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General Facts Why invest in Gold? Price Determining factors for gold
Economic Indicators Impacting Gold Prices
Gold Demand in India Research Support
Why Invest in Gold?
Gold is a foundation asset within any long term savings or investment portfolio. One of the few financial assets that do not rely on an issuer's promise to pay. It offers investors insurance against extreme movements in the value of other asset classes.
22 times gold has reached new highs in 2010.General Facts 60% of gold mined becomes jewelry. 100 million people depend on gold mining for their livelihood. worth USD$44.5bn.9 tonnes. . 2nd quarter gold demand was 919. 394% increase in the price of gold from Dec 2000 to October 2010.
Gold Demand : Sector wise Q2 2011 Jewellery 5% 17% 46% Total bar and coin invest ETFs and similar Technology 32% .
Gold Demand : Year wise Year .
Demand & Supply Q2 2011 .
Gold mining Production and Supply. invasion and economic uncertainty. . Hedge against financial stress. War. Jewelery and Industrial demand. Central Banks’ purchases/sales.
South Korea and Thailand) nations in terms of gold holdings increased by 28% in 2011.7 tonnes. Central bank activity among the VIST (Vietnam. . Gold price can be closely correlated to central banks via the monetary policy decisions made by them related to interest rates.Central Banks Central banks and IMF play an important role in the gold price. Interest rates are closely related to the price of gold. India stands 11th in Gold Holdings with 557. Indonesia.
equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative & safe investments increases.Hedge against financial Stress Gold can be used as a hedge against inflation. Within the current economic scenario. deflation or currency devaluation. countries are faced with huge deficits and more money that is pumped into these economies – the printing of money basically – then less valuable the currencies become. If the return on bonds. .
S. • India is the largest consumer of gold Jewelry followed by China and the U.Jewelry and Industrial demand • Jewelry accounts for over two-third of annual global demand. . dentistry and medical uses account for around 12% of gold demand. • Industrial.
• The completion of de-hedging by world’s two miners Barrick Gold mine and Anglo Ashanti Gold mine reduces the possibility of a price rise as seen in 2009 and 2010. . as consumers in many markets held off on selling their existing 'loose' holdings of gold in anticipation of higher prices. • Recycling activity was 3% down year-on-year.Gold Mining Production and Supply • The mining production rose by 7 percent to 708.8 tonnes in 2nd quarter 2011. • Producer de-hedging exerted a modest negative influence on supply in second quarter.
or that it can be used as an alternate currency during such periods of uncertainty. that the currency may become worthless.War. . people fear that their assets may reduce in value. Invasion and Economic uncertainty In times of war or in terms of economic uncertainty. Governments/people believe that Gold is a solid asset which will buy food/ transportation etc.
S credit rating in August 2011 Gold @$1800 Greece on verge of 98 percent default in September 2011 Standard and Poor (S&P) downgrades Italy’s credit rating in September 2011 .Gold @$1700 Standard and Poor (S&P) downgrades U.
Economic Indicators Impacting Gold Prices • • • • • • • GDP Non Farm Payrolls Industrial Manufacturing Data Business Inventories Value of U.S dollar Economic Stimulus package if announced Trade deficit .
Returns on Asset classes (Y-o-Y) .
Spot Gold v MCX Gold (3 Year Trend) Spot Gold Going hand in hand MCX Gold .
Spot Gold v Dollar (3 Year Trend) Spot Gold Dollar Negative Correlation .
200 tonnes by 2020.50.000 crores. . According to the World Gold Council (WGC) report for 2nd quarter 2011. urbanization and rise in income and savings levels of the consumer. valued at about Rs 2.Gold Demand in India Gold demand in India will continue to be robust in the next decade… WGC The cumulative annual demand will be in excess of 1. the demand for gold in India would be driven by rapid GDP growth.
The southern states like Kerala. The research highlights that with 50 per cent of the Indian population under 25 and approximately 150 million weddings anticipated over the next decade. Tamil Nadu and Karnataka account for over 40 per cent of the country's gold demand. Andhra Pradesh. which will drive gold consumption. Source: World Gold Council . Gold jewelry represented around 75 per cent of the total Indian gold demand in 2010.
Types of Investments Physical Jewelery Bars/Coins Non Physical Gold mining shares ETFs Futures(can be converted into physical) E Gold (can be converted into physical) .
Gold is also VOLATILE…… .
Mr. •Hold the gold in demat form. John’s choices Hope Prices falls before Marriage Buy 200g Gold now Buy 2 mini Gold MCX futures @ 2750/g •Block over 5. . maintain MTM.000 as margin amt (at present prices) •Invest the rest of 5 lacs in bank or other safe assets for 1 month. •Risk the possibility of a price fall later.5 lacs (at present level). John Thomas fixed his daughter Christina Johan’s wedding to be on 2012 May 6th. and that he plans to buy 25 pavan (200 g) gold as jewelry. •Block only less than 50.Common Man : Wedding Assume that on September 30th.
The flexibility of easy entry and exit available through online futures trading platform. enables even better strategies than that mentioned above. Note: This notional loss from futures can be reduced or nullified. so that the loss is limited to Rs.000 profit from futures + Rs. . Standing instruction can be given to exit futures if price fall below 2700 (or suitable prices).10000 or even much lower.20.P/L scenario @ End of April 2012 for MCX Gold purchase @2750 Time Profit / Loss April 2012 Price@ 2900/g Rs. 26600 interest gain (8%) Conclusion Buy jewelry at high Oct prices.000 loss from futures + Rs. Would be able to buy Jewelry at lower April prices. (and more with the extra gain) John avoids the high priced buy in Dec. 20.26600 interest gain (8%) April 2012 Price@ 2650/g Rs.
Advance booking by customers Commitment to suppliers Jeweler’s choices Hope Prices do not fall sharply after stocking or Hope that prices do not rise sharply before stocking Hedge with gold futures. Sell and buy against each stock moves •Avoid distress sales or purchases •Reduce losses •Make modest gains .Jeweler Scenario: Risks on both directions due to high volatility.
Research Support USE our research to know about major trends. Daily Gold report Strategies (Short term as well as long term) for both International as well as MCX Gold News Alert : Both Indian as well as International Technical Analysis and Charts Customer support through phone. entry/exit points etc. website . sms. email.
(Refer our gold reports in August 2011) .Spotting the top of the rally • It is every analyst / trader’s dream to “pick” the “top” of a rally. • Geojit Comtrade’s Research did just that.
) Different denominations available (1kg.Advantages of Gold Futures (MCX) platform Online Terminal (View/Trade at the comfort of your home/office) High depth/liquidity (MCX is no: 1 in India and no: 2 in world as per its website. Take/give delivery if you want. 1g). Trading hours (10am to 11 30pm) covers all major mkts. 8g. Margins as low as 4 to 7% . Store/Sell from demat. 100g.
Cardamom (Apr 2004) and Coffee (Feb2006) Brand image of Industry Pioneer since inception of commodity futures in 2003 .Pedigree Constituted by staff from erstwhile Geojit Commodities and other industry stalwarts. GEOJIT COMMODITIES Number 1 Broking house status in terms of Trading Terminals : Dun & Bradstreet Survey 2008 The first brokerage to offer online trading in Rubber (Mar 2003). Pepper (Apr2003). Wheat and Rice (Dec2003). Gold (Oct2003).
Increased media spending to make ourselves more visible in print. visual as well as digital media. . Seminars and workshops designed to help both the new clients as well as experienced traders.Geojit Comtrade : Increasing investor awareness/education Daily. Offers SMS / email reports at no additional cost. so that our reports and views reach better to our investors. weekly and special reports on various commodities & currencies covering both international as well as domestic markets.
Latest advancements Geojit’s “Flip Ultimate”. Mobile Trading in commodities for the first time in NCDEX/NMCE. One touch terminals. NCDEX & NMCE on to a single platform. Facility to trade in International Markets. . which has integrated the three major national level exchanges : MCX.
Fax: +91 484 2402482 Email: customercare@geojitcomtrade. NCDEX Member code : 00920 FMC No. NMCE Member code : CL0324 FMC No.com MCX Member code: 40220 FMC No. Kochi. Canal Road.Door No. Phone: +91 484 2401224/5.: NMCE/TCM/CORP/0245. Kaloor.geojitcomtrade.com Web: www. India-682016.:NCDEX/TCM/CORP/0895.: MCX/TCM/CORP/1710. NSEL Member Code : 12770 . XXXVI/1567.
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