Pages

RSBL Gold Silver Bars/Coins

Showing posts with label SPOT. Show all posts
Showing posts with label SPOT. Show all posts

Thursday, 12 January 2017

2017 - SURPRISES TO UNFOLD FOR GOLD : RSBL

Until Wednesday last week, gold was trading in positive territory continuing the rally from the previous session.

The spot gold price was quoted at $1,164.85/1,165.15 per oz, up $8.05 on the previous close.


There were many supporting factors for gold’s rally-

  • Mainly all the uncertainty that lies ahead with the changeover in the US administration 
  • Brexit 
  • The weakening trend in the yuan. 
On Friday last week, gold slipped following the release of strong US employment data which was as follows-
  • The USA added 156,000 jobs in December, compared with 204,000 in November, while wages grew 2.9% year-on-year to reach a seven-year high.
  • German industrial production climbed 0.4%, which was down from the 0.7% expected, while the country’s trade balance climbed more than expected. 
  • The non-farm employment change for December showed 156,000 Americans entered the workforce, a slight miss from the 175,000 forecast.
  • However, the figure for the previous month was revised up 19,000 jobs and the headline unemployment figure came in as expected at 4.7%.
  • The big surprise was that average hourly earnings grew by 0.4% month-on-month, bringing total wage growth to 2.9% for the year and the highest level since before the recession.


Gold prices were in positive territory in London on the morning of Monday January 9, recovering slightly from last week’s drop.

The spot gold price was recently quoted at $1,176.20/1,176.50 per oz, up $3.40 on the previous close. Trade has ranged from $1,172.50 to $1,178.75. Gold prices edged up in a technical rebound on Monday after one-month highs hit last week were undercut by the prospects of more interest rate hikes from the US Federal Reserve.

US employment increased less than expected in December but a rebound in wages pointed to sustained labour market momentum that sets up the economy for stronger growth and the prospect of further interest rate increases this year.

Chicago Federal Reserve President Charles Evans said on Friday the central bank could raise interest rates three times this year, faster than he had expected just a few months ago.

Evans and other regional Fed presidents are scheduled to speak this week, and the outlook for U.S. rates may become even clearer when Chair Janet Yellen appears at a webcast town hall meeting with educators on Thursday.

Expectations of US interest rate hikes lowers demand for the non-interest-paying bullion.
Apart from a rate hike the most discussed r rather the most awaited topic currently is the fiscal stimulus that Trump is promising and, of course, inflation.

Despite the rebound in the dollar, gold prices are holding up well – all thanks to the safe haven move by investors, just ahead of the shift in US administration.

By the end of 2016 or rather post the 2016 US election, confidence in the global markets was running high thus propelling gold to lose its safe haven appeal. But 2017 has lot of uncertainties and surprises to unfold for gold which will once again get into the investors basket keeping in the mind its appeal as a safe haven asset in times of global uncertainties.

In the week ahead, investors will be looking ahead to US economic reports, particularly Friday’s retail sales figures for December. Investors will also be watching an appearance by Fed Chair Janet Yellen on Thursday and speeches by a handful of other Fed officials during the week, as well as President-elect Donald Trump on Wednesday for a press conference.

Now investors await the upcoming inauguration of President-elect Donald Trump to see what the volatile leader will implement once in office.

Monday, 19 May 2014

MODIfying India

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



Firstly, heartiest congratulations to Mr. Narendra Modi on his historic win. It was a time for celebration for entire India. messages, jokes, headlines etc were exchanged as Mr. Narendra Modi enjoyed a momentous win in the worlds largest democracy.

As India welcomes its most awaited PM with open arms, we saw Mr. Modi's effect extending across all assets class.

Friday at the prospect of a stable government led by Mr. Modi, whose own state, Gujarat, prospered under his leadership. stocks and the rupee jumped on optimism that Modi will make good on campaign promises to create jobs and attract foreign investment in all sectors except for multi-brand retail.

Indian rupee also benefited, strengthening to an 11-month high of 58.63 rupees to the U.S. dollar Friday. and Sensex sky rocketed at 25,000 (1400 points up.) while results were still being out.
This appreciation of the rupees pushed bullion prices down.

Gold and silver tumbled terribly on Friday. Though in the international market gold was at a weekly gain, in India , the prices declined as the rupee strengthened. Gold plunged almost 350 rupees and silver was down 825 rupees on the commodities exchange. Meanwhile, in the international market gold was playing a different move.

After dropping more than 1 percent on Wednesday, spot gold prices gained on Thursday as investors digested comments by Federal Reserve chair person that central banks are in no rush to reduce the size of its balance sheet. 

The yellow metal was also supported by escalation of geo-political tensions as pro-Moscow separatists in eastern Ukraine ignored a call by Russian President Vladimir Putin to postpone a referendum on self-rule, a move that could lead to war. However, comments from European Central Bank President Mario Draghi's that the bank may act to stem falling inflation at its June meeting knocked the euro and the strength in dollar capped sharp gains in prices.

Gold prices fell on Thursday on positive US unemployment claims data which weakened the precious metals complex while dollar strength added to the bearish sentiments.
Stronger growth is expected post the poor winter growth. backed up by data this week showing strong housing starts and an uptick in consumer prices, might move up the Fed's plans for raising benchmark interest rates from near zero.

Half of the sates in US now have unemployment rates below 6 per cent. This figure shows that the jobs market in US is improving but at a slow pace. While employers in 39 states added jobs, we see that hiring too is picking up well.

On Friday, Gold saw slight gains in Asia before it fell to $1291.95  and then bounced back to $1296.09 in the next four hours of trade, but it then dropped to a new session low of $1288.02 after  housing data was released and the yellow metal ended with a loss of 0.19%.  Silver slipped to as low as $19.271 and ended with a loss of 0.62%.

The Economy


Report
For
Reading
Expected
Previous
Housing Starts
Apr
1072K
975K
947K
Building Permits
Apr
1080K
1008K
1000K
Michigan Sentiment
May
81.8
84.5
84.1



Source- http://news.goldseek.com/GoldSeeker/1400271241.php


For now, the gold market’s key drivers are, first and foremost, the flow of U.S. economic indicators as they affect expectations about prospective Federal Reserve monetary policy . . . and, second, of a more temporary nature, the ebb and flow of geopolitical anxieties arising from events in and around Ukraine.

Now that India has formed  a stable government and that the world picture is minutely fading and getting clear, market players are once again expected a rally in gold prices.

Reasons Being- 

Import duty reforms in India- The his morning, for example, as I write the news has come through that India’s ruling Congress party has conceded defeat in the world’s biggest democratic election to Narendra Modi’s BJP which may even win enough votes to take power on its own without its coalition partners. The BJP is thought to be more sympathetic to gold and could repeal, or reduce, the import restrictions that have led to India falling from first place as the world’s biggest gold consumer. 
This will lead to a rise in demand for gold from India which in turn will push gold prices high.

Physical Demand- Demand for gold from China is also expected to provide support for gold. This factor will give gold a wild card entry into the bulls market. over the next three to five years the demand from Asia and, also from Central Banks which have been buying gold rather than selling it over the past couple of years, will actually be sufficient to drive the gold price higher.

U.S. Economy- Many traders expect the US economy to deteriorate further which will compel the Fed to rethink about its policy prospects. The recent statistical improvement in the U.S. economy is little more than a bounce back from the past winter’s weather-induced economic chill. 

As a more realistic view of economic prospects takes hold, the financial markets will re-assess expectations of Fed policy – and this could be the catalyst triggering a resumption of gold’s long-term bull market. 

At the same time, equities are due for a setback – perhaps mild, more likely not so gentle. Either way, the competition for investment funds between equities and gold – a competition that equities have won in recent years – will shift increasingly toward bullion
when we expect to see a deterioration in the economic indicators and a reassessment of Fed policy prospects.

De- Dollarization- Russia is actively pushing on with plans to put the US dollar in the rear-view mirror and replace it with a dollar-free system. Or, as it is called in Russia, a “de-dollarized” world.
Russian Ministry of Finance wants to reduce the share of dollar denominated transactions and is hence ready to green light a plan to radically in the role of Russian ruble in export operations. Dollar will then be replaced by gold. This too will give a support to gold prices.

Geo-political tensions in Russia-  as we all know, tensions in Russia can escalate any moment thus increase the chances of a war. Any spark in the geo-political crisis in Russia will shoot up gold prices.

Meanwhile, gold is expected to range between $1272 to $1310 in the international market and Rs. 28,000- Rs.29,000 in the domestic market. 
On the other hand silver is expected to range between $18.80-$20.00 and Rs.40,000- Rs.42,500 in the international and domestic markets respectively.


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 on a see-saw"
http://www.riddisiddhibullionsltd.blogspot.in/2014/05/gold-on-see-saw.html


Thursday, 15 May 2014

My view on the closure of London Silver Market Fixing






On 14th May, 2014 the London Silver Market Fixing (the ‘Company’) Limited announced that it will cease to administer the London Silver Fixing with effect from close of business on 14 August 2014. Until then DB, HSBC and the Bank of Nova Scotia will remain members of the Company and the Company will administer the London Silver Fixing and continue to liase with the FCA and other stakeholders.



The LBMA's decision to stop London Silver Market fixing will bring in a lot of hurdles for silver importers in India. Across the world, LBMA prices have always been considered as benchmark prices. The biggest issue will be that there won’t be any benchmark price to look upon. Transparent fair prices will be required for the market to sustain and LBMA will have to choose other alternatives for fixing Silver market prices.

Monday, 12 May 2014

GOLD ON A SEE SAW

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





The year began on a positive note for gold after a terribly weak performance in 2013. By 2014, Mid February gold was once again enjoying the status of the most sought after metal, as we saw the yellow metal moving on the road of recovery.

Now gold is being pulled between bullish and bearish factors. Gold prices peaked in march, but the pull back and consolidation is now lasting a bit too long to be considered healthy. Moreover, ETF redemptions are on the rise and this has given rise to the bearish pull for gold. Gold is now sitting on a see saw and is caught between US recovery on one side and the rising Geo-political tensions on the other.

Russian crisis brings along with it a strong bullish background for gold. But at the same time the global economic development, has shifted investors focus from gold to equities and pushed gold into the bear market. In addition, other markets are doing better and you need look no further than the fact that US equities are setting fresh record highs and corporate confidence seems to be picking up, as there has been a revival in M&A activity. Strong equities are therefore raising the opportunity cost of holding Gold.

Last year gold did disappoint many investors but still it has not been pushed out of the market. It's a temporary phase and key market players still believe that gold will soon begin to rally.

As such, we think the market could quickly get interested in Gold again if other markets start to correct, especially as Gold prices are much closer to their lows than highs. A relaxation in India’s import restrictions could be a bullish development, as could a pick-up in geopolitical tension. Nearly 70% reduction in Gold imports as compared to last year will surely please the new government with the reduction in CAD woes.

It's always stated that gold enjoys the status of a safe haven asset during times of uncertainty. Ukraine tensions have been behind much of gold's 7 percent rise this year. Pro-Moscow separatists in eastern Ukraine ignored a public call by Russian President Vladimir Putin to postpone a referendum on self-rule, declaring they would go ahead on Sunday with a vote that could lead to war. The decision, which contradicted the conciliatory tone set by Putin just a day earlier, caused consternation in the West, which fears the referendum will tear Ukraine apart. While on Saturday, tensions were running at fever pitch in eastern Ukraine on the eve of an independence referendum, as rebels briefly held several Red Cross staff on suspicion of espionage. These rebels voted for self rule. Ukraine's acting President Oleksander Turchinov sad that those stand for self rule do not understand that it would mean complete destruction of the economy , social programme and life in general for the majority of the population in these regions.

But, many traders fear the gains would dissipate quickly once the situation is resolved. Many gold analysts have said that the precious metal has remained resilient the past few weeks as fundamentals remain negative for the asset, such as the Fed's commitment to continue to scale back economic stimulus.

Data released on Thursday stated that the number of Americans filing new claims for unemployment benefits fell more than expected last week, indicating the labour market was strengthening despite a run-up in applications in prior weeks.

Overall, Gold posted second straight weekly decline as more strong U.S. data showed that the world's largest economy was recovering well, supportive of the Federal Reserve's stance to keep trimming monetary stimulus. Moreover, the European Central Bank stayed committed over leaving its main interest rates unchanged. Physical demand has also been muted despite the drop in prices, with many hoping that a stabilization in prices would bring back buyers.

Last year, Chinese demand for gold surged as many buyers entered the market at dips. That, along with strength in retail demand in Western markets, helped drive a 35 percent surge in physical investment last year to 47.1 million ounces and Jewellery consumption also rose 22 percent to 81.7 million ounces.

The Fed’s ongoing reduction in its bond purchases, easing concerns about fiscal situations on both sides of the Atlantic and low inflation are all headwinds for the yellow metal for the rest of 2014. This brief detention underscored jitters in the two regions of east Ukraine ahead of the disputed referendum likely to result in a new spike of Geo-political tensions.

We cannot then, underestimate gold. 

The trade range for Gold and Silver is expected to be as follows:

In the international markets gold and silver are expected to range between $1270 -$1310 and $18.20 - $20.50 respectively. While in the SPOT (delivery based) domestic markets Gold and Silver are expected in the range of INR 28,300 to 29,700 and INR 40,500 - INR 44,000 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 -
"Ukraine Reigns Over Gold Prices"
http://riddisiddhibullionsltd.blogspot.in/2014/05/ukraine-reigns-over-gold-prices.html

Monday, 7 April 2014

BAD NEWS PROVES TO BE GOOD FOR GOLD


                                                       - by Mr. Prithviraj Kothari






I was awaiting this...gold bouncing back from its lows last week. As expected, gold crossed the $1300 mark on Friday.

Bad news turned out to be the good news last week for gold. A higher unemployment rate and worse than expected job creation is the bad news that has proved good for gold.
Throughout the week gold was lying low, but on Friday post the release of the US jobs report, gold managed to cross $1300. (future delivery)

The US jobs report were not as strong as expected. Though they were decent, but the market came off with a strong belief that the Federal reserve won't become any more aggressive in scaling back its accommodative monetary policy.

Now let's see what exactly the jobs report was all about.

Labor Department data showed private employers boosted hiring to 192,000 jobs in March, just a shade below analysts' average estimate of 195,000 net new jobs. The government reported that nonfarm payrolls rose by 192,000 in March, when expectations had been for 195,000 to 200,000. Job gains for the prior two months were revised higher by a combined 37,000. However the US jobless rate remained unchanged from February at 6.7 percent as the number of unemployed held steady at 10.5 million.

Before the jobs report was out, Analysts believed that that positive jobs data means the US Federal Reserve will likely continue cutting each month the amount of monetary stimulus it injects into the economy. But that did not happen. Markets now expect the Fed to begin raising its ultra-low interest rates in the middle of next year.

The jobs data prompted some short covering along with fresh buying, as (traders) were looking for a little better report than they got. Some traders were buying to offset, or cover, positions in which they had previously sold.

Yellow metal finds its support in the simmering geo political tensions in Ukraine and the reduced curiosity about the Fed's tapering.

Earlier in the week, Fed Chair Janet Yellen provided a relatively dismal outlook of the labour market and said she and other committee members believe “extraordinary commitment is still needed and will be for some time.”

Prices for the yellow metal also got a boost from sustained consolidation in the stock market and it saw a little extra benefit due to the fact that it was a bit oversold after a few weeks where gold was lying low.

In the Asian markets, precious metals fetched a premium in Shanghai's trade as compared to London for the first time since March. This saw demand rising from top buyer China, on Wednesday.

Prices for 99.99 percent purity gold on the Shanghai Gold Exchange hit a premium of about $1 an ounce to spot prices in London before paring gains. Shanghai prices had traded at a discount of between $8-$10 to London gold since March. Before this week, the last time they were at premium to London was in January, when Shanghai prices fetched a premium of about $20 or more an ounce on ramped up demand for gold before the Chinese New Year holidays.

Amongst other precious metals, platinum rose to $1432 an ounce, a rise of one per cent and palladium gained 1.2 per cent an ounce on continued worries over supply constraint and positive US car sales.

As the Anglo American Platinum said that it has sent out force majeure motives on its supple, which underscored the impact of a near 10-week old workers strike on the leading platinum producer. It's been 10 weeks since the AMCU members have been on strike at the platinum mines. there are 70.000 members of the AMCU that have been in strike. These 70,000 workers account for more than 70 per cent of the platinum production. the AMCU has been on strike since 23rd Jan, at the Impala, Anglo American Platinum  ltd. and Lonmin Plc. Due to disruptions in operations the companies have lost more than 10.3 billion rand in revenue and workers 4.6 billion rand in earnings. This has resulted in pushing the platinum prices higher.

On the other hand, gold, in the coming week, is expected to range between $1277 and $1230 an ounce in the international markets and Rs.28,000- Rs. 30,000 on the domestic markets.

While silver is expected to range between $19.20 to $20.55 and Rs 42,000 to Rs. 46,000 per kg 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 -
"Is it the right time to buy gold, silver platinum?"
http://www.riddisiddhibullionsltd.blogspot.in/2014/03/is-it-right-time-to-buy-gold-silver.html

Monday, 17 March 2014

LOTS OF IF's AND BUT's FOR GOLD

-by Mr. Prithviraj Kothari,MD,RSBL






Last year it was Syria...This year it’s Ukraine. Geopolitical tensions have always been a booster for gold and other precious metals and it has helped gold in enjoying its safe haven appeal as it always does in times of economic turmoil recession, inflation etc.

This week gold remained on the top and showed some interesting record movements too.
Gold prices bounced on Friday during the trading hours, rising 3.3 per cent from last week's close at 1385$ per ounce, a level not witnessed since early September. Gold sailed through US$1,380 and was on course for a sixth successive week of gains as the situation in Ukraine showed no signs of easing.

Apart from the Ukraine Crisis deceleration of Chinese economic growth has dampened the investors risk appetites. Retail Sales and Industrial output figures were out this week and it has been quite disappointing. According to MNI, a Chinese Government source said not to panic if 1Q GDP would be below target. This once again raised the question that the all so hyped China and its economy and its hunger for gold was just a temporary thing? Well we need to wait and watch

This uncertainty surrounding the rising economies has to an extent eroded investors confidence. The catalyst for a shift in risk sentiment remains to be seen as the market shrugged off positive US data overnight, suggesting the potential for a lacklustre reaction to upcoming Consumer Confidence figures.

Gold continues to be well supported as Russia is seemingly un-phased by the prospect of sanctions from the West. The population in the Crimea province votes this weekend on whether to secede from the Ukraine, with the way the ballot has been set out seemingly certain to guarantee that is the outcome say observers. It is likely to be followed by the US and its allies imposing sanctions on Russia on Monday, potentially starting a round of tit-for-tat retaliation with serious implications for financial markets and the US dollar.

The last time gold had such a gold run was in July/August 2011, soon after which the metal started its climb to the all-time record high of $1,921 per troy ounce.

Looking at the week ahead, if emerging markets fears abate and US data continues to improve; traders may ease out of safe-haven plays like US Treasuries. The resulting rise in yields would likely help the greenback to recover some lost ground, which in turn would weigh on gold prices. 

If situation in Ukraine results in unrest or rioting, gold prices would breach $1,400. But if the Ukrainian situation either resolves itself in the coming days or stabilizes to the current standoff and does not further escalate gold could sell off quickly — returning towards $1,300 an ounce. 

Lots of ifs and buts for the Gold next move! But one thing is clear, safe haven appeal of Gold will always be there.

For the week gold is expected to range between $1364-$1420 an ounce in the international market and Rs.29,500-Rs.31,500 per 10 gram in the domestic market.

On the other hand, silver is expected to range between $20.55-$22.00 and Rs.45,000-Rs.48,00 in the international and domestic markets respectively.



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 Trapped?"

http://www.riddisiddhibullionsltd.blogspot.in/2014/03/gold-trapped.html

Sunday, 16 February 2014

LET'S GET GOLD !!

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




Look in to the past- it was Feb 2013....Look in to the present- it is Feb 2014- Gold has risen 11 % since the beginning of the year....
Gold has shown some remarkable performances Since Jan-
1) Gold is up over 10 per cent since the 2013 closing lows
2)Gold crossed the $1300 mark for first time in over a year
3) The $1300 mark cross over has made gold reach a three month high in the week
4) this three month high posted its biggest weekly gains since October 2013.


Just "a" particular cause cannot be held responsible for this-

- Weak US economic data

- Deteriorating weather conditions in the US

- Political uncertainty in the Euro Zone

- SDPR posting its biggest inflow since December 2013

- Rising demand for gold from China

All of the above mentioned reasons are somewhere, directly or indirectly responsible for the rally in gold prices.

By the end of the week gold received a good booster by the weak US economic data release. The report shows that U.S. retail sales fell unpredictably in January. U.S*retail sales fell 0.4% in January*
Adding to it, more Americans filed for jobless benefits last week. Initial weekly jobless claims rose by 8,000 to 339,000, missing forecasts for a decline to 330,000.
The ICE dollar index, which tracks the greenback against six other currencies,declined to 80.308 from 80.718 late Wednesday. 
In all, the entire scenario gave a good push to gold prices. This weak economic development has once again raised questions over whether the world's biggest economy can sustain growth and made some investors hope the Fed would take a slower approach to tapering its bond purchases.

The disappointing U.S retail sales data weighed on the dollar, increasing the appeal for bullion, prices of which were sustained by the weak data releases from US as it reinforced the investors that Fed will take a slower approach to tapering its bond purchases.

Furthermore, extremely cold and unfavourable and unseasonable snowy conditions in US have hit the retails sales which has always been considered as a parameter to determine consumer spending. deteriorating conditions have also been a reason for a drop in sales.

Large parts of the United States have been gripped by freezing temperatures and snow storms, which caused investors to largely discount both the day's and other recent weak data that suggested the economy started the year on weaker footing.
shares in Europe dipped, as Italy was affected by the prevailing uncertainty  that raised worries about efforts to turn around Italy's sputtering economy.

However hopes once again prevailed as the way was left open for center left leader Matteo Renzi to take over, once Italian Prime Minister Enrico Letta would tender his resignation.

Additionally, SPDR- world's largest gold backed exchange traded fund, posted its biggest inflow since late December 2013. Holdings rose 7.50 tonnes to 806.35 tonnes on Thursday,
 This further strengthened investors sentiments.
While in China, consumer demand has always been rising and it has now overtaken India as the largest bullion consumer as it topped 1000 tonnes for the first time in 2013.

In the physical markets, bullion was also underpinned after India's trade ministry said it has recommended easing curbs on gold imports, after a 77 percent drop in imports for January that helped narrow the country's trade deficit.


During times of economic turmoil, gold has always enjoyed the status of a safe haven asset and has always had an inverse relation with equities.
But an interesting fact to be noted was that as gold performed well, equities too were on a rise.

Indeed the recovery in the gold price has coincided with a 0.5-percentage-point increase in the U.S. equity risk premium and a decline in U.S. real yields. This has been a favourable atmosphere for gold prices to rise.

Other precious metals are on the rise with Palladium up for the 8th day in a row (the longest streak since July), Platinum up 6 days in a row (long since July) and Silver up 10 days in a row breaking $20.50.

Gold’s gains in 2014 have been helped by soft U.S. economic data and emerging-market stress, but the metal’s strength may not last once economic data improve again.

The underlying notion that central banks are slowing down their quantitative easing is boosting gold's appeal as an inflation hedge and alternative currency. 
    
Speculation that the Fed might hold off further reduction of stimulus had strongly supported gold by keeping interest rates at rock bottom while stoking inflation fears. 

There is no surety of how well and for how long will these gold prices be sustained. A we head towards March, weather conditions in US tend to improve and can once again boos consumer spending. the rapid rebound in the S&P 500 over the past week would suggest that the sources of support for the gold price from a rising equity risk premium may be coming to an end. 

Now we wait for March or rather lets march towards March !!


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 -  "Is the golden egg about to hatch??"

http://riddisiddhibullionsltd.blogspot.in/2014/02/is-golden-egg-about-to-hatch.html

Saturday, 4 January 2014

PRECIOUS SWEET REVENGE- WHATS NEXT??

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




In the first trading week of 2014, gold was seen taking revenge to all those investors who shifted from gold to equities and other assets in 2013. Many claimed that gold has lost its glitter and is no more a return generating asset. By its performance in the first week of 2014, gold put a lock to many peaking mouths. In fact other precious metals like silver and platinum followed suit , with platinum touching a six-week high and palladium climbing to a three-week high, heading for its biggest weekly gain since October.

But then again debaters said that gold has shown similar trend in 2013. Recalling gold in 2013 at this time of the year, I remember that gold moved sharply in Jan but then plunged terribly throughout the year. On 2nd Jan, 2013, gold opened at $1664. Then in Feb it was seen trading at $1660 while in March it was $1570. It was consistently seen moving down throughout the year. It crashed drastically in June and touched the 1182 mark on the last day of the year. All the hype and hoopla created by gold in the beginning of 2013, seemed to have vanished gradually by the end of 2013.  

Quantitative easing has always been a positive factor for gold as it held down interest rates and stoking inflation fear. But then on the other side, as labour reports and other data showed that the US economy is improving, it initiated scaling back of the stimulus programme. This is stinging into gold’s glitter.

Many investors lost faith in gold as in bullion-backed exchange-traded products shrank for the first time since the first fund was introduced in 2003. Heavy outflows from gold-exchange traded funds also reflected investors' diminishing interest. Holdings on SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell three tonnes to their lowest since January 2009 at 801.2 tonnes.  

Since October 2013, gold has been performing poorly. As it entered 2014, gold was seen to be in its best performance since October, as it rose to a two week high on Friday. This upsurge was supported by Chinese demand for gold.  Chinese demand is likely to stay strong in the build up to the Lunar New Year on Jan 31st, when gold is traditionally given as a gift.

Based on published data, Chinese physical gold imports will end 2013 at more than double 2012's record levels, at roughly 1,000 tonnes (below data is through October); and who knows how much more demand the unpublished data would uncover?


For gold, the major costs of mining - i.e., mining and reserve replacement - is at least $1,500/oz., per this quote from Gold Fields' CEO, Nick Holland (Gold Fields is the world's fourth largest gold producer). As for silver, St. Angelo proved prices must be above $25/oz. to enable the mining industry to produce positive cash flow. Now as per the current price levels, I fear if the mines can operate, forget making money out of it. 

Expectations that U.S. economy will improve and the rest of the world's growth will stabilise in 2014 have further undermined the case for holding bullion, as investors look to put their money in riskier assets such as equities.

The US Fed has to be very cautious while scaling back its stimulus program as the much claimed recovery is still happening at a slow pace and can take a halt at any point of time.

There is not much evidence that the global economy is improving. A tapering of QE can have negative effects on all the important stock market which is generally considered as an indicator of growth, development and progress

Things do seem to be improving in the Euro zone too.

All these aspects compel us to think that gold & other bullion metals could have a bearish price impact, technically. But fundamentally, supports do remain strong. 

Well it's too early to comment given the fact that there are a lot of important events coming up for precious metals in the months to come. My take would be a Gold’s price to 30% while Silver price rise to 40%.

Gold in the coming week is expected to trade between $1185 to $1252 an ounce in the international market and Rs.29,000 to Rs. 31,000 per 10 gram in the domestic markets

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 -
"2013's Last blog"

Wednesday, 1 January 2014

HAPPY NEW YEAR








WISHING EVERYONE A VERY HAPPY NEW YEAR. MAY 2014 GLITTER LIKE GOLD, SHINE LIKE SILVER AND PROSPER LIKE PLATINUM FOR YOU. 
GOOD LUCK AHEAD!!!!

Friday, 20 December 2013

GOLD-PAST PERFORMANCE, PRESENT PRICES & POTENTIAL PREDICTIONS

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

Gold acted like a new born baby this year. It showed new movements and new trends which were quite difficult to understand, analyze and justify. But this baby though adopted by many was also abandoned by a handful chunk of people.

Gold that has always stood proud in its category, for the first time in 13 years, it gave negative returns. Moreover, it’s headed for an annual drop of 25 percent. Gold has been in a significant bear market since reaching a record high at $1,910 an ounce in 2011. On April 15, the gold price plunged about 9%—the biggest one-day loss ever for the yellow metal.  In its collapse gold bullion lost $705 an ounce or 37% of its value to the recent low at $1,195. Some say the no. '13’ as considered unlucky by many; has proved to be inauspicious for gold too.  

The international markets witnessed the following highlights in the year 2013 that were responsible for volatile movement of bullion prices.

  • Cyprus Bailout
  • Syrian Conflict 
  • Statement by FED that it may taper its bond buying program by late 2013
  • US government shutdown
  • US debt ceiling being raised

Throughout the 1st quarter gold was seen in a range of 1554$ an ounce to 1695$ an ounce. Though gold declined to $1554 in February it managed to cross the 1600 mark in March - Thanks to Cyprus. The Cyprus crisis had offered gold a helping hand, after investors had been pulling out of the precious metal 

On the other hand, the Indian government hiked duty on gold to 6 per cent from 4 per cent to rectify the current account deficit on January 21, 2013. Gold also saw a booster coming in from US lawmakers that were successful in averting the fiscal cliff at the 12th hour, this too pushed up gold prices.

On Friday, 12th April, Gold witnessed a record drop and for the first time in history it crashed 80 dollars in a single trading day this reaching $1484. Panic selling had triggered this downfall.

Some 158,200 taels of gold bullion (roughly six tonnes) were sold in six auctions held by the State Bank of Vietnam. There was news that as soon as the international markets opened, Merryl Lynch sold 4 million ounces of gold.

Heavy ETF selling was also seen in the markets.Gold dropped further trading at 1385$ at one point of time.Till mid June gold managed to be above the $1400 mark but news about the recovery of the US economy dropped gold prices and it was seen trading at around 1385$.

During mid July the FOMC minutes reviewed that many Fed governors would like to see more signs of improvement in jobs before agreeing to taper.

What came as a turning point for gold was the civil war at Syria. Gold prices rallied above $1430. Meanwhile, in South Africa the National Union of Mineworkers (NUM) has given 48 hours' notice of a strike at South Africa's gold producers. This too affected gold prices.

While in the domestic market, the Indian rupee slipped for the third consecutive day in a row on Wednesday to close at a fresh record low of 68.80 per dollar, as uncertainty over a possible US-led military strike against Syria knocked down Asian equity markets and currencies. This was the biggest ever single day fall for the currency since 1995. But then in September, stepped in Mr. Raghuram Rajan- he was then considered the savior of the depreciating rupee.

The FOMC meet began on 18th September and was over by the 19th. All expectations, rumors, speculations and predictions were finally put to a halt. 

Just when India marked the onset of its festive season, the US was heading for a partial shutdown. Though the partial shutdown did not create much impact on gold prices globally, this shutdown along with the debt ceiling will surely have a major impact on bullion prices worldwide. As shutdown entered its second week, there prevailed a lot of uncertainty in the markets.

Finally, in the first week of November, just after Halloween, the Fed stated that it would not taper its bind buying right away as it needs concrete evidence over US economy's growth. Though this should have pushed up the gold prices, completely opposite happened. Gold was down 6.1% in November, the worst performance since June when prices touched a 34-month low of 1180.5$

U.S. Senate leaders finally announce a deal to end a political crisis that had partially shut down the federal government and brought the world's biggest economy close to a debt default that could have threatened global financial calamity. The deal, however, offered only a temporary fix and does not resolve the fundamental issues of spending and deficits.
But what came in as a silver lining in the dark clouds for gold was the demand for gold from China. It finally overtook India as the largest consumer for gold as it imported 131 tonnes of gold in October through Hong Kong.

It is rather the month of December that was considered a deciding factor for gold's fate as the most awaited and much discussed FED meeting concluded on 18th. It is in this meeting that the Fed was supposed to give a final decision as to when the tapering would begin for the final time in 2013. Though many investors believed that tapering would take place in early 2014, The Fed had a surprise package for all. It probably accommodated a bit everyone for Christmas, by announcing a somehow symbolic $10 billion taper to start in January, target to end QE around the end of 2014, but on the other hand promising to keep low rates for a well past time until the unemployment rate would drop below 6.5%. Gold quickly fell to 1215.80, while the S&P 500 rallied close to the all-time high. Gold in the Indian market dropped Rs.1000 per 10 gram late in the evening. The total Gold ETF holdings are currently 57.41 Moz compared to 86.62 Moz at the start of 2013. Total gold ETF holdings are now back at the lowest level since Novemeber, 2013. 

The tapering news got along with it a firm belief that the Global economic scenario is improving and we will near the end of recession soon.

Conclusion
Gold has lost its appeal as a safe haven asset. But yes, the market is still divided into two segments. Some who have abandoned gold like the net outflows of ETFs while others who have adopted it with the belief that gold prices will rise and the metal will always serve with a safe haven appeal like the central banks of the world. 

I feel, Gold should not be always thought as a short term profit making option, rather it should be thought in terms of grams that would safeguard your future. I always remember my great grandfather saying "don't buy gold to make profits...buy gold because its eternal....it's pure wealth and its enduring and come what may-  GOLD WILL ALWAYS STAND BY YOUR SIDE:- This feeling has sunk in so well not only with me but I guess with entire India.

And that's the reason that gold has always been the favorite metal for Indians.


PREDICTIONS 2014

By now everyone would believe hat 2013 has been one of the worst years for gold.
If we take a look at gold's performance over the past decades we see that gold has given highest returns compared to any other asset in its class. I would advise investors, to have patience and just follow one mantra "Buy on Dips"

It's quite difficult to predict gold prices. A trade range can though be noted down. There are a lot of factors that are involved in the making and breaking of gold prices. These factors influence the price of gold and gold is directly or indirectly dependent on them. What we assume that in case there is another eruption of a financial crisis or any new geo political crisis, gold prices may break new highs and continue to rise strongly as a result of the supposed function of gold as a safe haven.

Following will be the key factors that will be responsible for the movement of gold prices in 2014.
  • US Debt ceiling
  • QE tapering
  • Demand for gold from China
  • Union Budget 2014 (for the domestic market)
  • Finance ministry directives (for the domestic market)
  • Mining companies 
  • Interest rates
  • US economic data

Gold is still at the mercy of the dollar. What this means is as volatile as it is with the Fed’s back-and-forth on the possible taper, gold will continue to play off what the dollar does into 2014.

The average base price for gold in 2014 is expected to be 1375$ an ounce. In the domestic market gold is expected to move in a range of Rs.25,000 - Rs.33,000 per 10 gram and the average base price for the same is expected to be around Rs.28,000. 
The average base price for Silver is expected to be around $25.00. The average base price for silver is the domestic market would be somewhere around Rs.45,000 per kg and the trade range for silver is expected to be Rs.37,000- Rs.55,000 per kg.


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 -
"As the year ends does the bull market for gold end too?"


Sunday, 15 December 2013

AS THE YEAR ENDS DOES THE BULL MARKET FOR GOLD END TOO?

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






For so many years, gold has given gains and has also been the highest return generating asset in its class. But this trend seems to come to an end now where majority of the market believes that gold is now set to enter the bear market after 13 long years.

Varied reasons are responsible for this sentiments- 

A loose monetary policy, continued fear of a further and worse economic crisis due to weak global economic growth prospers and continuous prediction of impending inflation and devaluation of fiat currencies, these are the major reasons apart from the minute ones responsible for creating  belief in the market that the upswing for gold has come to an end.

Bullion surged 70 percent from the end of 2008 through June 2011 as the Fed bought debt and kept interest rates near zero percent to boost economic growth amid the most-severe global recession since World War II.

Interest rates have been kept low by the fed's massive bond buying programme and this has always supported bullion.

But now there is uncertainty over the market that the Fed may soon start tapering its bond buying programme either in march or may be soon in December. This picture will get clear in the coming Fed Meeting to be held on 17-18 December.

Spot gold hit a three week high on Tuesday trading at $1260.24 during the day, It rose as much as 1.6 per cent. This rise was seen gaining momentum, after the market's recent short-covering rally while investors and analysts speculated over the timing of U.S. monetary stimulus reduction

Just after a gain of two days, gold slipped on Wednesday as short-sellers rushed to cover bets on sharp price falls, as a tentative U.S. budget deal returned the focus to prospects for the Federal Reserve to curb monetary stimulus.

As soon as the US retail sales data was out on Thursday, gold fell 2 per cent. The data boosted the dollar and fueled expectations that the Fed could reduce its bond buying programme in somewhere in December itself.

The US data released in Thursday, showed that retail sales had climbed 0.7 per cent. Many traders and analysts in the market are living with the belief that the Fed may start scaling back its bond purchases at the forthcoming meeting to be held on Dec 17-18. This decision would be based on positive economic data coming in from the US on employment, housing, construction, manufacturing and services sector. Another factor that prompts  the Fed to taper QE is the recent budget agreements that shows hope of a shutdown being overcome.

Though gold rose one per cent on Friday after a two day plunge. the marketers still believe that gold is subject to further downfall in the coming week as we witness one of the most important meetings of the Fed. This shall hopefully be a fate deciding factor for the bullion market.

Apart from the retail sales data, some important news came in from the SPDR Gold Trust- the biggest golf ETF. It states that the holding in the SPDR gold trust had fallen the most in nearly two months in Thursday. The limited inflows has restricted an upward movement in gold prices.

But in the Asian markets gold was seen selling at high premiums. Premiums on the Shanghai Gold Exchange for 99.99 percent purity gold picked up to $10 an ounce from $7 in the previous session.

In a sign of the toll that labour unrest in South Africa is taking on mining companies, North am Platinum said on Friday it expected to lose 500 million rand ($48 million) this year due to a strike by more than 7,000 employees and that talks to end the walk-out would resume only next year.

Moreover, there were reports out that North Korea is selling huge quantity of gold to China because of a possible economic crisis in the country. If at all this news its true and it will be a significant driving point for precious metals.

The trade range for gold is $1210- $1270 an ounce in the international markets and Rs.29000 to Rs.31,000  per 10 gram the domestic markets



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 -
"Frenzy Friday"
http://www.riddisiddhibullionsltd.blogspot.in/2013/12/frenzy-friday.html