RSBL Gold Silver Bars/Coins

Thursday, 28 February 2013



Let me first list down the important highlights of the budget with regards to the Bullion, Gems and jewellery Industry:

1. FM has announced to levy Commodity transaction tax (CTT) of 0.01% on all non-agro commodity trades such as Gold, Silver, non-ferrous metals and crude oil.

2. To prevent harassment to passengers, the government has proposed to increase the limit of duty-free import of jewellery via passenger baggage to INR 50,000 for males and INR 1,00,000 for females. The rule has been amended for Indian passenger who has been residing abroad for over a year or a person who is transferring his residence to India.

Budget 2013 has been neutral

          India's greatest worry is current account deficit and when you need more than $75 bln this year and next year to fund current account deficit, I was expecting that a Duty hike is on the cards. Fortunately that is not the case. The government has neither imposed any restriction nor has it hiked the import duty on gold.

I did expect CTT tax to be introduced. But CTT tax will only add INR 300 per kilo of Gold. Though a nominal amount, but unnecessarily added on a common man’s purchase of Gold.  I feel this should have been introduced only when Options product had been established in the commodity’s exchange along with Tax structure that is currently applicable while trading in Equity markets. This would create a level playing field between the stock investor and the commodity exchange investor

Increasing the Duty free limit on gold for a passenger coming to India (conditions already given), is a positive move undertaken by the government, as it will definitely help in curbing the imports to some extent and reduce the pressure on forex.

I was expecting some announcement on the R&D front, new financial instruments to extract Gold lying in India so as to increase CAD, but these were missing.

On a scale of 1 to 10, I would personally rate this budget as 6.

Monday, 25 February 2013


Gold looses glitter and silver loses its shine. Precious metals were moving on a see saw all week and then the blood bath of prices had swept the markets. On the exchange gold plummeted to a low of INR 29,100 while silver dropped down to INR 53,100. In the physical market gold and silver were being traded at INR 29,400 and INR 54200 respectively.

Investors, traders and the whole market in general stated different reasons for this crash.
Within a fortnight gold crashed by almost 1000 rupees. But Thursday set a recovery stage for gold. Some weaker U.S. economic data did help to lift gold prices, as the weaker-than-expected Philadelphia Fed business survey worked against notions the Federal Reserve will soon end its major bond-buying program. The other reason that helped gold to bounce back on Thursday from a seven-month intra-day low, was the physical buyers in Asia picked bargains a day after the market was rattled by concerns the U.S. Federal Reserve could scale back its monetary stimulus. This created some positivity in the market.

But before the Fed released its minutes the precious metals markets had already plunged down sharply as rumours swirled that a large commodity hedge fund had been forced to liquidate its holdings, the largest gold-backed exchange-traded fund, New York's SPDR Gold Trust reported its biggest outflow in 18 months on Wednesday, coinciding with the price drop

Gold seemed to know what would come later on Wednesday, as short dated put buying, was followed by a push lower, to trigger a first round of sell stops below the 1600 USD level around midday. Technical inspired selling joined the sell off and as seen from the release of global ETF holding numbers, large long liquidation took place. Around the European lows of 1580 in the afternoon, as so often happens when commodities do a large move, rumours started to make the round that a large commodity fund would be in trouble
A panic selling behaviour was seen in the market.

Spot prices reached a low of $1,554.49 on Wednesday, their weakest since July. They slid 2.6 percent on Wednesday after Federal Reserve minutes suggested the bank may wind down its ultra-loose monetary policy sooner than expected.

It had since reversed course to post a rise of 0.2 percent to $1,565.06 Thursday evening. It fell 2.6 percent on Wednesday, posting the biggest daily drop in a year. 

Quantitative easing tends to support gold, as it keeps interest rates low while stoking fears of inflation. Tumbling prices attracted buying interest in the physical markets overnight in Asia, with analysts and traders reporting high volumes traded on the Shanghai Gold Exchange.

Gold has been caught up in a sandwich between hopes of central bank easing which enhances its inflation-hedge appeal and expected recover of the economy which hollows its safe haven status.

As far as the current outlook is concerned, Gold is expected to move in the range of 28,500. However, one can take a call to buy at this dip as gold is expected to move in the range of 29,500-33,000 rupees in the long run.