CHAPTER 1 INTRODUCTION

GENERAL INTRODUCTION The money you earn is partly spent and the rest saved for meeting future Expenses. Instead of keeping the savings idle, you may like to use savings in Order to get return on it in the future. This is called Investment. Reasons for investment: One needs to invest to: Earn return on your idle resources Generate a specified sum of money for a specific goal in life Make a provision for an uncertain future It is also to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future, as it does now or did in the past. This is why it is important to consider inflation as a factor in any long-term investment strategy. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. Right time for investment: The sooner one starts investing the better. By investing early we allow our Investments more time to grow, whereby the concept of compounding increases your income, by accumulating the principal and the interest or

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dividend earned on it, year after year. The three golden rules for all investors are: Invest early Invest regularly Invest for long term and not short term Various options available for investment:One may invest in: Physical assets like real estate, gold/jewellery, commodities etc. Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance/provident/pension fund etc. or securities market related instruments like shares, bonds, debentures etc.

SPECIAL INTRODUCTION Gold has been synonymous to wealth and prosperity through the ages. The history of Gold dates back to as early as 4000 BC when the prehistoric men used it as a tool. Since then Gold has filled the pages of history as the divine metal that has attracted the attention of men powerful and otherwise. Gold was the source of power for the kings. Wars were waged; lives were lost as kingdoms piled up and hoarded tones of Gold. In the modern history, Gold became the international currency as the Gold standard came into existence. Even after the dismantling of Gold standard, Gold existed as the backbone of international trade and economics as the US accumulated tones of yellow metal. Till today, Gold has retained its basic use as a commodity without losing its sheen as a currency. Gold, because of its ability to protect the wealth of investors can be an ideal addition to a portfolio. Also the short-term

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fluctuations in Gold offer good potential for trading. Gold has been on its longterm upwards trajectory which began in early 2001. This long-term move has been punctuated by short-term pullbacks offering opportunities for late entrants to join the bandwagon. With the US economy outgrowing the league of developed nations during the last two years coupled with the worsening of long-term structural weaknesses and the subsequent movements in the USD have moved the focus away from Golds use as a commodity. However the long-term fundamentals of the yellow metal have also undergone a significant change with the mining output falling quite steadily during the last decade coupled with an evergreen demand especially from Asia. This report analyses the long-term and short-term fundamental factors expected to move Gold prices. We believe that the short-term weakness expected in gold is a great opportunity for the late-comers to join the great Gold. Strategically, gold is one of the two most important commodities on the planet along with crude oil. Gold has been historically recognized as the ultimate store of value and method of payment. The following characteristics of Gold have enabled it play this role: It is durable, homogenous and divisible Golds rarity gives it intrinsic value and that value is high per unit of volume. Its value is recognized across the globe and is traded in a continuous market. Gold is the only financial medium of exchange that is not someone elses liability.

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In updating our price outlook, we have considered the following factors: Investment demand will continue to be the prime driver for the rally in Gold prices, As economic factors will make gold more attractive compared to other financial assets. Furthermore strong buying support from the Central Banks of Russia, China and Middle East countries will help support the rally in Gold prices. Mine production will not be able to meet current demand due to lack of new Discoveries. The long term average in the Crude/Gold ratio has been around 16 times, but is Currently only around 10 times. In the remaining part of this report we will consider the major factors that are likely to drive Gold prices higher in the near future.

STATEMENT OF THE PROBLEM In the investment process, that the investor should have knowledge about the investment alternatives and the markets. The rate of returns on investment is highly fluctuation but at the same time, investors have to analyze the rate of return/risk on investment. Financial institutions have been playing a key role to attract investors. Investors are being affected because of the middle agents like broker, jobber etc.. Business mens earn profit handsomely but they dont know to access in various available avenues of investment. Lack of financial education set aside their disposable income in low safety, profitability and marketability of investment. As investor they also expect a good rate of return from their Page |4

investment. For all these, they need adequate flow of information. Hence the present study entitled Income & Profitability on gold investment has been taken up. NEED FOR THE STUDY Investment is the most important thing today. Business mens are earning handsomely. They have all right to invest and spend to some extent. But lack of financial education, put them in much more difficult situation. At present lot of investment avenues are available market with investor education. Investors can choose from a variety of instruments and assets. While making the choice, they should also consider the rate of return and risk that on their investment. Comparatively this study reveals investors mentality on investment and its implications. There are institutions which offer attractive packages to investors. Medias like TV, Newspaper, Magazines etc.. help the investors to access their available avenues for investment. Majority of investor being educated elites in this study, know the available avenues of investment and institutions. Thus, to ascertain business mens psychology over investment and financial institutions, an attempt has been made to project the various available avenues for investment and the need for governments suitable action in their business. OBJECTIVES OF THE PROJECT To study the current investment scenario To analyze the different options available for investment options To overview the different ways of investment in gold To acquaint the investor with the factors that affects the investment scenario in gold. To have the extensive overview on the working system of Tata Gold Plus. Page |5

 To analyze the different factors which affect the gold market and suggest the investors about the right time to invest in gold. Also see that is it the right time to invest in gold or not.

SCOPE OF THE STUDY The analysis of the factors which affect the prices of gold and the investment decisions in gold. A comparative analysis of these factors has been done on the various parameters like Standard Deviation, Regression; correlation to make possible the tedious task of analysis of these factors. Further analyzing the factors will suggest the investors that whether it will be profitable for the investors to invest in gold or not. METHODOLOGY The important point for the validation of any research study is based on what type of methodology is adopted. Project report is based on following data. SOURCES OF DATA Data are facts, figures and other relevant materials, past and present, serving as basic study and analysis. The data serves as the bases for analysis. Without an analysis of actual data on specific inferences can be drawn on the question under study. Inferences based on imagination or guess work cannot provide correct answers to research questions. The relevance, adequacy and reliability of data determine of quality of findings of a study. For the purpose of present study data from two sources have been gathered namely primary and secondary data. Page |6

1 Primary data Primary data are original data collected for the purpose of a particular study. In the present study primary data have been collected by personal interview method with the help of questionnaire. 2 Secondary data These are the sources containing data, which have already been collected and compiled for other purpose by other researchers. The secondary sources consist of readily available materials and already compiled statistical statements and reports whose data may be used by researcher for his / her studies. Secondary data for the present research collected the major sources of secondary data are given below. Newspaper & Articles Business line Various websites Different marketing journals

The primary data are those data collected a fresh and for the first time and thus happen to be original in character. The secondary data on the other hand, are those, which have already being collected by someone else and which have already been passed through the statistical process. The methods of collecting primary and secondary data differ. Since primary data are to be originally collected, while in case of secondary data in the nature of data collection work is merely that of compilation. So, primary data has been gathered for the purpose of the study employing all the above methods.

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Secondary data has been gathered from various published sources, the same has been given in detail in Bibliography. SAMPLING METHOD 1. Sampling design Research is designed for two sampling plans. It consists of three divisions. i.e., sampling unit, sampling size and sampling procedure. 2 Sampling procedure Empirical field studies required collection of first hand information of data pertaining to the study from the field. These units of study include geographic area of Shivamogga city. The aggregate of the all the units pertaining the study is called the population or the universe. Population is the largest group to be studied. It is the total collection of elements about which we wish to make inferences. A member of population is an element. It is subject on which measurement is taken. It is the unit of study, a part of population is known as a sample. The process of drawing a sample from a larger population is called sampling. The list of sampling units from which a sample is taken is called the sampling frame. For the present study purpose, simple random sampling has been

selected. Simple random sample is used because every elementary unit has got equal chance to be included in the sample. 3 Sample units This particular survey was directed at only in Shivamogga District

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4 Sampling plan Sampling techniques may be classified as non-probability and probability techniques. Non-probability sampling techniques relay on the research judgments. Consequently, they do not permit an objective evaluation of the precision of the sample results and estimates obtain are not statistically

project able to the population. The Commonly used non-probability sampling techniques include convenience sampling, judgment of sampling quota sampling and snowball sampling. In probability sampling techniques, sampling units are selected by chance. Each sampling unit has a non-zero chance of being selected and the researcher can specify every potential sample of the given size that could be drawn from the population, as well as the probability of selection each sample. It is also possible to determine the precession of sample estimates inferences make projections to the target population. Probability sampling techniques include simple random sampling, systematic sampling, stratified sampling, cluster sampling, sequential sampling and double sampling. The choice between probability and non-probability sampling should be based on the nature of the research, degree of error tolerance, relative magnitude of sampling non-sampling errors, variability in the population and statistical, operational considerations. 5 Sample size The sample size is of 50 respondents consisting of Consumers in Shivamogga city.

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DATA COLLECTION INSTRUMENT USED IN THE PRESENT STUDY For the purpose of collecting primary data personal interview method with the help of questionnaire has been used by the researcher, and the primary data have been gathered from 50 respondents in Shivamogga city. Observation method and interview schedules also have adopted wherever found necessary. FIELD WORK As stated earlier, total sample size selected for the study is 50 respondents from different places of Shivamogga city, Researcher has personally met all the 50 respondents from Jan to March 2014 and gathered primary data for the purpose of analysis and interpretation. DATA PROCESSING AND ANALYSIS PLAN For the purpose of processing, analyzing, interpreting the data, the researcher in this study has used percentile analysis and interpretation have been presented in the tables followed by the appropriate pie charts, bar graphs, which are followed by conclusions. Finally, it helps fellow researchers and management students who would like to broaden the knowledge in the field of marketing. TOOLS AND TECHNIQUES OF DATA COLLECTION The researcher has adopted the questionnaire as the data collection tool by means of extensive survey on selected respondents of adequate sample size. The researcher has taken utmost care to see that the degree of bias is kept to the minimum by avoiding the ambiguity in the questions and while recording the responses from the interviewed respondents to come out with a meaningful data collection pattern, which facilitates the effective analysis and P a g e | 10

interpretation of the collected data to come out with fruitful and worthwhile conclusions and to put forward significant conclusion for the company to implement the same in order to have a competitive edge over the rest of the competitors in the market place.

LIMITATIONS OF THE STUDY The study confines only to the People at Shivamogga City, hence the finding cannot by generalized Due to shortage of time the sample size is limited to 100 only The information provided by the respondents in spontaneous and they may not be consistent. Accuracy of the primary data collected depends upon the authenticity of the information filed by the respondents of questionnaires

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