RSBL Gold Silver Bars/Coins

Showing posts with label Import Duty. Show all posts
Showing posts with label Import Duty. Show all posts

Sunday, 31 August 2014


by Mr. Prithviraj Kothari, MD, RSBL

Over the past few days gold has been playing touch and go with $1300 mark. It has enjoyed a recovery as it moved strongly higher off the $1275 level. In the past week, gold was seen falling sharply at the key level of $1275. In fact, before plunging, gold touched the resistance around $1313. 

The market is now divided into bull versus bear market. There are some who are positive about gold and believe that gold prices will move higher while some believe that it will further enter the bear market. 

Lets justify their views-


Uncertain global environment:
Escalating tensions in eastern Ukraine fuelled safe-haven demand for gold on Thursday, offsetting upbeat U.S. data that would have otherwise pushed the precious metal lower.
The tensions between Russia and Ukraine and militant activity in Iraq are keeping gold from falling back. Certainly people are concerned about the military situation in Ukraine, Syria, and Iraq. There were news that more than 100 Russian soldiers were killed in eastern Ukraine in a single battle this month while helping pro-Russian separatists fight Ukrainian troops.

Rising demand for physical gold:
Moreover, we have seen over the past years that September is one of the best months for gold in terms of physical demand. Over the last 20 years, the yellow metal has seen an average gain of 3% in September.
In India, August marks the onset of the festive season and people buy heavily as September sets in. August 29th has marked the beginning of the festive season with Ganesh Chaturthi and will go on till Diwali. Ahead of this expected demand Indian jewellers and dealers will be stocking up in the coming weeks, so it should affect prices

Along with this, we all see the wedding season setting in and no other metal can replace gold in the so called big fat Indian weddings. Be it jewellery, gifts or any other investment purpose, gold has always been India's first choice. 

Moreover demand from rural areas is also expected to rise as India witnessed a much better monsoon than expected. The majority of India's gold demand comes from rural areas, so the monsoon weighs heavily on purchases.


Strengthening Dollar:
Gold has been pulled the winding down of the US QE program and a probability of rates hike. Probability that the Fed may increase its Fed- Funds rate by mid 2015 will effectively reduce gold price in dollar terms.

US economic development:
This week, important data coming in from US has clearly shown signs of a gradually strengthening economy. The U.S. gross domestic product grew at a revised annualized rate of 4.2% in the second quarter of this year. 
The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending Aug. 22 declined by 1,000 to 298,000 from the previous week’s revised total of 299,000.
A separate report showed that U.S. pending home sales increased by 3.3% last month, beating expectations for a 0.5% rise. June’s figure was revised to a 1.3% drop from a previously estimated decline of 1.1%

As we all know, any positive data coming in from US has a negative effect in gold prices as gold is pressured by the idea that if the U.S. economy has sustained improvement then the Federal Reserve will start to raise rates, once it ends its quantitative easing program.
Geo-political tensions:
Further there were news that Geo-political tensions seem to have eased out and hence, we saw gold losing its safe haven status and gold prices slipped back below $1300.

Import restrictions:
The lack of any movement to change Indian import restrictions under the new government has also been a disappointment for the gold bulls.

As we see that the market has been divided into two segments: "the bulls and the bears" and as we go through this transition we can expect to see assets outperforming expectations. The market can’t help but exceed expectations since the investors' expectations are so low at this point.

We now see what the market has been awaiting for:

Data expected
1st September:
The August China NBS manufacturing PMI index and the Euro zone final manufacturing PMI
2nd September:
The U.S. August ISM manufacturing index
3rd September:
The preliminary Q2 GDP of the Euro zone
4th September:
The Bank of England and the ECB interest rates decisions and announcements on 4 September
5th September:
U.S. August non-farm payrolls and the unemployment rate

The market will be watching the outcomes of Thursday’s European Central Bank meeting and Friday’s U.S. August nonfarm payrolls report for gold direction. Economists are looking for ECB to take some sort of action, with a cut to interest rates likely.


$1273- $1307 an ounce
Rs. 27,500- Rs. 28,500 per 10 gram
$19.15- $19.85 an ounce
Rs. 41,500- Rs. 43,500 per kg

The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.
- Previous blog - "Uncertainty over Interest Rate Hike!!!"

Sunday, 8 June 2014


                                                     - by Mr. Prithviraj Kothari, MD, RSBL

Once again, gold was surrounded by a cloud of doubt.....doubt of gold being a safe haven asset...doubt of gold being the most dependable asset in times of uncertainty.

While Thursday showed signs of gold on the path of recovery, the US jobs data released on Friday once again proved fatal for gold. Bullion climbed 0.8 percent on Thursday, reaching the highest since May 30, after the euro strengthened against the dollar as the market discarded the European Central Bank’s unparalleled effort to weaken the single currency and strengthen growth. On Thursday, The European Central Bank announced a new and aggressive monetary stimulus package. This once again raises a question over the global economic recovery. This package along with dovish corresponding remarks from ECB president Mario Draghi  considered stock market and European bond market bullish. 

This move of the ECB has reinforced the notions of some in the market place that the U.S. Federal Reserve may be forced to back off its plan of “tapering” its quantitative easing. 

This has created a contradictory environment in the economic world where the European Union is stimulating its monetary policy while at the same time the Fed is tapering its monetary easing.

It was this tapering of the FED that gold saw its worst performance in 2013. It was in 2013 that we saw the yellow metal dropping almost 28 percent over expectations that the Federal Reserve will taper its monetary stimulus programme as the US economy strengthened. Since January, 2014, The Fed has made four tapers as we saw US moving gradually towards the path of recovery

This week too gold dropped on positive jobs data released on Friday. Gold prices fell on Friday as the dollar index swung back into positive territory, after a closely watched U.S. employment report came in almost exactly in line with expectations, showing a solid pace of hiring in May. Friday morning’s U.S. employment report for May showed a slightly higher than expected rise of 217,000 in non-farm payrolls. The key in the report was forecast to rise by 210,000. Nonfarm payrolls increased last month, the Labor Department said on Friday, against expectations for a 218,000 rise, while data for March and April was revised to show 6,000 fewer jobs created than previously reported.

The bearish trend in the international market is further expected to bring down gold prices in the near term. This sentiment further strengthened as premium on gold in the domestic markets dropped. 

At the same time, gold consumers in India are waiting to exhale. Consumers in India are following the "wait and watch" policy as they expect prices to decline below the crucial Rs.25,000 level in the near future as the market expect customs duty to decline.

Post election, gold premiums have dropped drastically. premiums had slid from 10% to 1% and 2%, soon after the government allowed premier trading houses to import gold and increased the availability of the metal in the market. and markets have a positive feel towards a lot of sectors including precious metals. Investors and traders now await a new gold policy to be unveiled by the government.

Many have even postponed their purchases as they feel that prices will decline further.
Jewellers expect prices to slide further in the next 4-6 days, given the price slump in the international market.

In the international markets people have shifted focus from gold to equities. Following suit, In India too, stocks are stealing the lime light as gold has been sidelined. Moreover, customers expect a further fall in import duties after which gold prices are anticipated to fall further. Demand in the domestic market is also expected to remain slack for the next two months, as there is no festive season.

Many traders who had resorted to hoarding gold due to supply concerns would refrain from doing so now, as import norms for exporters have been relaxed to a certain extent, said jewellers. Moreover, June is considered a slow month as far as demand is concerned.

So as of now gold is just hanging around. While some people have shifted focus to equities and physical demand for gold isn't strong, the announcements of the ECB meeting has found some cover for gold.

Most people will just wait for the market to make a decisive move before entering at this dip.

While the only mantra now is wait and watch I expect gold to be in the range of $1238- $1273 and Rs.26,200- Rs.27,500 in the international and domestic markets respectively.

On the other hand silver is expected to move in the range of $18.15- $20.15 and Rs.39,500- Rs.41,000 in the international and domestic markets respectively.

The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.

- Previous blog -
"A Dreadful Week For Gold"

Sunday, 13 April 2014


                                                     - by Mr. Prithviraj Kothari, MD, RSBL

Gold is the world's favourite metal and being an Indian, I have always been brought up with the principle that gold is one such metal the "HAS" to be a part of regular investments.

Gold in one such unique asset in its class, that  enjoys a diverse set of loyal buyers. In fact, I wouldn't be wrong, if I Say that gold has a huge fan following.
  • In the west, investors want to spread their risk.
  • In 2013, demand for gold from India hit record levels. and the crash in April saw humongous number of buyers stepping into the market to take advantage of this crash. The situation went so out of control that the government brought down the shutters, hiking import duty to 10% and imposing the “80/20 rule” which forces dealers to re-export 20% of any new shipment before taking delivery.
  • Meanwhile, China’s gold demand meantime rose faster, finally overtaking the world No.1 and swallowing well over 1,160 tonnes of imports, even while topping the league table of gold mining nations with a further 440 tonnes.
Though the gold fan club is always widening, last year it saw many betrayers.

  • It was in April, 2013 that gold had crashed following Cyprus bailout.
  • It had been downgraded by many and abandoned too, last year.
  • Gold that has always stood proud in its category, for the first time in 13 years; it gave negative returns in 2013. Moreover, it headed for an annual drop of 30 percent. Since reaching a record high at $1,910 an ounce in 2011, it collapsed to a low of $1195 nearly 37% of its value.
And its April 2014, that gold has performed exceptionally well compared to its counterpart. Gold held around 2-1/2-week highs on Friday, heading for its biggest weekly gain in a month on sagging risk appetite and increasing hopes the U.S. Federal Reserve will hold off on raising interest rates as soon as early next year.

Meanwhile, US Secretary of State John Kerry’s commented that if Russia would intervene further in Ukraine then it would target Russia's energy, banking and mining industry. I feel Ukraine story is far from done!

The highly anticipated FOMC minutes were released and markets seemed to be looking for a hint that would have confirmed Janet Yellen’s latest comment from after the March FED meeting, when she made clear that “a considerable time” means about 6 months and that means a rate hike could come as soon as early 2015. But that statement was missing in the minutes. US yields traded lower, stocks jumped up, the US Dollar lost against the board and metal prices continued to rise.

In spite of Janet Yellen making it clear time and again that; decisions will be based on economic reading, I find it crazy that traders are still reacting to potential changes in QE taper and interest rate increases.

Gold continues to roll along in an uncertain market with no clear direction in which assets are moving: US equities, US dollar and the possibility of interest rate hike this year.

Some of the remarkable figures coming in from Asia and other countries were-

In 2013, the value of physical gold traded through Dubai surged to $75 billion compared to $6 billion in 2003, and $70 billion in 2012.  volumes accounted for 40 per cent of the total worldwide trade in 2013. This reinforced Dubai's position as the global gold and precious metals trade hub as stated by Ahmed bin Sulayem, Executive Chairman of Dubai Multi Commodities Centre (DMCC),

China saw its gold output increase by 10.6% year on year to 63.2 tons in the first two months of this year, according to statistics released by China Ministry of Industry and Information Technology. In the first two months of this year, gold mines in the country produced 51.7 tons of gold, 10.4% more than in the same period of 2013

Gold imports in India are on a recovery mode now, as March imports have been mooted to have doubled to 50t m/m. The decision to permit 5 more private banks to import gold led to this recovery. In fact as the auspicious occasion of Akshaya Tritya is approaching, we see the demand to surge even higher and thus the import figures are expected to rise too.

Keeping the current market trends and price drivers in mind, gold is expected to trade in the range of $1293-$1350 an ounce in the international market and Rs.29,000- Rs.31000 per 10 gram in the domestic market.

On the other hand silver is expected to move in the range of $19.50-$20.55 and Rs.42,000- Rs.46,000 per kg in the international and domestic markets respectively.

Reiterating, I feel buying physical Gold, Silver and Platinum should be on cost averaging basis. It has been a successful strategy since the bull year began, though it would be a bit strange for the investors who started investing in the last couple of years.  I am sure Gold or for that matter any precious metal investments would always give best returns if considered as long term investment options and something that you can bank on in financial instabilities.

The primary purpose of this article by Mr. Prithviraj Kothari is to educate the masses of the current happenings in the Bullion world.
- Previous article-
"Bad News Proves to Be Good For Gold"

Saturday, 29 March 2014

Is it the right time to buy Gold, Silver & Platinum?

No doubt this had to be the blog for the week. Precious metal prices have been rocketing down for the entire week.

Let’s first focus on the reasons for the price fall:
1.    FED’s QE3 is being unwound at a steady pace. Tracking the improving US economic conditions, FED might even increase the pace of tapering.  QE was responsible to set record highs for gold and the same is the reason for its downfall in 2013.

2.    Ukraine turmoil had given the much necessary support to safe haven buying assets like Gold where the prices were on an upward spiral. As the turmoil continues to unwind itself and most of the news being discounted by the market participants, the support is slowly fading away.

3.    Physical demand is a concern. Bloomberg had reported that Iraq had increased their Gold reserves by a massive 36 tons in March and IMF data showed that Turkey was back increasing their Gold reserves by 9.3 tons in February. Hong Kong Trade Statistics showed a strong month of Chinese Gold imports for February, which were a net of 109.2 tons, which was 30% more than January and 80% more than the previous year. When I had seen these stats, I did feel that the physical demand is holding strong to support the Gold price fall. But frankly, Turkey or Iraq aren’t the main supporters for Gold. Undoubtedly it has been the show of Asian countries and majorly China. Now to track Chinese physical demand, I take support of SGE premiums. When the prices fall, SGE premium is the first one to go up, while that has not been the case lately. SGE premiums have been locked in a negative territory or hardly minutely up despite Gold price fall from $1390 to $1290 in a span of 2 weeks or so. Due to this I feel that once March data is released, it is likely to show a decline in imports relative to February numbers as SGE premiums were in positive range for most of the time in Feb.  With SGE premiums mostly in negative to hardly anything, it would have been less attractive to import metal. Even the But as the economic uncertainties increasingly looming over Chinese banking sector through shadow banking issues, I feel their physical purchases would dampen a bit.

4.    On the domestic front, Gold and Silver prices are dropping faster than its dollar denominated counterparts. Rupee has appreciated considerably when compared to dollar over the past few weeks. This has led to downfall in gold prices. Indian government and RBI had to take tough decisions over the past year and now the results are paying off. With the CAD in control, Indian economy is looking to improve from here on. Due to which investors are regaining their faith in India and investments are gradually increasing.

5.    Silver prices are more or less dragged along with Gold prices. With regards to platinum, the AMCU does not seem to be willing to accept less than double salaries, as it announced it would give Platinum producers one year extra time to adjust the wages and would only then return to work

My take on Gold prices in dollar terms will be in the range of $1180-$1400 i.e. INR 26500 to INR 32500. I feel this is the range that the investor should keep in mind while buying Gold.

My take on Silver prices in dollar terms will be in the range of $18.50-$23.50 i.e. INR 41000 to INR 47000. I feel this is the range that the investor should keep in mind while buying Silver.

Like others I do feel that if overall the economy improves than the downward journey for precious metals will continue. But like others, I feel the below given reasons will always play a crucial role in providing returns to the investors who trust on Gold and other precious metals.

1.    With the upcoming elections in India and CAD in control, I do expect that the new government will surely take some steps to boost the R&D for mining Gold in India as well as provide some relaxations in Gold import policies. If that happens, Asian demand will get a boost from India. But government policies will play a key role as they know the best when it is about deciding the best for Indian economy.

2.    As the prices head lower, I am sure that the physical demand will improve drastically world over and not only China because everyone knows that Gold is the only asset that can be taken into account during any economic turmoil.

3.    Gold will always play an important role in geopolitical conflict situations and economic uncertainties.

4.    As the prices continue to spiral down, mining industry will face hurdles to operate in low margin or no margin environments. If that is taken into consideration, I feel that their operational costs will rise more than the income they generate from mining creating the necessary closure of mines as it will be difficult to stay in business in such conditions.

5.    Silver and Platinum continue their downfall as they are more or less dragged along with gold prices. But as the economy improves their use in industries across the world will continue to rise and in turn increase their demand and prices.

6.    The bubbles created by money printing and market manipulation - not just in the U.S., but the entire world has never been universally unbacked, nor government intervention so widespread. This has not been seen over the years and the stimulus programmes have led to gigantic balance sheets of central of banks of the world under the word: “Economic Development”

Gold has always stood by one and all when it comes to economic uncertainties. But with Central banks and governments trying their best to revive their economies, Gold is loosing its investment appeal to some extent, as investors look for short term benefits.

I feel buying physical Gold, Silver and Platinum should be on cost averaging basis. It has been a successful strategy since the bull year began, though it would be a bit strange for the investors who started investing in the last couple of years.  I am sure Gold or for that matter any precious metal investments would always give best returns if considered as long term investment options and something that you can bank on in financial instabilities.

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 GOES ON A BUMPY RIDE"

Monday, 28 October 2013


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

Gold has always been the most favourite metal in its class as it has given tremendous returns since the past 12 years. In fact it has history of 12 years of gains which is why it enjoys the status of a safe haven asset.

But this year gold has fallen almost 20 percent over issues that the Fed would start tapering its easy money police by cutting its $85 billion monthly bond purchases. This has fuelled gold's appeal as a hedge against inflation.

The Fed who first stated that they may begin tapering n September, later released a statement that it might cut its easy money policy if the economic data released is positive and meets certain levels of growth.

The metal, however, has rallied about 8 percent in less than two weeks as disappointing U.S. economic data and lingering budget uncertainties in Washington increased gold's safe-haven appeal.

The recent trend in gold and its volatile reaction to the most recent economic release show the market is still heavily data-dependent for price direction.

After the US shutdown and the temporary delay of the Debt ceiling, the market believes that the worse is yet to come and that US has still not started walking on the path of recovery. these actions will further delay the Feds bond tapering act.
And that will be beneficial for gold and silver.

Bullion was headed for a 1.7 percent gain on the week, having hit four-week highs on Thursday as it benefited from weaker-than-expected U.S. non-farm payrolls data earlier in the week. 

Gold broke the $1350 level for the first time in more than a month as it rose 1 per cent on Thursday. All these upward movements were justified with the expectations that the Federal Reserve will continue its monetary stimulus due to disappointing US jobless claims data,

Bullion prices rallied after the number of Americans filing new claims for unemployment benefits fell less than expected last week. The jobs data bolstered expectations the Fed will not start to rein its stimulus program until well into next year.

Gold inched up slightly on Friday as disappointing U.S. economic data reinforced expectations that the U.S. Federal Reserve will keep its stimulus intact well into 2014.
Spot gold was up $4.62, or 0.34 percent, at $1,351.16 an ounce during the day, hovering below its highest level since Sept. 20 of $1,351.61.

Bullion eked out gains even as the dollar recovered from a nearly nine-month low against a basket of currencies. Other reasons cited for this gain in gold prices was technical buying and a two month high in the open interest for US gold futures

Some players think that gold is poised to rise into an upcoming Fed meeting as economic data isn’t thought to be strong even to alter the Fed’s decision to delay tapering. While the Nonfarm payroll report released earlier this week was considered old news, the government shutdown is thought to have added to the slowing in the US. 

Seeing gold stand up in the face of adverse currency market action was also seen as a positive by some traders . 

An issue that might provide gold with some support early next week is the prospect of a platinum strike in South Africa next week.

The gain in spot prices has further deterred physical demand in most Asian countries. 
In India, premiums were at a record high of $120 an ounce as dealers struggled to meet demand amid tight supplies.

Diwali is just round the corner and demand for gold in India is expected to soar (though it will be just half of last years demand).

However, dealers are struggling to get supplies and thus paying hefty premiums to fill in the gap.

Indian sellers have struggled to source supplies for domestic use for almost three months, since the central bank introduced a rule that required 20 percent of all imports be re-exported. 
In fact premiums are elevated and are expected to rise further... and the expectation is that they (stocks) are likely to run out completely around November at a time when the demand will be the highest on account of Diwali

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 -
"Financial calamity avoided or the worse is yet to come??"

Saturday, 17 August 2013


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

Gold, Silver and Platinum all of them have found a new life after they broke their technical resistances, strongly.
 Gold rose nearly 1 percent to a two-month high on Friday, and bullion posted its biggest weekly gain of almost 5% in many weeks.

Silver rose 1.5 per cent for an eighth consecutive daily gain. The grey metal has sharply outperformed gold and was up 14 per cent this week for its biggest weekly rise in almost five years. The Gold/Silver ratio has corrected 50% of its move since end November last year and given that the 200 day moving average should provide some support too at 58.08, we might cool down in Silver versus Gold and digest the strong recent out performance.

Platinum is trading above $1,500—hitching its star to gold’s wagon.

Gold's and Silver’s rally came as U.S. stock indexes were lower on Friday and on track for their biggest weekly declines in months. The rally in gold towards $1,372 is perhaps even more impressive because the price rise came despite the 10-year US government bond yield breaking above 2.75% yesterday. Rising bond yields have been negatively correlated with the gold price over the past few months – but not yesterday. Adding more support is that we are not seeing any major slowdown in physical gold demand yet despite the rally in the gold price. Rallies like we experienced yesterday would typically see physical demand fall away until the price volatility settles once again. The SGE premium has not fallen below $22/oz the past few days.

Even the greenback pared its early gains against its peers on Friday as release of weaker-than-expected U.S. University of Michigan consumer confidence fueled expectations that the Federal Reserve will keep its stimulus measures by the end of this year. 

The Bureau of Labor Statistics published its recent report of the U.S CPI for July 2013. Based on the latest update, the consumer price index rose again for the third consecutive month; in annual terms the US CPI increased by 2%. Despite the moderate rise in the CPI, it is still very low and remains lower than the inflation target of the Federal Reserve. The low inflation could suggest the U.S economy isn’t heating up, which could raise the odds of the Fed leaving its policy unchanged and keeping the current asset purchase program unchanged. This news may have contributed to the rally of gold and silver prices.

Last but not least, the largest increase in SPDR GLD holdings turned out to be by Goldman Sachs Group, who added 3.7 Mio.

In the domestic market, a record low in the rupee lifted Indian gold futures above the closely watched 30,000-rupee mark. Dealers said the high local price of gold in the world's largest gold buyer is expected to weigh down on demand. This week gold was more of a game of demand and rupee depreciation. 

This week, Government of India increased the import duty on Gold by 2%, Silver by 4% and Platinum by 2% to new 10%. The festive season had given tremendous rise to the demand for gold. The yellow metal witnessed a sharp climb as stockists weighed supply constraints in view of the ensuing festival and marriage seasons in the midst of incessant duty hikes from the government and RBI measures. Besides other extreme steps, like abolishing the purchase of property abroad for Indians, or reducing heavily the amount Indian companies can invest abroad, they also abolished the import of gold coins and medallions. Imports of coins and medallions; however should not have a big impact on thets total import number, as most of the imports are in form of bars and not coins. These new regulations that come up now almost on a daily basis without being too clear have brought imports to a standstill and we still wait for more details on how exactly to conduct imports in the coming days ahead.

Silver also reflected the shiny metal’s surge and zoomed to hit a four-month high owing to heavy speculation.

A sharp fall in Sensex and rupee against dollar and strong global cues also contributed to the upsurge in gold price, which posted the biggest single-day gain after August 19, 2011. Interestingly, the metal had shot up by INR 1,310 on August 19, 2011 as well.

But for Indians who want to invest in gold, you may have a host of restrictions. The big ones are a trade deficit, a current account deficit and a collapsing currency. The rupee is down 28% over the last two years. That's the biggest fall since 1991.

For the weeks to come there is lot of uncertainty prevailing over precious metal prices.
The trade range for golf for the coming week is 1340$- 1420$ and in the domestic market it is expected to trade between Rs.29,000- Rs. 32,000 per 10 gram.

“The primary purpose of this blog by Prithviraj Kothari - MD, RSBL, is to educate the masses of the current happenings in the Bullion world.

- Previous blog -
"Dollar makes gold look attractive"