Last year, in my post on 16th August I mentioned about investing in Gold ETF & brief reasoning on same. That time gold was around Rs.8500/- per 10 grams & now it’s almost Rs.12000/-. Gold did touch the level of Rs.13000/- ($1000/ounce) & had corrected. Many of my friends were skeptical & still are about investing in Gold.
Below I have tried reasoning some of the points which can lead to a rally in Gold which U, ME & HUM can never imagine. :-)
Gold which is popularly called Bullion in Economic terms is always considered as safest investment & an ideal hedge against the much popularized term Inflation. The best part is the print media & the electronic media is on a war foot to teach general public about Inflation & the effect of it on their finance & day to day life.
Gold once was used as a currency before it was replaced by the paper by the leading Central Banks. It was a thumb rule of printing the paper currency equivalent to the gold in the reserve. Initially everything was fine until the need of government to serve the country & the dependency of the general public on the government for the spoon feeding was in such a extent that the thumb rule was forgotten.
It was a double whammy, Paper was printed & gold was sold. J. This was a case in most of the countries.
Now with sub prime & other issues coming to fore, the time has come that the Central Banks will need to buy the gold to maintain the balance.
If you compare the growth of Gold versus land or equity, you can spot the difference.
In 1978, my parents bought our home at Rs.80/- sq.ft & now after 30 years; it’s quoting almost Rs.8000/- for the same sq.ft. Gold in 1978 -1980 was around $850/ounce & now it is hovering around $900/ounce.
Land has appreciated almost 100 times in 30 years & in same period gold has moved just 5%.
If you believe in economic balancing, either Real estate price has to come down to Rs.150/sq.ft or Gold has to move nearly 100 times i.e. $85000/ounce. To put it into Indian currency Rs.900000 ( Rs. Nine Lakhs) for 10 grams of gold. J
Technical Analysis of Bullion indicates that there is a probability of a maximum downside risk of 30 -35% from the peak level which comes out to Rs.8500- Rs9000/- or a sharp rally to Rs.17000/- in short term.
For long term ………… Picture Abhi Baki Hain
(Yes, I am a great fan of SRK, Ajay Devgan & Kajol )
Readers should draw their own conclusion & take appropriate action.
Disclosure: I have position or maybe trading in above said stocks/ commodity for myself/ family members / friends / Associates.
Please go through Disclaimer on this blog.
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