Gold Geojit Comtrade bullion market

7/28/2019 Gold Geojit Comtrade bullion market

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Gold



General Facts

Why invest in Gold?

Price Determining factors for gold

Economic Indicators Impacting Gold Prices

Gold Demand in India

Research Support

Contents



Why Invest in Gold?

Gold

is

a

foundation

asset

within

any

longterm

savings

or

investment

portfolio

.

One

of

the

few

financial

assets

that

do

notrely

on

an

issuer's

promise

to

pay

.

It

offers

investors

insurance

against

extrememovements

in

the

value

of

other

assetclasses

.



General Facts

60

%

of

gold

mined

becomes

jewelry

.

394

%

increase

in

the

price

of

gold

from

Dec

2000to

October

2010

.

22

times

gold

has

reached

new

highs

in

2010

.

100

million

people

depend

on

gold

mining

for

their

livelihood

.

2

nd

quarter

gold

demand

was

919

.

9

tonnes,

worthUSD

$

44

.

5

bn

.



Gold Demand : Sector wise

46%

32%

5% 17%

Q2 2011

Jewellery

Total bar and

coin invest

ETFs and

similar

Technology



Gold Demand : Year wise

Year



Demand & Supply Q2 2011



Central Banks’ purchases/sales.

Hedge against financial stress.

Jewelery and Industrial demand.

Gold mining Production and Supply.

War, invasion and economic uncertainty.



Central Banks

Central banks and IMF play animportant role in the gold price.

Interest rates are closely related tothe price of gold.

Gold price can be closely correlated

to central banks via the monetarypolicy decisions made by them relatedto interest rates.

India stands 11th in Gold Holdings with557.7 tonnes.

Central bank activity among the VIST (Vietnam, Indonesia, South Korea andThailand) nations in terms of goldholdings increased by 28% in 2011.



Hedge against financial Stress

Gold can be used as a hedge against inflation,deflation or currency devaluation.

Within the current economic scenario, countriesare faced with huge deficits and more money thatis pumped into these economies – the printing ofmoney basically – then less valuable the currenciesbecome.

If the return on bonds, equities and real estate isnot adequately compensating for risk and inflationthen the demand for gold and other alternative &safe investments increases.





Jewelry and Industrial demand

• Jewelry accounts for over two-third ofannual global demand.

• India is the largest consumer of goldJewelry followed by China and the U.S.

• Industrial, dentistry and medical usesaccount for around 12% of gold demand.



Gold Mining Production and Supply

• The mining production rose by 7 percent to 708.8 tonnes in 2nd quarter 2011.

• Producer de-hedging exerted a modest negative influence onsupply in second quarter.

• Recycling activity was 3% down year-on-year, as consumers inmany markets held off on selling their existing 'loose' holdingsof gold in anticipation of higher prices.

• The completion of de-hedging by world’s two miners Barrick Goldmine and Anglo Ashanti Gold mine reduces the possibility of aprice rise as seen in 2009 and 2010.



War, Invasion and Economic uncertainty

In times of war or in terms of economicuncertainty, people fear that their assetsmay reduce in value, that the currency may

become worthless.

Governments/people believe that Gold is asolid asset which will buy food/

transportation etc. or that it can be usedas an alternate currency during suchperiods of uncertainty.



Gold @$1700

Gold @$1800

Standard and Poor (S&P)downgrades U.S creditrating in August 2011

Greece on verge of 98percent default inSeptember 2011

Standard and Poor(S&P) downgrades

Italy’s credit rating inSeptember 2011



Economic Indicators Impacting Gold

Prices • GDP

• Non Farm Payrolls

• Industrial Manufacturing Data• Business Inventories

• Value of U.S dollar

• Economic Stimulus package if announced

• Trade deficit



Returns on Asset classes (Y-o-Y)



Spot Gold v MCX Gold (3 Year Trend)

Spot Gold

MCX Gold

Going hand in hand



Spot Gold v Dollar (3 Year Trend)

Spot Gold

Dollar

Negative Correlation



Gold Demand in India

Gold demand in India will continue to be robust inthe next decade… WGC

The cumulative annual demand will be in excess of

1,200 tonnes by 2020, valued at about Rs2,50,000 crores.

According to the World Gold Council (WGC)

report for 2nd

quarter 2011, the demand for goldin India would be driven by rapid GDP growth,urbanization and rise in income and savings levelsof the consumer.



Gold jewelry represented around 75 per cent of thetotal Indian gold demand in 2010.

The southern states like Kerala, Andhra Pradesh,Tamil Nadu and Karnataka account for over 40 per

cent of the country's gold demand.

The research highlights that with 50 per cent of theIndian population under 25 and approximately 150

million weddings anticipated over the next decade,which will drive gold consumption.

Source: World Gold Council



Types of Investments

PhysicalJewelery

Bars/CoinsNon PhysicalGold mining shares

ETFsFutures(can be converted into physical)

E Gold (can be converted into physical)



Gold is also VOLATILE……



Common Man : WeddingAssume that on September 30th, John Thomas fixed his daughter ChristinaJohan’s wedding to be on 2012 May 6th, and that he plans to buy 25 pavan (200

g) gold as jewelry.

Mr. John’s choices Hope Prices falls

before Marriage

Buy 200g Gold nowBuy 2 mini Gold MCX

futures @ 2750/g

•Block over 5.5lacs (at presentlevel).

•Risk thepossibility of aprice fall later.

•Block only less than50,000 as margin amt(at present prices)

•Invest the rest of 5

lacs in bank or othersafe assets for 1month.

•Hold the gold in dematform, maintain MTM.



P/L scenario @ End of April 2012 forMCX Gold purchase @2750

Time April 2012 Price@ 2900/g April 2012 Price@ 2650/g

Profit / Loss Rs.20,000 profit fromfutures + Rs.26600 interest

gain (8%)

Rs. 20,000 loss from futures+ Rs. 26600 interest gain

(8%)

Conclusion Buy jewelry at high Octprices, (and more with the

extra gain)

John avoids the high pricedbuy in Dec. Would be able tobuy Jewelry at lower April

prices.

Note: This notional loss from futures can be reduced or nullified. Standinginstruction can be given to exit futures if price fall below 2700 (or suitableprices), so that the loss is limited to Rs.10000 or even much lower. Theflexibility of easy entry and exit available through online futures tradingplatform, enables even better strategies than that mentioned above.



Jeweler Scenario:Risks on both directions due to high volatility.

Advance booking by customers

Commitment to suppliers

Jeweler’s choices Hope Prices do not fall sharply afterstocking or Hope that prices do not

rise sharply before stocking

Hedge with gold futures; Sell and buyagainst each stock moves

•Avoid distress sales orpurchases•Reduce losses•Make modest gains



USE our research to know about major trends, entry/exit points

etc. Daily Gold report

Strategies (Short term as well as long term) for both

International as well as MCX Gold

News Alert : Both Indian as well as International

Technical Analysis and Charts

Customer support through phone, sms, email, website

Research Support



Spotting the top of the rally

• It is every analyst / trader’s dream to“pick” the “top” of a rally.

• Geojit Comtrade’s Research did justthat. (Refer our gold reports in August2011)







Advantages of Gold Futures (MCX) platform

Online Terminal (View/Trade at the comfort of your home/office)

High depth/liquidity (MCX is no: 1 in India and no: 2 in world as per itswebsite.)

Different denominations available (1kg, 100g, 8g, 1g).

Trading hours (10am to 11 30pm) covers all major mkts.

Take/give delivery if you want.

Store/Sell from demat.

Margins as low as 4 to 7%



Constituted by staff from erstwhile Geojit Commodities

and other industry stalwarts.

GEOJIT COMMODITIES Number 1 Broking house status in terms of Trading Terminals :

Dun & Bradstreet Survey 2008

The first brokerage to offer online trading in Rubber (Mar2003), Pepper (Apr2003), Gold (Oct2003), Wheat and Rice(Dec2003), Cardamom (Apr 2004) and Coffee (Feb2006)

Brand image of Industry Pioneer since inception of commodityfutures in 2003

Pedigree



Geojit Comtrade : Increasing investor awareness/education

Daily, weekly and special reports on various commodities & currenciescovering both international as well as domestic markets.

Seminars and workshops designed to help both the new clients as well asexperienced traders.

Increased media spending to make ourselves more visible in print, visual aswell as digital media, so that our reports and views reach better to ourinvestors.

Offers SMS / email reports at no additional cost.



Latest advancements

Geojit’s “Flip Ultimate”, which has integratedthe three major national level exchanges :MCX, NCDEX & NMCE on to a singleplatform.

Mobile Trading in commodities for the firsttime in NCDEX/NMCE.

Facility to trade in International Markets.

One touch terminals.



Door No. XXXVI/1567, Canal Road, Kaloor, Kochi, India-682016,

Phone: +91 484 2401224/5, Fax: +91 484 2402482Email: [email protected]: www.geojitcomtrade.com

MCX Member code: 40220 FMC No.: MCX/TCM/CORP/1710,NCDEX Member code : 00920 FMC No.:NCDEX/TCM/CORP/0895,NMCE Member code : CL0324 FMC No.: NMCE/TCM/CORP/0245,

NSEL Member Code : 12770

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Gold Geojit Comtrade bullion market