Stocks To Keep A Close Eye On
- Thread starter SavantGarde
- Start date
- Tags afl amibroker
- Status
There is no longer a gold standard in existence but there are other factors explaining gold price movements:
- as a hedge against inflation:- in this regard, the amount of loose money that economies are awashed with due to greenshoots/other fiscal stimuli around the world, this is a real possibility. If oil goes back up to $100 or more, it'll only add 'fuel' to inflationary pressures.
- as a safe haven at times of uncertainty (e.g. wars etc) - there aren't that many situations in the world presently to warrant that but another factor could also be if Central banks start selling US treasury bonds (afterall, lending for 30yrs at 2-3% is not a very good use of money esp. if risk averseness decreases to an extent bu not so much that some safety is not desired), gold may be one of the places money could gravitate toward.
- another reason that some have cited is, its negative correlation with equity markets. However, there have been periods of time when there was a neutral to positive correlation of gold with equity markets - presently, we're witnessing such a period.
The inflation adjusted price of gold compared to the previous peak in the 80s is a lot higher than where it is now. Also, if dollar continues to be weak & becomes weaker, money will gravitate toward hard assets such as gold.
Given some of these things, it is not a bad idea to stay in gold if you already have it or even take a fresh position. Keep in mind that it is really an asset meant for an investor not a trader, i.e. don't expect to see $2000 in the next few months.
Also, due to the oversold condition of the dollar, if there is any interim short covering in it, can affect gold prices negatively. Combine that with the USD/Re movement. If RBI doesn't manage this well then even with an increase of gold prices in USD, one may not profit much if Re continues to strengthen vis-a-vis USD. If you're up to it, you can minimize this by buying Gold in USD through ETFs trading abroad by utilizing the $200K/per yr outward remittance allowed by RBI (keep in mind, the flip side of this is, if you want to bring this money back & Re has strengthened a lot vis-a-vis USD, you might be back to square one).
ETFs are now available in India as well. I believe some of them are Kotak, Reliance UTI, Benchmark etc. The advantage of ETFs are that you don't have to worry about storing the physical gold itself. You don't have to worry about a haircut when selling it; ETFs trade on bid & ask prices just like stocks & you can stay nimble with your gold investments as ETFs now have enough liquidity for one to enter & exit at will.
There are rumblings of some secret meetings in which there are discussions to substitute dollar based oil trade with gold+a basket of other currencies-ala SDRs - it is advisable not to pay inordinate attention to such rumours. These alternatives to substitute USD as a reserve currency is far far away. Your decision to invest in gold or not should be based on reasons cited above.
Hope this helps!
Kumar
- as a hedge against inflation:- in this regard, the amount of loose money that economies are awashed with due to greenshoots/other fiscal stimuli around the world, this is a real possibility. If oil goes back up to $100 or more, it'll only add 'fuel' to inflationary pressures.
- as a safe haven at times of uncertainty (e.g. wars etc) - there aren't that many situations in the world presently to warrant that but another factor could also be if Central banks start selling US treasury bonds (afterall, lending for 30yrs at 2-3% is not a very good use of money esp. if risk averseness decreases to an extent bu not so much that some safety is not desired), gold may be one of the places money could gravitate toward.
- another reason that some have cited is, its negative correlation with equity markets. However, there have been periods of time when there was a neutral to positive correlation of gold with equity markets - presently, we're witnessing such a period.
The inflation adjusted price of gold compared to the previous peak in the 80s is a lot higher than where it is now. Also, if dollar continues to be weak & becomes weaker, money will gravitate toward hard assets such as gold.
Given some of these things, it is not a bad idea to stay in gold if you already have it or even take a fresh position. Keep in mind that it is really an asset meant for an investor not a trader, i.e. don't expect to see $2000 in the next few months.
Also, due to the oversold condition of the dollar, if there is any interim short covering in it, can affect gold prices negatively. Combine that with the USD/Re movement. If RBI doesn't manage this well then even with an increase of gold prices in USD, one may not profit much if Re continues to strengthen vis-a-vis USD. If you're up to it, you can minimize this by buying Gold in USD through ETFs trading abroad by utilizing the $200K/per yr outward remittance allowed by RBI (keep in mind, the flip side of this is, if you want to bring this money back & Re has strengthened a lot vis-a-vis USD, you might be back to square one).
ETFs are now available in India as well. I believe some of them are Kotak, Reliance UTI, Benchmark etc. The advantage of ETFs are that you don't have to worry about storing the physical gold itself. You don't have to worry about a haircut when selling it; ETFs trade on bid & ask prices just like stocks & you can stay nimble with your gold investments as ETFs now have enough liquidity for one to enter & exit at will.
There are rumblings of some secret meetings in which there are discussions to substitute dollar based oil trade with gold+a basket of other currencies-ala SDRs - it is advisable not to pay inordinate attention to such rumours. These alternatives to substitute USD as a reserve currency is far far away. Your decision to invest in gold or not should be based on reasons cited above.
Hope this helps!
Kumar
- Status
Similar threads
-
to keep record of stocks i will be following- Started by Gandhar.
- Replies: 5
-
-
-
-
Is it ok to buy Stocks keeping the current market scenarios in mind or should I wait
- Started by greg4u
- Replies: 10