HOLE GIVES HOPE TO PRECIOUS METALS

Gold prices have been consolidating since the beginning of the year as the market is waiting for the US Federal Reserve to undertake a third round of quantitative easing. Investors expect the central bank to announce stimulus measures at its meeting in September to boost the fragile economic recovery.

The economic agenda is busy with German unemployment, EU retail PMI, UK money supply, the usual Thursday US initial jobless claims, personal income and spending and the start of the gathering at Jackson Hole 

Gold  is set for the biggest gain since January. Prices reached a four-month high of $1,676.90 on Aug. 27 on speculation that the Fed will embark on a third round of debt purchase after the Jackson Hole meeting.

The economic agenda is busy with German unemployment, EU retail PMI, UK money supply, the usual Thursday US initial jobless claims, personal income and spending and the start of the gathering at Jackson Hole 

  

Comex gold futures prices on Friday rallied sharply, hitting a fresh five-month high and are now within easy striking distance of $1,700.00. The precious metals markets took flight late Friday morning following the much-anticipated remarks by Federal Reserve Chairman Ben Bernanke at a Fed symposium in Jackson Hole, Wyoming. The Fed chief strongly hinted fresh, unconventional U.S. monetary policy stimulus will be implemented at some point. Indeed, he left the door wide open for a fresh quantitative easing initiative to be unveiled at the September FOMC meeting.

Friday is the last trading day of the month, which makes it an extra important trading day from a technical perspective—and the gold and silver bulls even took full advantage of that by pushing prices to multi-month highs. The gold and silver bulls gained fresh, solid upside technical momentum Friday, to suggest that prices can continue to trend sideways to higher for at least the near term.

Investors expectations of imminent stimulus had dimmed somewhat heading into the symposium in Jackson Hole at which Bernanke said the Fed was ready to provide more stimulus if needed, but gave no signal it was imminent.

International gold prices reflect the domestic prices too. In India, gold reached crossed it highest mark, with the rate per 10 gm reaching – Rs. 31,500 as on 28^th August 2012.

Gold is expected to move ahead of its life time high. Prices of gold may hit new highs around the Diwali festival as rising tensions in West Asia may increase demand for the metal as a safe haven investment. Civil war in Syria and geopolitical tensions in Iran are major factors pushing up prices of gold despite the fall in physical retail demand for the metal in India, China, and many other countries. In such a scenario, we could see gold touching a price over 32,000 rupees per 10 gm, may be by Diwali.

Overall the metals seem to be holding patterns ahead of what unfolds from Jackson Hole, there has unsurprisingly been some pull back after last week’s rallies as the markets consolidate and overall, although there may be some initial disappointment if QE3 is not announced (which is not likely) - the likelihood that QE3 will be kept firmly on the table may provide comfort

CELEBRATING MY 50TH BIRTHDAY

It was a moment of immense joy seeing all family, friends well wishers and the entire RSBL Family gather at Bullion House to celebrate my 50th birthday on September 1. I thank all of them for sparing time and making this day memorable for me. 

GOLD GLITTERS...SILVER SPARKLES....PLATINUM POLISHES

Precious metals seemed to be on fire this week. Gold reaching its life time high of Rs. 31,300 (999 purity per 10gm) in the physical market where as silver and platinum reached Rs. 57,000(per kg) and  Rs. 29,600 (per 10gm) respectively.

Bright chances of another round of QE3 led to sharp rises in gold and silver prices where as labour unrest in Lonmin’s mine in South Africa resulted in the platinum volatility.

In the international market, gold rose to a 16-week high to USD 1,665.09 an ounce and silver gained by 2.5 percent to USD 30.57 an ounce

Rise in international gold prices affected the domestic prices too. Internationally, gold reached its highest level in the past three months. Rising gold rates along with the appreciation of the rupee against the dollar led to this huge leap. Indian rupee appreciated to 55.41 against the US dollar on Thursday. 

Minutes of the FOMC meeting resulted in rallying of gold and silver. The FOMC meet brightened the chances of another quantitative easing plan. US economy has been growing but at a very slow pace. The homes sales report and jobless claims report didn’t seem to be much positive. These stats will strongly affect bullion prices.

Moreover Central bank has been buying 150 tonnes of gold. Along with his there is huge SPDR ETF buying too.

Gold has always been considered as a safe haven asset and during these times of uncertainty investors are turning to gold to be on the safer side. Where traders and stockists are concerned, they too have started piling up their stocks ahead of the biggest festive and marriage seasons of the year (September- December) in India.

Looking at platinum, this metal has also shown great volatility in this week. The unrest at Lonmins mine in South Africa has spread to two other mines. Platinum prices continued to soar due to concerns of supply trouble after 44 people died during strikes at a pit owned by Lonmin.

About a fifth of global platinum production is idled in South Africa resulting in supply shortage and soaring prices.

It seems likely that these protests will affect the other precious metals too including the gold mining sector.

Outlook for gold is bullish with the yellow metal is expected to reach $ 1800 an ounce by September end.

WE NEED A GOOD MONSOON....SOON!!!!

Every year, the entire country - be it the big time investors or the small hard working farmers- all await for the most important months of the year- The June- September Monsoons.

Though India has been in the limelight for its technological, infrastructural and outsourcing developments, about two-thirds of the country's one billion people depend on farming for a livelihood and agriculture accounts for about one-quarter of the gross domestic product.

A good monsoon strengthens the rural consumption power which in turn creates an impact on growth. This clearly indicates that growth of the Indian Economy is largely dependent on agriculture, a good harvest and more importantly a good monsoon.

This entire cycle affects not only then rural areas but also the urban economy. Equities, real estate, precious metals, commodities etc all are somewhere or the other, directly or indirectly affected by monsoons.

India can hardly afford a dreadful monsoon as it has already been facing a setback due to global slowdown, domestic inflation and an uncertain economy.

Though monsoons have recovered in the past 10 days, India is still under the shadow of a drought. The entire economy now depends on what will happen by August end.

Talking about precious metals, gold has not shown as much movement as it had in 2011. A year ago gold was heading toward $2000 an ounce but has dropped back to the $1500 range and has been lying there since quite some time. However in the Indian markets, gold is much costlier than what it was last year- thanks to the appreciation of the rupee.

Another factor that has played an important role in gold prices in India is the monsoon. India- which the largest consumer of gold in the world has been facing a very weak downpour. India’s rainfall total this year is about 20 percent below its 50-year average, and possible drought will adversely affect gold consumption as the focus would turn to food and survival

So far, in June, rain deficit has already reached 41%. Rural India still accounts for 60% to 70% of gold sales in the country and if the monsoon is below normal this year, gold purchases will struggle to cross the 600 tonne mark this year.

India's demand for gold has reportedly fallen far more drastically than that of the world. In the first quarter of 2012, domestic demand for the yellow metal witnessed a 30% crash year on year. Imports too have crashed. India's gold and silver imports have fallen 52% in May. April too witnessed a decline, with gold and silver down by 33% to $3.1 billion. Imports of the yellow metal had already shrunk in the January to March 2012 period.  

Though India's annual monsoon rains had covered almost half of the country at the start of June, there has been a palpable slowdown, with no signs of a pick-up and a forecast of bright, sunny days. 

Where the entire country eagerly waits for a heavy downpour, analysts are pessimist about a good monsoon and predict a dark cloud that will bear no rainfall

GOLD SILVER GOING ZIG ZAG

Gold and silver prices continued to move upwards as both precious metals edged up on Thursday. These metals rose despite the decline of the Euro and perhaps due to the appreciation of other “risk currencies” including Aussie dollar and Canadian dollar. The recent U.S reports didn’t seem to have much of an effect on the financial markets: U.S jobless claims declined 6k to 361k; U.S trade balance deficit (goods and services) declined to $42.9 billion in June 2012. This news may have contributed to the appreciation of the USD.

Gold edged up again on Thursday by 0.26% to $1,620.2; Silver rose by 0.08% to $28.10. During the month, gold edged up by 0.35%; silver, by 0.66%

This entire week, commodity prices played around the following lines- 

Great Britain PPI input- UK Producers Price Index for Input Prices rose by 1.3 per cent in July in monthly terms up from a revised 2.9 per cent decrease in June, while the PPI Input Prices annually fell by 2.4 per cent in July up from a revised 3 per cent decrease in June, according to the Office of National Statistics. The monthly PPI input prices increased less than the expected 1.5 per cent increase and annually dropped more than the forecast at 1.50 per cent decrease. Furthering this, precious metals edged up.

US Federal Budget Balance- Uncertainty over whether the US Federal Reserve and European Central Bank will take further steps to boost their economies has so far deterred a stronger move in gold prices, and bullion remains below last September’s record high at around $1,920 an ounce. Should the Fed signal it intends to implement a third round of monetary easing at the next meeting, it would probably boost precious metals, which are seen as a hedge against inflation.

Chinas trade Balance-  China’s General Administration of Customs said exports grew just one percent in July year-on-year to $176.9 billion, while imports rose 4.7 percent to $151.8 billion, cutting the trade surplus to $25.1 billion from $31.7 billion in June.

The data follow results on Thursday showing Chinese retail sales, industrial output and inflation eased in July, indicating the export-driven economy was feeling the effects of Europe’s debt crisis lowering demand in the key market.

China New loans-  China's new loans in July came in at 540 billion yuan, a weaker reading than the 920 billion yuan from June. The latest data missed analysts' estimates of 701 billion yuan. This resulted in an upward movement in gold.

The U.S federal budget report signalled the progress of the U.S economy and, in turn, affected the USD and commodities prices. The Canadian employment report affected the Canadian dollar that tends to be linked with bullion rates.  The Chinese reports also affected commodities prices as they have shown a sharp change. These reports have shown a decline in trade activity and new loans which in turn suggested that China’s economy is slowing down and this slow groth has adversely affected bullion rates. 

Finally, the ongoing decline of the Euro during the week could continue to curb the rally of bullion rates, while the rise in Aussie dollar and other “risk currencies” is contributing to the recovery of precious metals prices.

With a lack of major, market-moving fundamental news this week, precious metals market watchers are focusing more on the key outside markets. The U.S. dollar index was higher in Thursday, which did limit the upside in the precious metals. Meantime, crude oil prices were slightly higher on Thursday, which did somewhat limit selling pressure in gold and silver. Oil bulls have upside near-term technical momentum after prices Wednesday hit a 2.5-month high. The precious metals markets will continue to look closely at how these two key “outside markets” trade on a daily basis.

In the Indian markets, there was a news leak of increase in duty on gold. However these were rumors and nothing concrete has been announced yet.

Onset of the festive season has seen rise in demand but it is comparatively low. High gold prices and economic turmoil are creating this slug.

Mean while, Gold and silver are still zigzagging with an unclear trend as they haven’t shifted from their respective price range. 

GOLD OUTLOOK REMAINS POSITIVE IN THE MEDIUM TERM

The month of August began with a downfall for precious metals. Bullions rates didn’t do much as both gold and silver prices scaled down. Other commodities like oil and US stock markets declined too.

Precious metals were seen hovering around the declaration of results of the FOMC meeting that concluded on Wednesday.

Gold Prices fell below $1600 an ounce Wednesday afternoon in London, reversing the gains of the last week, following better-than-expected US jobs data. Silver Prices meantime dropped as low as $27.21 an ounce – also back to where they were last week.

However, after the weeks downfall, gold and silver managed to edge up by Friday.

Gold for December delivery advanced $18.60, or 1.2%, to settle at $1,609.30 an ounce on the Comex division of the New York Mercantile Exchange. The metal declined 0.5% on the week, however. Silver for September delivery rose 81 cents, or 3%, to settle at $27.80 an ounce. Silver rose 1.1% on the week. A strong nonfarm payroll report combined with a positive ISM Services print supported the day's gains. Nonfarm payrolls came in at 163K versus the expected 100K while nonfarm private payrolls added 172K against expectations of a 105K increase. The unemployment rate of 8.3% ticked up from its previous reading of 8.2%. 

Lower dollar adds further glaze Bullion metal prices ended higher at Comex on Friday, 03 August 2012 snapping a three-day losing streak after U.S. employment data showed a rebound in hiring last month and as the dollar traded weaker

The Fed said during the FOMC statement that it will continue swapping $667 billion of short-term debt with longer-term securities to lengthen the average maturity of its holdings, an action named ‘Operation Twist’. The central bank will also continue reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities. The Fed left unchanged its statement that economic conditions would likely warrant holding the benchmark Fed funds rate near zero “at least through late 2014.”

Given the active central bank calendar, every fresh data point will be analyzed for how it might affect the likelihood of additional stimulus programmes. According to Wednesday’s ADP Employment report the US economy added 163,000 private sector nonfarm jobs in July – over a third more than the consensus forecast among analysts. It is therefore not surprising that gold dipped after the release of mostly positive US macroeconomic reports over the past 24 hours.

The FOMC meeting will be followed by the meetings of European Central Bank of England on Thursday, where all analysts are eyeing on more stimulus following by a declaration made by ECB president last week.

Mario Dargi told in a meeting in London , last week, that the ECB stood ready to do whatever it takes to save the euro, which means that the banks is preparing to re enter the bond markets.

Asian markets too traded with a negative bias on Wednesday mainly on the back of weak manufacturing data from china, which expanded at the slowest pace in eight months

The outlook for precious metals in the medium-term, however, remains positive because the central banks will have to undertake an expansive monetary policy sooner or later. They are just waiting for the right time; they don't want to use the last cartridge too soon

GOLD HOVERING AROUND QE3

Last week precious metals edged down. But this week the Euro and the dollar played a different game for gold.


ECB President’s statement about doing “whatever it takes” to preserve the Euro had resulted in a rise in the Euro for a second consecutive day which in turn gave support to gold. Gold rose by 0.44% to $1,619.8; Silver edged down by 0.07% and reached $27.45. During July, gold increased by 0.44% while silver slipped by 0.6%.


Most major commodities also rose during Wednesday’s trading: crude oil prices including WTI and Brent oil traded up; gold and silver prices didn’t do much as gold increased while silver edged down


Apart from the recovery of the Euro, gold got a mid weak support from the Fed news that came up. The potential from more liquidity and easing measures by the FED led to this rise.


Gold futures pared gains in the US on Thursday after a larger-than-expected drop in US unemployment claims slightly dampened the market's expectations for additional quantitative easing (QE3) from the Federal Reserve. US Labor Department reported that unemployment claims last week fell to a 353,000, down from a revised 388,000 the previous week. This marks the sharpest week-on-week decline since February 2011.

Gold surged to another new 3-week high, probing above the 100-day moving average (1615.12) for the first time since April. Moreover, the weaker dollar too lent support to gold. A softer dollar tends to underpin all commodities by making them cheaper in other currencies, plus some market participants tend to buy gold as a hedge against dollar weakness.

Gold prices strengthened further at the domestic bullion market on Thursday amidst good jewellery buying also influenced by higher global trend. Onset of the festive season saw increase in demand for gold in the Indian market.

Markets in general seem once again to have latched on to the notion that central bank actions are the only viable catalyst to take them higher. They rise and fall as expectations of further easing wax and wane. The better than expected US data make it less likely that the Fed will act, so markets retreat.

GOLD LOSES ITS GLITTER

Gold and silver did not show much volatility from 2nd to 7th July. Post the Wednesday close (4^th July), gold and silver tumbled down, Reasons cited for this were the ECB rate reduction from 1% to 0.75% which in turn affected the Euro, oil and precious metals.

Moreover, the U.S payroll report stated that only 80K jobs were added which means that though there was a development, it was at a slower pace.

This week’s movement relied on the minutes of the FOMC Meeting, China's GDP for the second quarter, Euro Council Meeting and the U.S trade balance.

Gold and silver moved in different directions for the second straight day but both metals did not do much during the week. On a monthly scale both precious metals slightly declined

It was a mild “risk-off” trading day in the market place on Thursday. Wednesday afternoon’s FOMC minutes from the Federal Reserve that confirmed a sluggish U.S. economy was responsible for this, but provided no fresh clues on any upcoming Fed monetary-policy-easing moves. Most market bulls wanted the Fed to signal it’s embarking on another round of quantitative easing, better known as QE3.

Fears of weakening world economies exhibited modest risk aversion in the markets which in turn led to a moderate downfall in gold futures on Thursday.

Like other commodity markets, gold declined and proved to be a risk asset rather than a safe haven asset.

Spot Gold was last quoted at $ 1,567.50 on Thursday.

However, Friday had somethething else in basket for gold .Risk taking in the marketplace following the release of the Chinese GDP figure on Friday, resulted in the price of gold gaining close to $20 an ounce for the day. Investor confidence in the global economic recovery was boosted following the Chinese news, which came in close to its expected level. The precious metal ended up finishing the week at $1589.26.

This week, analysts are warning that gold may not be able to extend Friday's gains. While the Chinese GDP figure was viewed as positive by many investors, it still did not signal any expansion in the global economy. Given the current state of the euro-zone, as well as fears that the region's debt crisis could spread further, gold may reverse some of its gains in the coming day

In India, onset of the monsoon plays an important role in the economic growth. The gold market too, will be paying attention to the outcome of India’s monsoon season.

Good monsoon season is positively correlated with agricultural crop yields, in turn farmers’ incomes and higher gold demand. Rural farming areas account for approximately 60% of Indian gold buying. However, So far, the monsoon season is not off to a good start, with rainfall to July 10 reported by be 23% below average, although sowing levels, which are also important factors for agricultural yields, are pretty much in line with last year. The India Meteorological Department has said that the monsoon is likely to pick up in July and August, forecasting 98% and 96% of respective monthly averages. So for gold, while the initial indicators aren't so good, there's still time for some optimism to grow.

USD REPLACING GOLD AS CURRENCY OF LAST RESORT

Gold and silver started off the week with little movement but coming Tuesday they both bounced back. The rally in bullion was inline with the rise in other commodities rates and U.S stock markets. Since the U.S markets were closed on Wednesday there was not much movement in the commodities markets. 
SPOT MARKET gold prices traded close to $1610 an ounce for most of Tuesday morning in London, after breaking through the $1600 mark during the earlier Asian session. Silver prices touched $28 an ounce for the first time in nearly two weeks, while stocks and commodities also gained after disappointing US manufacturing data led to renewed speculation that the Federal Reserve might launch a third round of quantitative easing, known as QE3. 

However, precious metals saw a decline post The Wednesday close.

Gold and silver prices declined following the ECB decision to cut interest rate by 0.25pp to 0.75% and deposit rates from 0.25% to zero. This news also adversely affected the Euro/USD. Moreover the growth in the US economy was seen at a much slower pace
Comex gold futures prices ended the U.S. day session modestly lower on Thursday in choppy trading. The sharply higher U.S. dollar index pressured the precious metals as did traders being in a bit of a “risk-off” mentality. Dollar`s rally of more than 1 percent on Thursday`s session, the biggest daily rise in nearly eight months. Unemployment claims reduced to 374K as compared to a forecast of 385K which showed positive signs in US job market though the Unemployment rate remained unchanged at 8.2%.
The wave of monetary decisions announced by major central banks sparked Fears in markets regarding the outlook for the global economy, which in turn triggered a sell-off in commodities and shares as investors resorted to safe haven assets, especially the U.S. dollar and yen.
In the physical market, demand is still lagging on lackluster buying from Asian countries. Bullion rates might continue to zigzag from gains to losses and basically move in the same direction as the major currencies pairs including Euro/USD.  


A stronger dollar can hurt demand for metals and other commodities by making them more expensive in other currencies.  Further, a stronger dollar detracts from buying of gold as a sort of alternative currency, and vice-versa.

RBI MIGHT BAN BANKS FROM SELLING GOLD COINS

Akshaya Tritiya, Diwali or Dhan teras….Banks will no longer give importance to these days for sale of gold coins.

RBI is considering banning banks from selling gold coins.

A central bank source argues that imports of Gold Bullion are exacerbating the Rupee's weakness against the Dollar, making a case for ending Gold Coins sales by banks. Banks were allowed to sell Gold Coins following a relaxation of rules on commodities trading aimed at sterilizing Dollar inflows, which saw the Rupee appreciate in the years before 2008. With the rupee depreciating 30% since August, and hitting a new low this week, at 57.16 to a dollar, the apex bank is looking to reverse the trend. At a recent meeting, bankers have been advised to go slow on gold coin sales.

India is the world leader in Gold consumption. Gold is seen as a safe haven for parking money given the present gloom in the financial markets. A bulk of its demand is met through imports which are putting stress on the current account deficit and the value of the rupee.

As per Government of India, Gold as an investment has 2 issues. Firstly, the investment is non-productive as gold is hardly used in industrial production and it has contributed to the high current account deficit of the country. Secondly, the foreign exchange reserve that is used to import gold reduces the availability of this resource to finance the import of other commodities.

Gold’s share in total import bill of the country has gone up from 8.1 per cent in 2001-02 to 9.6 per cent in 2010-11. The percentage share of gold and silver combined has risen from the 3^rd most imported commodity in 2000-01 to the 2^nd most imported commodity in 2010-11 behind only crude oil.

RBI wants to generate immense awareness amongst people to switch to other modes of investment. However, Some experts believe the RBI's attempt at market manipulation will merely increase the black market gold prices and speed up the decline of the Rupee when compared to other assets like gold and silver.

Rather than implementing new modes for curbing imports, the Government should promote Bullion export in the country as it does for the jewellery. When Bullion is exported, an extra 1.5% value charge is levied by the government on the exporters. Moreover to redeem Duty, the exporters have to pay around a percent to the banks. If a provision is created in this case, then we could see an increase in Forex reserves by the exports. Research & development is the key to the future of Indian bullion industry. India holds around 9% of the global gold reserves estimated at 14,000 tonnes but fails to generate wealth out of it due to weak investment in exploration and mining activities. As we know, India is one of the leading consumers of gold and could challenge the likes of China and South Africa in gold production provided the right policy decisions and enabling environment for gold exploration and mining is put in place.

Indian households have nearly 25,000 to 30,000 tonnes of Gold. Government should show an effective way to gain revenue by exporting it. Schemes like minimum tax scheme should be introduced wherein an investor is charged minimum tax to convert his/her unaccounted gold into an accounted one. By this the government treasury will also increase and the idle gold can be put to use. The other scheme can be a VDS scheme (voluntary disclosure scheme) by which the Gold /Silver can be brought to the market. Such ideas will have a win - win situation for all.

However, if this ban is imposed then, one person who will surely benefit with this action is the “common man”, as gold coins will become cheaper. Usually people who buy gold coins from banks are charged a margin on around 3% if this ban is imposed then customers will start buying from the bullion dealers and other jewelers who don’t charge such high margins. Hence coins will be available to them at comparatively low rates.

However this move is still in its planning stage and no decision has been taken so far.

PRECIOUS METALS REACTIONS POST FOMC MEET

The positive Greek Election results did give a boost to the equities market but there were mixed reactions from precious metals. Mainly because the entire market is waiting for the outcome from the Fed’s FOMC meeting.

The results of the Greek elections, in which the pro bailout party had won, didn’t seem to impress forex and commodities traders. All eyes in Europe continue to stare at Spain & Italy. In yesterday’s G20 meeting the leaders talked about the EU debt crisis and Spain’s soaring borrowing costs.

The G-20 meeting, held at Mexico continued for two days- 19^th and 20^th June. At the conclusion of the summit, leaders announced a U$430b firewall to give some stability to an increasingly unsettled global market. Safe-haven bids boosted gold as G20 leaders pressed Europe to do whatever it takes to combat Europe's crisis after a victory for pro-bailout parties in a Greek vote reduced the chances of a euro breakup but failed to calm financial market

The Federal Open Market Committee (FOMC), a committee within the Federal Reserve System, started its two-day policy meeting - there were growing expectations that it will look to ease policy further to stimulate economic growth in the country. Many expected the Fed to extend its long-term bond buying program through Operation Twist beyond its current June deadline – the result being a weaker USD. ‘Operation Twist' programme implies funding the purchase of long-term debt by selling short-term notes - which is set to expire at the end of this month.

Fortunately these anticipations proved true. In a bid to reduce unemployment and protect the expansion, Fed has decided to extend Operation Twist till the year end with a sum of U$267, but no announcements regarding QE3 plan have been made.

Immediately after the meeting, Gold saw a range of Rs. 30,075 to Rs. 30,155. Gold is now expected to move within 1580$- 1640$ and any movement beyond this range will bring about great volatility. Though gold reduced in dollar terms, rates in Indian market remained more or less the same because rupee appreciated against the dollar to a tune above 56.20. Ratings agency Fitch, meanwhile, lowered its outlook on India to negative from stable.

Moreover, demand remains soft in India due to the lack of auspicious buying periods over the next few months. For June, the Bombay Bullion Associations expects gold imports to fall to 20-25 tonnes from 55-60 tonne in the same month of last year due to high gold prices in the rupee.

The government has not intervened much to contain the rupee appreciation. Hence gold is expected to lie at these levels.

PROMOTE GOLD EXPORTS RATHER THAN WORRY ABOUT IMPORTS

Gold is always considered as a safe haven. Surrounding the current macro factors like Indian currency depreciation, Euro zone's debt problems, China’s economic slowdown & weak economic indicators from USA, Indian Gold prices are touching new highs to offset the risks in the world economies.

Government of India has introduced various measures to curb the imports of Gold.

Government’s point on Gold imports:
India imports most of its gold requirement. As per Government of India, Gold as an investment has 2 issues. The investment is non-productive as gold is hardly used in industrial production and it has contributed to the high current account deficit of the country.  Moreover, the foreign exchange reserve that is used to import gold reduces the availability of this resource to finance the import of other commodities.

Our point of view through which we can have a win-win situation:


Gold is always considered as a safe haven asset or to be precise a perfect hedge against any economic turmoil. Investing i.e. saving in gold is preservation and even addition of individual’s wealth. Savings is a way by which you expect returns over a later stage in life or during some emergency. So, calling gold investment a non productive one is not correct when we are talking about a shield for Indian people who are running the economy.


Research & development is the key to the future of Indian bullion industry. India holds around 9% of the global gold reserves estimated at 14,000 tonnes but fails to generate wealth out of it due to weak investment in exploration and mining activities. India is rich in mines but the R&D is so poor that we are hardly in position to extract much of its abundant resources.

To be precise the country produced and refined only a minuscule 2.46 tonne worth Rs312 crore in 2008-09, the latest period for which data are available. That’s less than 1% of the value of metallic mineral production in the country. 


On the other hand, China boosted its gold refining business after it gave companies a single-window clearance along with fiscal and infrastructure incentives. Today, the country produces and refines about 320 tonne (approx.) of gold annually, the most in the world.

I feel that if R&D is carried in an efficient way, production of the metal will increase. This will reduce dependency on imports and in turn help the government to increase the forex reserve.


 As the metal will be extracted locally, customers will be benefitted pricewise, due to local production. As we know, India is one of the leading consumers of gold and could challenge the likes of China and South Africa in gold production provided the right policy decisions and enabling environment for gold exploration and mining is put in place.


Indian households have nearly 25,000 to 30,000 tonnes of Gold. Government should show an effective way to gain revenue by exporting it. Schemes like minimum tax scheme should be introduced wherein an investor is charged minimum tax to convert his/her unaccounted gold into an accounted one. By this the government treasury will also increase and the idle gold can be put to use. 

The other scheme can be a VDS scheme (voluntary disclosure scheme) by which the Gold /Silver can be brought to the market.

Government should promote Bullion export to take place in the country as it does for the jewellery. When Bullion is exported, an extra 1.5% value charge is levied by the government on the exporters. Moreover to redeem Duty, the exporters have to pay around a percent to the banks. If a provision is created in this case, then we could see an increase in Forex reserves by the exports.


India believes in Gold investment and measures to promote such savings need to be issued by the government rather than curbing them. from Mr. Mukesh Kothari's excerpt

GOLD- UPS AND DOWNS

Last fortnight saw great volatility in gold, with gold reaching its life time high at Rs. 30,400 per 10gm in the physical market, then dropping again by almost 1000 rupees per 10 gm and then nearing back to its life time high.


Indian gold prices in the bullion market reached of Rs. 30,285 per 10 grams on Wednesday. On Wednesday, Indian gold prices rose by Rs. 270 to Rs. 30,285 per 10 grams and neared its previous record of Rs. 30,400 set on June 6. This is mainly due to Rupee weakness against dollar amid strong cues from the world markets. Gold rose on Wednesday morning trading, reflecting a slight softening of the US dollar and continued fears over the stability of the European periphery.


A rally on Tuesday afternoon pushed the metal through $1,600 to a high of $1,617.85. It was last near this level at $1,613.25/1,613.75 per ounce, up $2.53 on Tuesday's close.


Gold has outperformed other precious metals, leading to renewed speculation that it had regained its status as a safe-haven asset - its traditional role in times of economic uncertainty.


With China's economy slowing in addition to the euro zone's debt problems, the USA payrolls data added to worries of a global economic slowdown. The May employment report was quite weak, and it does raise the odds of Federal Reserve to launch another round of monetary stimulus to support the U.S. economy, known as "Operation Twist," at the its next policy meeting on June 19-20. The Twist program extends the maturity of the central bank's Treasuries holdings in a bid to bring down long-term borrowing costs like mortgage rates. The program is set to expire at the end of June.


On Domestic front, India is reeling under the pressure of depreciating currency i.e. Indian Rupee. A currency’s external value declines when their import weighs more than its general exports because it expands the trade gap and increases pressure on the economy as a whole. In the case of India, nearly 70 percent of its oil demand is met by imports. As a result, the plummeting currency will eventually increase import bill and will lead to a rise in oil prices and contribute to inflation. This in turn will lead to a rise in precious metals.


The Greek elections that were held on Sunday were expected to bring in more volatility, but then again the market is awaiting the FOMC meeting that concludes on 20th June.


Gold has an opportunity to re-establish its safe-haven status, particularly as concerns over sovereign debt, flat currency, counter-party risk and the desire to hold a hard asset have supported gold in the past.

GOLD CREST- INVESTORS ABANDONING THE YELLOW METAL

Gold has always enjoyed an edge over other metals in terms of its value and prestige, being the best investment option. Investors generally buy gold as a hedge or harbor against economic, political, or social fiat currency crises. The sudden surge in gold prices tends to create a standstill in the bullion market.

Last fortnight saw great volatility in gold, with gold reaching its life time high at Rs. 30,400 per 10gm in the physical market, then dropping again by almost 1000 rupees per 10 gm and then nearing back to its life time high.

As on Thursday, Indian gold prices in the bullion market created a new high of Rs. 30,450 per 10 grams.

With China's economy slowing in addition to the euro zone's debt problems, the USA payrolls data added to worries of a global economic slowdown. The May employment report was quite weak, and it does raise the odds of Federal Reserve to launch another round of monetary stimulus to support the U.S. economy, known as "Operation Twist," at the its next policy meeting on June 19-20. The Twist program extends the maturity of the central bank's Treasuries holdings in a bid to bring down long-term borrowing costs like mortgage rates. The program is set to expire at the end of June.

On Domestic front, India is reeling under the pressure of depreciating currency i.e. Indian Rupee. A currency’s external value declines when their import weighs more than its general exports because it expands the trade gap and increases pressure on the economy as a whole. In the case of India, nearly 70 percent of its oil demand is met by imports. As a result, the plummeting currency will eventually increase import bill and will lead to a rise in oil prices and contribute to inflation. Absence of Government decisions on various policy matters is creating a vacuum in India’s economic growth.

Such factors are paving way for new highs in Gold prices, as it is considered as a safe haven.

This uncertainty in price leaves the short term investors with a risk during making their investment decisions. As the market does its daily job of balancing fear and greed, it becomes increasingly apparent that fear predominates. Investors are abandoning anything with the slightest hint of risk.

On the other hand, an investor would buy the yellow metal at any point, if he/she has a futuristic goal. As also a domestic need for jewelery would trigger the purchase. Jewellers would in turn buy only during dips, preparing for the upcoming festive season. Thus bullion houses would witness lesser demand owing to the plummeting price of gold.

RSBL RECEIVES EPCES EXPORT AWARDS FOR THE BEST SEZ UNIT

RSBL has received the prestigious EPCES Export Awards for outstanding export performance during the year 2009-10 from the Category-II Product Specific SEZ-Other than MSME in the category Gems & Jewellery.

It was presented by  Shri Jyotiraditya M. Scindia, Hon’ble Minister of State for Commerce & Industry. It was moment of joy and pride not only for me but for the entire RSBL Family.

Its purely the combined effort and consistent support from my team, that RSBL has reached where it is today. I also thank the Export promotion Council for recognizing our efforts.

Another feather to the cap- 2012 has lots in store for us.