This Akshaya Tritiya don't buy gold
This Akshaya Tritiya don't buy gold
We Indians love gold. It is more than jewellery. It is an investment that helps beat inflation. It is a security that can be pledged in hard times. Getting a loan against gold is much easier than getting a loan against your house or life insurance policies. Our love for the yellow metal pushed up the country's Current Account Deficit so much so that the government had to increase the import duty. The Reserve Bank of India also introduced controls making it difficult to import gold.
The price of standard 10 gm gold as on April 28, 2014 was Rs 30,300. Over a one-year period the gain in gold prices has been 10.66%. Over a three-month period the gain is a little over 1%, while over a one-month period it is almost 6% higher.
ALSO READ: Gold demand for Akshaya Tritiya likely to be subdued
But will the yellow metal continue to give as good returns going ahead? Given that Akshaya Tritiya, when it is considered auspicious to buy gold, is around the corner should you buy gold?
Kishore Narne, Associate Director, Motilal Oswal Commodity Broker advises against it, if you are looking to invest in it over the long-term.
"The kind of run that gold prices saw over the last decade was triggered by factors that are changing. Such as free flow of liquidity, low cost of money globally due to low interest rates and financial uncertainty. But now the US Federal Reserve has started unwinding and the interest rates are already easing. In Europe too interest rates are moving up and the economic situation is returning to normal,'' he says.
In India gold rates are higher due to the higher import duty and the controls on import. It is this artificial hike that has pushed gold prices up by about 18%. But with the RBI indicating that it will ease some of the controls, prices in India too will come down.
"Ideally prices in India should fall to about Rs 22,000 or so,'' Narne says.
In the short-term there could be a spike of about Rs 1,000 if the Ukraine crisis plays up. But that is not a good enough reason to buy, unless you are a trader.
Hitesh Jain, commodity analyst, India Infoline Finance says that a 10% correction in gold prices is significant and hence, it makes sense to wait. "Appreciation in the rupee and moderation in CAD are compelling reason for any government to reduce the import duty on gold. If that happens gold prices will fall post elections. I am not bullish on gold for the next one year,'' he says.
It is possible that premiums in spot gold may see a slight pick-up during Akshaya Tritiya, since it is traditional to buy gold. But post-elections prices are likely to fall again.
Investors with an investment of one to two years should not invest in gold as price appreciation is unlikely. Invest in gold only if you can hold it for five years or longer and not more than 10% of your investment portfolio, advises Jain.
Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
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We Indians love gold. It is more than jewellery. It is an investment that helps beat inflation. It is a security that can be pledged in hard times. Getting a loan against gold is much easier than getting a loan against your house or life insurance policies. Our love for the yellow metal pushed up the country's Current Account Deficit so much so that the government had to increase the import duty. The Reserve Bank of India also introduced controls making it difficult to import gold.
The price of standard 10 gm gold as on April 28, 2014 was Rs 30,300. Over a one-year period the gain in gold prices has been 10.66%. Over a three-month period the gain is a little over 1%, while over a one-month period it is almost 6% higher.
ALSO READ: Gold demand for Akshaya Tritiya likely to be subdued
But will the yellow metal continue to give as good returns going ahead? Given that Akshaya Tritiya, when it is considered auspicious to buy gold, is around the corner should you buy gold?
Kishore Narne, Associate Director, Motilal Oswal Commodity Broker advises against it, if you are looking to invest in it over the long-term.
"The kind of run that gold prices saw over the last decade was triggered by factors that are changing. Such as free flow of liquidity, low cost of money globally due to low interest rates and financial uncertainty. But now the US Federal Reserve has started unwinding and the interest rates are already easing. In Europe too interest rates are moving up and the economic situation is returning to normal,'' he says.
In India gold rates are higher due to the higher import duty and the controls on import. It is this artificial hike that has pushed gold prices up by about 18%. But with the RBI indicating that it will ease some of the controls, prices in India too will come down.
"Ideally prices in India should fall to about Rs 22,000 or so,'' Narne says.
In the short-term there could be a spike of about Rs 1,000 if the Ukraine crisis plays up. But that is not a good enough reason to buy, unless you are a trader.
Hitesh Jain, commodity analyst, India Infoline Finance says that a 10% correction in gold prices is significant and hence, it makes sense to wait. "Appreciation in the rupee and moderation in CAD are compelling reason for any government to reduce the import duty on gold. If that happens gold prices will fall post elections. I am not bullish on gold for the next one year,'' he says.
It is possible that premiums in spot gold may see a slight pick-up during Akshaya Tritiya, since it is traditional to buy gold. But post-elections prices are likely to fall again.
Investors with an investment of one to two years should not invest in gold as price appreciation is unlikely. Invest in gold only if you can hold it for five years or longer and not more than 10% of your investment portfolio, advises Jain.
Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
--
You received this message because you are subscribed to the Google Groups "Product Updates for AMC" group.
To unsubscribe from this group and stop receiving emails from it, send an email to Productupdatesforamc+unsubscribe@googlegroups.com.
For more options, visit https://groups.google.com/d/optout.
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