December 31, 2008 4:48 PM
Today is the last day of the gone by year. As I always say, as an investor, one should keep asking, what next? Where is the next profit opportunity?
First, update on recommendations given in last year:
Gold outperformed all asset classes, in ETF terms it has given 27% returns.
G-sec funds have given 25 % returns.
It gives satisfaction to me for achieving intended results.
New Year Updates:
Remain invested in both the asset classes.
Gold : As US and world across, central banks are cranking money printing presses and against that the supply of precious metals have not increased with the pace of money pumping, it will drive the Gold prices much higher. If we believe to Marc Faber, he is seeing the price target of $ 3000 in next few years. Attached report elaborates the same.
G-sec Funds : US and Japan are done with interest rates cut, they reached to Zero to stimulate their respective economies, rest of the world will follow and since India has still very high rate of interest, almost highest in BRIC and developed economies, India has to lower interest rates further. This can yield higher returns in G-sec funds.
New Year Recommendation: Sugar
Sugar is extremely low priced commodity among all against inflation adjusted prices. If we compare the sugar with inflation adjusted prices of last 60 years, its quoting at 1/10th of its high. — Marc Faber’s attached report says.
There are other factors too, like we have sugar deficit in world this year, since wheat prices were high in last crop season and sugar prices were down to earth and since last year was the 3rd and last year of sugarcane season(normally sugarcane crop can be taken for three years in row and than farmer changes the crop) farmers have chosen to sow wheat on sugar this year thus leading to lower output of sugar for next 2 years at least.
I am not counting the other benefits of the sugar industry as its all products are in very high demand like molasses, ethanol, using waste to generate electricity etc etc.
There are demerits too, it’s a seasonal industry, industry has normally crushing season of 240 days a max, it is also subject to government intervention time and again and it’s a commodity.
Upon searching best sugar company, where crushing season lasts more than average and capacity utilization is done 365 days, having capacity and tie up for producing and selling ethanol, having very good relations with farmers thus ensuring enough sugarcanes with required quality on time and the geographical situation and also presence in politically least intervened state,
Shree Renuka Sugar is the company having all said characteristics, I believe it is poised to get the maximum benefit from coming upturn in sugar sector.
I recommend to buy Shree Renuka Sugar.
I wish you all Very Prosperous and Happy New Year
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