BUY GOLD
While market experts are of two views on buying gold, given the fact that it has gone of significantly in the recent past and there has been a sell-off over the last few weeks, this analyst feels gold is a good buy for an investment period of 1 to 3 years.
Analysis:
- Euro zone still not out of the woods with problems in Greece, Spain, Italy and Ireland. The eurozone is more or less supported by Germany and France and both these countries are etting stretched both financially and politically.- US dollar is getting weak against a lot of currencies including Euro, Canadian Dollar, Singapore Dollar, Australian Dollar. With huge internal debts, slowing economy, Presidential elections in about 1 year, the US government will find it very difficult to take tough measures to cut down their spend. This in turn will mean that their currency will further weaken.
- Globally, commodities are cooling off, which means that spending has slowed down. This in turn will mean an overall global economy slow down for atleast another 1 to 2 years.
- For the developing countries (China and India), GDP is growth rate is slowing down and inflation is on the rise.- India especially has a clear problems with inflation, despite RBI raising interests over the last 2 years and a good monsoon. This mainly due to the effect of India moving from a saving economy to a spending economy and the first impact will be on inflation in the initial years
- Clear non-governance and no clear policy decisions, due to which the slow down is not getting addressed.
Finally, Festive season starts in India starting Oct and all the way upto next April when the demand for gold will go up.
Technically speaking, gold has a resistance at ~ Rs 2750 (Kotak Gold ETF) and can break thi due to the above mentioned factors in the next couple of months. Good support level is available at 2500, then 2250, 2150 and finally at 2000. The 50 Day average is around Rs 2500 which is the current levels and if this holds for a week, then the prices will stabilize and move up from here. Also, Rs 2000 acts a good support level for over 1 year now. Buying gold, best form is ETF and can be done as SIP over the next few months.
Disclosure: This analyst has invested in Kotak Gold ETF.
ps: caveat emptor.
- Euro zone still not out of the woods with problems in Greece, Spain, Italy and Ireland. The eurozone is more or less supported by Germany and France and both these countries are etting stretched both financially and politically.- US dollar is getting weak against a lot of currencies including Euro, Canadian Dollar, Singapore Dollar, Australian Dollar. With huge internal debts, slowing economy, Presidential elections in about 1 year, the US government will find it very difficult to take tough measures to cut down their spend. This in turn will mean that their currency will further weaken.
- Globally, commodities are cooling off, which means that spending has slowed down. This in turn will mean an overall global economy slow down for atleast another 1 to 2 years.
- For the developing countries (China and India), GDP is growth rate is slowing down and inflation is on the rise.- India especially has a clear problems with inflation, despite RBI raising interests over the last 2 years and a good monsoon. This mainly due to the effect of India moving from a saving economy to a spending economy and the first impact will be on inflation in the initial years
- Clear non-governance and no clear policy decisions, due to which the slow down is not getting addressed.
Finally, Festive season starts in India starting Oct and all the way upto next April when the demand for gold will go up.
Technically speaking, gold has a resistance at ~ Rs 2750 (Kotak Gold ETF) and can break thi due to the above mentioned factors in the next couple of months. Good support level is available at 2500, then 2250, 2150 and finally at 2000. The 50 Day average is around Rs 2500 which is the current levels and if this holds for a week, then the prices will stabilize and move up from here. Also, Rs 2000 acts a good support level for over 1 year now. Buying gold, best form is ETF and can be done as SIP over the next few months.
Disclosure: This analyst has invested in Kotak Gold ETF.
ps: caveat emptor.
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