnfebruary_1328953.html?utm_source=ref_article)

When current account deficit hit a huge height during the month of the August, 2013, the present Reserve bank India governor Mr. Ragu Ram Rajan and the previous government initiated various measures to cut gold imports. While the previous government hiked gold import duty from 2% to 10%, RBI sets the criteria that gold importers had to re-export 20% of their gold imports before their next imports.

These measures trimmed down gold imports greatly. The reduction in gold imports and other economic related actions reduced the current account deficit to a great extent.

The RBI relaxed its 20% re-export criteria for gold imports during November month of the year, 2014. Even after this easing action, gold imports plummeted in the December, 2014.

(Reference-http://www.marketoracle.co.uk/Article43806.html)

In International Markets, US employment data shows robust performance in February, 2015. The unemployment rate slipped to 5.5%, decreasing by o. 4%. The US economy has not witnessed this ever since May 2008.

The US labor divulged that nonfarm employment had augmented to 295,000 in February, 2015. It had also ascended to 239,000 in January, 2015.

Hence, the market expectation is that Fed may hike interest rates, on the basis, jobless rate, in June month’ review meeting itself which is very well before the anticipated time.

Gold prices tumbled to the lowest level of $1,147.10 ever since 1st December, 2014 on this expectation.

(Reference:-http://www.dailytimes.com.pk/business/14-Mar-2015/asia-gold-demand-picks-up-due-to-lower-prices-but-caution-prevails)

Fed also reduced its estimation on growth, inflation and interest rate projections.

Fed Chair Janet Yellen told that deleting the word “patient” didn’t mean Fed would become impatient in hiking the interest rate after the completion of its meeting in a press meeting and cautioned that the soaring dollar had impacted greatly on US exports and shrunk the inflation.  

Fed’s and its chair person’s announcements lifted the prices of gold from a four-month low of $1,141.60 to two weeks’ high

(Reference:-http://www.investing.com/news/commodities-news/gold-trades-above-$1,170-on-dovish-fed-333161 )

Though gold may not give interest, it can be hedged against inflation.

Hence, in my view, long term investors can accumulate gold in each and every decline. 

© 2015 Copyright Srinivasan Rangaraj- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules