January 30, 2013 • 12:57:44 PST
While public officials may be ignoring the continued deterioration of our economy, job losses to the tune of hundreds of...
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January 30, 2013 • 12:06:45 PST
Gold will rise to $3500 and above. Make sure you are there when it happens. Simply stop quoting it because that is the t...
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by Ryan Schwimmer January 30, 2013
GDP DATA SHOCKS MARKETS ECONOMY SLOWING
Precious Metals prices received an unexpected boost this morning, as the fourth quarter gross domestic product (GDP) release shocked the markets. Expectations across the board were that GDP would show slow growth for the economy, but now analysts are thinking that additional monetary stimulus may be needed as the drop was much more than expected. Some are speculating that payroll tax increases that went into effect January 1 could have an even worse impact on first-quarter GDP. Whereas investors seemed to be waiting for news out of the Federal Reserve meeting prior to the release of this data, it appears that sentiment has changed.
A statement is expected from the Fed today at the conclusion of a two day meeting. Many already expected a continuation of last year’s bond buying program, and the GDP data reinforces that. Standard Chartered analyst Dan Smith said, “The Fed’s decision and statement are something people are looking at quite closely. The big challenge for Gold is the impact a world economy recovery will have on prices.”
At 9 a.m. (EST), the APMEX Precious Metals spot prices were:
- Gold, $1,680.30, Up $17.50.
- Silver, $31.87, Up $0.65.
Last Updated : 30 January 2013 at 13:15 IST
Will India’s anti-Gold consumption drive become a success?
Source :Commodity Online
By Sreekumar Raghavan
India Government has raised the import duty on gold again by 2% to 6% and that on gold dore bars to 5% from 2%. Dore, an alloy of gold and silver is used by refineries to produce pure gold, accounts for about 100 tons of annual imports out of a total of 800 tons imported on an average in the country.
Last year when gold import duty was raised from 2-4%, it led to widespread protests from the bullion, jewellery industry and they downed shutters for weeks. However, this time the protests have been feeble with the Gem and Jewellery Export Promotion Council (GJEPC) asking for a reduction in gold import rate in its pre-budget memorandum submitted to the Finance Ministry.
(Gold Photo Courtesy: Bigstockphoto)
Why the anti-gold consumption drive?
India Government is against gold consumption because it is causing a huge outgo of foreign exchange estimated at $58 bn in 2011-12 which it expects to be reduced to $38 bn in 2012-13. Imports have fallen from a high of 969 tons in 2011 to close to 800 tons in 2012, according to industry estimates. The huge forex outgo is also causing large increase in current account deficit which is worrying the Finance Ministry.
Indians hold close to 18000 tons of gold and families or individuals holding more than 15 lakh worth gold assets could be liable to pay wealth tax which they may not be paying now. Once this is brought to banks, accounting becomes easy for the Finance Ministry.
Gold deposit schemes
Indians attach an emotional value to gold jewellery. It is also seen as a 100% secure investment, hence it will be herculean task for the government to curb the desire of the average Indian to possess more and more gold. From what has appeared from news reports, it is not quite clear how the gold investment schemes will work out. Here is a summary of what has already been announced:
1) Government plans to link gold exchange traded-funds (ETFs) and the gold deposit schemes of banks to encourage investors to use existing gold stock in the domestic market.
2)Gold investment schemes in banks will have a minimum tenure of six months instead of 3 years at present to make it attractive for investors. The gold invested in banks will be lent out to jewellers and at the end of the tenure the investors have the option of getting back the gold in physical or monetary terms.
3)Apart from the above, D Subbarao, Governor, the Reserve Bank of India , has suggested the idea of introducing inflation-indexed bonds, which will curtail demand for physical gold.
" The attraction to float inflation-indexed bonds is to wean investors away from gold. So, if we have to provide an instrument which yields inflation-indexed returns, this is the most straightforward asset, but we will have to engage both the government and banks," said RBI Governor D Subbarao on Tuesday. An earlier effort to introduce such bonds failed because of design flaws, he said.
Indians hold more quantities of gold in jewellery form and not in coins or bars – will this be acceptable in bank deposit schemes? Temples also hold large quantities of gold and if they were to be deposited in banks, will it be in a form acceptable to banks?
Several economists hold the view that investment in gold is wasteful and it could very well be invested in productive assets. Jagadish Bhagawati, an Indian born US-based economist has cited the poor financial inclusion due to lack of a well-developed banking system in the country after independence for the preference of citizens to hold more assets in physical gold.
There may be historical, traditional, religious, emotional factors behind the insatiable desire to own more gold by Indians. It may not be easy to lure them away from it by offering higher interest rate schemes or bonds, as people hold on to the yellow metal more on emotional and security reasons rather than just returns from it.
Tailpiece
The hike in import duty may turn out to be advantageous for e-gold, e-silver offerings of National Spot Exchange (NSEL), according to Amit Mukherjee, Head, Business Development at NSEL. Launching the e-gold, e-series trading platform of Commodity Online in Ahmedabad recently he said that e-gold registers a turnover of Rs 500 crore daily and it will get a boost on account of hike in import duty as it helps investors buy gold in demat form at 10-15% percent lower than market rate and with option to take delivery. Delivery centres are being increased from 16 to 40 in six months time, he added.
(The author is Chief Editor/Strategist at Commodity Online Group)
January 29, 2013 • 12:45:53 PST
Today the outspoken hedge fund manager out of Hong Kong, who recently lit the gold world on fire with his comments about...
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January 29, 2013 • 14:33:40 PST
Marc Faber to Maria Bartiromo " Your in Danger Because you Don't Own Any Gold"
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Commodity Technical Analysis: Gold Testing Fibonacci Support
Daily Bars
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Commodity Analysis: The current level, defined by the 61.8% retracement of the rally from the low and 1/4 close (1/4 is important because it was a high range day and high volume day), is critical to the next move in gold. Strength above Friday’s high would suggest that a low is in place.
Commodity Trading Strategy: Flat
LEVELS: 1626 1642 1655 1672 1683 1697
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