Gold as an Investment Option

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"Gold is the soul of all civil life, that can resolve all things into itself, and turn itself into all things." 8/18/12 --Samuel Butler

Gold: Investment Class, Foundation Asset
 Investors generally buy gold as a hedge or

 Gold is the most popular Precious metal as an

harbor against economic, political, or social fiat currency crises (including investment market declines, burgeoning national debt, currency failure, inflation, war and social unrest).
The gold market is subject to speculation as

are other markets, especially through the use of futures contracts and derivatives. 8/18/12

Pure gold is a very soft metal To improve it’s handling quality, people add

some alloys (a mixture of other metals) to make it harder (more resistant to scratching and deforming) relation to purity of gold by weight.

The numbers on the Karat scale have a linear


Gold Price- 5 Year Overview


Supply & Demand Factors of Gold


Factors Affecting Gold Price: •War and National Emergencies •World Economic Uncertainity 8/18/12 .

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Key Terminology: Gold Investing 8/18/12 .

BU: brilliant uncirculated.5% pure. the words bar and ingot are used interchangeably. Bullion: precious metals in the form of bars 8/18/12 that are at least 99.Ask: the price at which a dealer offers to sell. In the precious metals industry. Assay: a test to ascertain the fineness and weight of a precious metal. Bar: a mass of metal cast or shaped into a convenient shape. used to describe a coin in new condition. .

Correction: a decline in prices following a Contango market: a normal futures market in which prices are higher in the succeeding delivery months than in the nearest delivery month. 8/18/12 Good delivery: the specification that a bar of . in which investors contribute funds for the purpose of buying commodities. rise in a market.  Opposite of backwardation.Commodity pool: a venture. usually a limited partnership.

Gram: the basic unit of weight of the metric system.) Hallmark: mark or stamp on a bullion item that identifies the producer. (31.Grain: earliest weight unit for gold. Karat: a measure of the purity of a precious 8/18/12 . Pure gold is 24 karat. metal. Inverted market: a situation in which prices for future deliveries are lower than the spot price.1035 grams = one troy ounce. Also known as backwardation. One troy ounce contains 480 grains.

or 0. at which the price of gold is "fixed" or set.7 grams).375 troy ounce (11.1035 grams. NYMEX: the New York Mercantile Exchange. In the precious metals industry. a Ounce: a unit of weight. an ounce means a troy ounce equal to 31. future exchange where platinum and palladium are traded.London fix: two daily bidding sessions in London of five major gold firms. Tola: a unit of weight of India equal to 180 8/18/12 grains .

Benefits of investing into Gold 8/18/12 .

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Portfolio diversification v Balancing asset classes of different correlation s can significantl y enhance returns whilst 8/18/12 .

Inflation hedge 8/18/12 .

has remained largely stable for decades purchasing power. it has retained its q In contrast. the real value of most currencies has generally declined. 8/18/12 .Gold's reputation as a protector of wealth against the ravages of inflation. q The value of gold. in terms of the real goods and services it can buy. q Despite all challenges.

The defensive properties apply both internally (i.e.Currency Hedge Investors have long regarded gold as a good protection against depreciation in a currency's value. 8/18/12 . gold is widely considered to be a particularly effective hedge against fluctuations in the world's main trading currency. against inflation) and externally (against other currencies). In the latter case. the US dollar.

8/18/12 .Gold has offered investors consistently strong protection against instability and exchange rate fluctuations.

this is a safest investment during recessionary times. 8/18/12 .Liquidity: Gold can be converted into cash easilyAlso. Safe from economic upheavals: Even in a recession hit economy. gold fares well. you can sell a piece of jewelry anywhere in the world and get instant cash. there are no boundaries to its liquidity. In case of an emergency. Therefore.

Risks involved in Gold Investing 8/18/12 .

Risks of Investing into Gold 8/18/12 .

How Gold Prices are fixxed? : London Fix 8/18/12 .

The London gold fixing or gold fix is the procedure by which the price of gold is determined twice each business day on the London market by the five members of The London Gold Market Fixing Ltd. on the premises of N M Rothschild & Sons. and the It is designed to fix a price for settling The gold fix is conducted in United States 8/18/12 . Pound sterling (GBP). contracts between members of the London bullion market dollars (US$).

The current five participants in the fixing. who must be members of the London Bullion Market Association. are: 8/18/12 .

Investment Options: Gold 8/18/12 .

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All the commercial banks and financial distributors are authorized to sell gold coins of 24 karat (the purest). The prices of gold coins depend on the daily market rates of gold. 8/18/12 .Gold coins It is one of the purest forms of gold. with a certification from an independent agency.

Gold Coins 8/18/12 .

investors can get their gold in the form of bullion bars or coins.  The fixed sum then buys gold every trading At any time during the contract term (usually a minimum of a year). or when the account is closed. and sometimes even in the form of jewellery 8/18/12 .Gold Accumulation Plans Gold Accumulation Plans (GAPs) are similar to conventional savings plans in that they are based on the principle of putting aside a fixed sum of money every month. day in that month.

Gold Futures & Options Gold futures Gold futures contracts are binding commitments to make or take delivery of a specified quantity and purity of gold.or cash deposit paid to the The investors can significantly leverage their investment 8/18/12 .is only a fraction of the price of the gold underlying the contract. on a prescribed date. broker . at an agreed price. The initial margin .

amount of gold. maintaining the physical metal in storage. The Gold ETF fund will purchase a large They will then issue shares in baskets. 8/18/12 . the value of the shares will increase with the price of gold bullion. meaning it is traded on the major stock exchanges.Gold ETF An ETF is an Exchange Traded Fund.

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Gold ETF How to Invest: •Have a Demat Account •Buy Scripts of Gold ETFs.26%) 8/18/12 .10 (1.829.25 35.2. Typically. 1 unit of GETF = 1 gram of gold NSE : Nov 14. 17:00 SBI Gold ETF.

These products provide investors with a combination of:  exposure to gold price fluctuations a yield principal protection 8/18/12 .Structured Products Gold-linked bonds and structured notes Gold-linked bonds are available from the world's largest bullion dealers and investment banks.

Gold Corp. 8/18/12 Impala. It brings additional rewards as well as its share of risks. Newcrest Mining. Barrick Gold.Gold mining companies It is not a direct investment in gold but in the stocks or shares of a gold mining and exploration company. . The price of these stocks moves with the price of the gold and also depends on the company's future outlook.

precious metal since a buyer has to pay for the craftsmanship associated with the making of jewelry. which increases the total cost. selling of the jewelry may not fetch the same price in case the current market price does not exceed the buying price.Gold Jewelry People buy gold jewelry either out of desire (to wear gold ornaments) or needs (mandatory purchase in marriages and other functions). This is an expensive way of buying the Moreover. 8/18/12 .

Is Gold Jewelry a good Investment? What are the: • Functions • Features 8/18/12 .

Is Gold Jewelry a Good Investment? 8/18/12 .

Is Gold Jewelry a Good Investment? 8/18/12 .

Gold Investment Pyramid 8/18/12 .

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insurance. needs to take delivery on expiry Comparable to market returns Storage risk Bullion Gold 8/18/12 Lowest Highest High .Comparison between Different Forms of Gold Investments Cost of Buying Purity Liquidity Gold ornaments High Uncertain. etc. high initial Storage risk cost involves in making ornaments Low as banks charges storage cost. Comparable to market returns Depends upon company performance Storage risk Gold coins High Highest Low Gold ETFs Gold mining companies Lowest Lowest Highest Company performance defines its existence Highest High High No storage risk Market and company risk Gold futures Lowest High Used as a hedge Storage risk. comes Moderate in different carats Return Safety/Storage Risk Low.

Tax Implications of Gold Investing 8/18/12 .

2 Taxed at 20 per cent with indexation benefit Gold and silver bars and coins as well as jewellery are liable to wealth tax.Tax Treatments of Different Gold Investments Short-term Gains1 Gold ornaments Gold coins Gold ETFs within 3 years within 3 years Within 1 year Long-term Gains2 After 3 years After 3 years After 1 year After 1 year After 1 year After 3 years Gold mining companies Within 1 year Gold futures Bullion Gold Within 1 year within 3 years 1 Taxed as per applicable income slab. the tax payable being 1% 8/18/12 of the market value of the assets .

Strategies for investing into Gold 8/18/12 .

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Gold Composition in the Portfolio 8/18/12 .

Gold in a Portfolio 8/18/12 .

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Gold ETF vs. Physical Gold superior to investing in Physical Gold? Why is investing in Gold ETF considered 8/18/12 .

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Rapid Trends-Gold and Silver Bullion  . Nicole Langton Gold as an investment: Wikipedia  8/18/12 http://en.Refrences Gold Basics : Understand Basic Gold Investing. From the desk of: Alex Buying Gold Jewelry as an Investment. Gold Bullion.ehow.rapidtrends.

  Richard Evans.Gold fixing. “Strategies For Investing In Gold”. “The pros and cons of 8/18/12 investing in gold”. Wikipedia   Mark Riddix . The Telegraph .moneyunder30.

cmi-gold-silver.The Gold Bullion Pro Top 10 Factors Affecting Gold Price in India World Gold Council Research Reports- 8/18/12 .Key Terminologies in Gold Investing K http://www.goldbullionpro.

" --Paul Einzig 8/18/12 . an Indian traveler observed that trade all over the world was operated with the aid of Roman gold coins which were accepted and admired everywhere.Thank You "Even during the period when Rome lost much of her ancient prestige.

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