2013's LAST BLOG!!!!

-By Mr. Prithviraj Kothari, MD, RSBL (RiddiSiddhi Bullions Ltd.)

As I begin to write the last blog of 2013, I would like to thank all my readers, followers and friends who have been through this journey. Though it has been just two years since I started my blog, your extended support and constant following has made sure that I do not take a break. 

It is for the first time in 30 years that gold is heading for a negative return. In fact 2013 has been one of the worst years for gold. With the end of 2013, we also see an end to a 12 year rally. This decline was driven by low interest rates and  certain steps taken by global central banks to foster the economy. 

Gold was once again seen trading at 1185 (the low it reached in June 2013). This drop came in when the Fed announced its tapering plan. This was the same reason that had plunged gold prices in June when the Fed had for the very first time stated that it would soon taper its QE. Though that time there was a lot of uncertainty prevailing in the market as to how and when the scaling back would be executed, until Fed finally implemented the tapering plan in December.

Gold traded flat around $1,200 an ounce on Tuesday as activity slowed before Christmas, while signs of a steady U.S. economic recovery could deter investor interest as the metal heads for its biggest annual loss in 32 years.

U.S. economic data on Monday showed consumer spending rose in November at the fastest pace since June, while consumer sentiment hit a five-month high heading into the year-end.

The euro zone crisis has more or less stabilised, global economy seemed to be improving and the US too plans to taper its QE. Though all this makes gold a bit unfavourable in the year to come there are loyal investors who have still not lost faith in gold. 

A risk of deflation could push gold prices higher in 2014. Although perceived by many as a negative for gold such worries could exacerbate the debt problems of weaker euro zone economies and force the European Central Bank to loosen monetary policy further, boosting gold prices.

Another supporting factor for gold could be the Fed's continued asset purchase program. Although the central bank has announced a small taper, it will still be pumping large amounts of stimulus into the economy, which should be supportive for gold. 

Most importantly China’s support will always be crucial to Gold. Frankly, Gold is carrying along with it a big burden of uncertainty in 2014.

As the economy improves, Silver and Platinum demand will surely rise faster as compared to Gold. With the current policies by the central banks across the world, these precious metals are to be watched out for the year 2014. 

Apparently, the poor performance in 2013 has left the precious metals looking less attractive compared to other assets, including equities. But, Gold should and always be considered as a safe haven asset. Being in this industry for so many years, I would always recommend some part of portfolio allocation towards Gold and other precious metals.

The trade range for gold is expcted to be around Rs. 29,000- Rs. 30,000 per 10 gram in the domestic market.

The primary purpose of this blog (Prithviraj Kothari's view on Bullion Markets- MD,RSBL (Riddisiddhi Bullions Ltd.)) is to educate the masses of the current happenings in the Bullion world.
- Previous blog -
"Gold- Past Performance, Present Prices & Potential Predictions"
http://www.riddisiddhibullionsltd.blogspot.in/2013/12/gold-past-performance-present-prices.html