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YELLOW METAL’S FACELIFT



It’s been a giant wheel ride for the Glittering Gold as the gold rose 200% from January 2008 to January 2013 to touch an all times high of Rs 32,943 per 10gm on August 2013 to the unexpected slide to 20% to Rs 26,645 per 10 gm on September 2014. On  3 January 2008 Gold was trading at 11,009 mainly due to global economic slide which struck in the latter half of the that year, and because all the global financial instruments were giving way so the investors clung to the gold just like the only log in deep seas.

 Although we have witnessed a steady growth of economy in the rise global indexes like US-NASDAQ, India-Sensex,France-CAC-40,Brazil-bovespa and Germany-DAX. More so the rise of interest rates announced by the US although however minor increase will have some effect on the markets globally because interest rates rise are directly proportional to the yields on bonds and cash in the form of money-market funds there by making the investors a little bit inclined away from gold as bonds and cash give a false sense of security and attractiveness.

Although the gold has been in bearish mode for most of the 2014 and this only indicates that one must invest in gold in phases because there will be some major backup from gold exchange traded funds (ETF). In a way the decline in gold was good for the Indian economy because the gold imports have been the biggest contributor to the current account deficit (CAD).Although the government in 2012 had imposed a host of curbs on gold imports like the import duty on gold was raised progressively from 2% to 10%  and also 20% of export mandatory for the gold importers !!!! , however the government gave one wild card by allowing the big gold importers to import gold on credit which was banned in 2013.


However CAD of India will be 1.7% of GDP in 2014-2015, and maybe the gold curbs will be lifted in the near future and by 2015-2016 the CAD will only rise to about 2.3% of GDP. So investing in Gold can be a very good move as GOLD can be HEDGE against possible losses in other assets classes, and GOLD is always a very good bet in case of any economic turmoil and geopolitical upheaval and thereby tensions fallout in west Asia, Ukraine and the Middle East, Pak or China, so gold is always a very safe paradise in the times of any uncertainties. So fresh buying and investing in gold for short, middle and long terms will prove to be a heaven.