The regular trend is
perhaps back… the yellow medal has been the frenzied attraction for some time
now….. Gold has been money for many reasons – it can be traded easily; it
always has a high value to weight ratio; can be divided into smaller units
without destroying; tougher to have counterfeits and the scarcity of gold has
only been going up. Gold has always been used as a symbol of status and power. Today 6th June 2013
closed at Rs.2784/- for 1 gram of pure gold (24Ct) and Rs.2603/- for 22 carat,
certainly on the upswing than it was on mid May 13.
Firstpost reports
that the Govt has hiked the import duty on the precious metal to 8 percent from
6 per cent, in a bid to curb demand. This is the second hike in the duty in six
months as gold imports touched an alarming 162 tonnes in May. The imports
touched a staggering figure of $15 billion in the last two months. The hike is
aimed at curbing import of gold which is mainly responsible for the rise in CAD
impacting the country’s foreign exchange reserves as well as the rupee value.
CAD, which is the difference between inflow and outflow of foreign currency,
touched a historic high of 6.7 per cent of GDP in the quarter ending December
2012.
Finance Minister P
Chidambaram is quoted as stating that
surging imports are unsustainable and advised the banks to tell customers not
to invest in the precious metal. “Banks have a role to play in dampening the
enthusiasm for gold…I would urge all banks to please advise their branches that
they should not encourage their customers to invest in or buy gold”, he said
while addressing the annual general meeting of the Indian Banks’ Association
(IBA). The Reserve Bank, Chidambaram said, has already “advised banks they
should not sell gold coins…I hope a day will come when we regard gold as any
other metal, it just shines a little more than copper or bronze.”
Confusing to say the
least as common man still sees the yellow metal as a potential means of
investment and almost all banks and Post Office have been selling their own
branded gold, slightly above the market rate and have been making huge money
out of the sale………. now PC wants them to stop !!
Sometimes they say
that the surge in Apr and May 13 followed fall in prices in International
market. India is a big importer… in
April it was 142 tonnes of gold, and in
May we imported 162 tonnes of gold; against the monthly average of 70 tonnes of gold last year. Earlier this month, the government came out
with the first issue of inflation indexed bonds, which aims at discouraging
gold investments.
Meantime, World Gold Council (WGC) said hike in import
duty on gold will make the precious metal expensive, while cautioning that
curbing supply will not be effective in the long run as this is likely to lead
to demand being met through unauthorised channels. WGC India chief said that
demand for gold, whether in the form of jewellery or investment (bars and
coins), is driven by millions of individuals investing as part of their
household savings and is not discretionary spending for consumption. “People
buy gold as a long term investment to protect their wealth and gold also has
huge significance socially, emotionally and economically in India,” he
observed.
Here is a chart
showing the movement in price of gold for the past one year
With regards – S.
Sampathkumar
News courtesy :
Firstpost.com; Chart courtesy : indiagoldrate.com
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