|
GreatTips www.GreatTipsMcx.com
|
|
Will it Work ? Are You Sure ? Why not confirm it….. |
|
By continuing to read or referring to material contained in any of our services, you have read and agreed to the disclosure & disclaimers mentioned & published at our site: www.GreatTipsIndia.com |
|
GOLD |
|
INTRODUCTION |
|
Gold is the oldest precious metal known to man and for thousands of
years it has been valued as a global currency, a commodity, an investment and
simply an object of beauty. |
|
Major Characteristics |
|
Gold is unique as it is both a commodity and a monetary asset. Its stability and high value makes it virtually indestructible and
ensures that it is almost always recovered and recycled. There is no true consumption of gold in the economic sense as the
stock of gold remains essentially constant while ownership shifts from one
party to another. Although gold mine production is relatively inelastic, recycled gold
(or scrap) ensures there is a potential source of easily traded supply when
needed, and this helps to stabilise gold price. Economic forces that determine the price of gold are different from,
and in many cases opposed to the forces that influence most financial assets.
|
|
Global Supply Demand Scenario |
|
The total above ground stocks of gold is estimated to be around
1,63,000 tonnes by Gold Fields Minerals Services
(GFMS) as on end of 2008 Out of this total stock, 51% is estimated to be present as jewellery, 18% as official reserves, 17% held as
investment, 12% used for industrial purposes and 2% is unaccounted for. Jewellery accounts for almost two-thirds
of annual gold demand with investment and industry being the other main
drivers. The total annual global demand for gold has averaged 3530 tonnes in the last three years (2005 - 2008). However, it
is expected to dip slightly in 2009, owing to the sharp rise in prices. Five countries, viz., The total global mine production is relatively stable, averaging
approximately 2,455 tonnes per year over the last
three years. Recycling of old gold scrap and official sector sales are the
other major sources of supply, which have averaged 1084 tonnes
and 378 tonnes in the last three years. China with a production of 276 tonnes, overtook |
|
World Gold Markets |
|
OTC markets at London (LBMA), New York and Zurich Gold derivative exchanges at Istanbul, Dubai, However, the sharp price increase in 2008 and 2009 has impacted
demand with total demand in 2008 dipping to 660 tonnes.
It is further expected to shrink in 2009 with demand in first three quarters
of 2009 totaling only around 265 tonnes against
553.5 tonnes in the same period of the previous
year. As Thus, Gold hoarding tendency is well engrained in the Indian society and
unofficial stocks held by Indians is estimated to be well above 15,000 tonnes, which is around 9% of the total global gold
stocks. Domestic consumption is dictated by monsoon, harvest and marriage
season. Indian jewellery offtake
is sensitive to price increases and even more so to volatility. In the cities gold is facing competition from the stock market and a
wide range of consumer goods. Facilities for refining, assaying, making them into standard bars,
coins in India, as compared to the rest of the world, are insignificant, both
qualitatively and quantitatively. In July 1997 the RBI authorized the commercial banks to import gold
for sale or loan to jewellers and exporters. At
present, 13 banks are active in the import of gold. This reduced the
disparity between international and domestic prices of gold from 57 percent
during 1986 to 1991 to 8.5 percent in 2001. |
|
Market Moving
Factors |
|
Indian gold prices are highly correlated with international prices.
However, the fluctuations in the INR-US Dollar impact domestic gold prices
and have to be closely followed. The global prices are driven by a host of factors with
macro-economic factors like strength of the economy, rising importance of
emerging markets, currency movements, interest rates being major influencing
factors. Supply-demand is a major influencer, amid rising global investor
demand and almost stable supplies. Shifts in official gold reserves, reports of sales/purchases by
central banks act as major price influencing factors, whenever such reports
surface. The investment in gold is influenced by comparative returns from
other markets like stock markets, real estate other commodities like crude
oil. Domestically, demand and consequently prices to some extent are
influenced by seasonal factors like marriages. The rural demand is influenced
by monsoon, agricultural output and health of the rural economy. |
|
Purity |
|
Gold purity is measured in terms of karats and fineness Karat: Pure gold is defined as 24 karat Fineness: Parts per thousand Thus, 18 karat = (18/24)th of 1000 parts =
750 fineness |
|
Disclosures/Disclaimers:The Calls/materials
contained/made herein are for information purpose and are not recommendation
to any person to buy or sell any commodities/securities. The information is
derived from sources, that are deemed to be reliable but its accuracy and
completeness are not guaranteed. The author does not accept any liability for
the use of this column. Readers of this column who buy or sell securities
based on the information in this column are solely responsible for their
action. We may or may not have any position in given stock. If any other
entity, individual or service provider also giving the same script and
recommendation than we are not responsible for that. By continuing to read or
referring to material contained, you have read and agreed to the disclosure
& disclaimers mentioned & published. |