Updates on New Year recommendations


February 12, 2009 12:22 PM

Dear Investor

I believe you would have invested in recommended stock and commodity, I gave on 31st Dec as New Year Recommendations. Thus, it becomes imperative to have updates on the same.

Gold: Gold price was Rs 1322 per gram on 31st Dec, the day I recommended. As I am writing today, it is trading at 1440. Return of 8.9% .

Has anything changed since I recommended Gold, which can change the up path of Gold price? Absolutely not. Instead we have more reasons now to buy and hold gold.

Another package of $ 800 bn will be passed soon in US, increasing money supply. In Geithner’s own statement, he said “ This is a dangerous dynamic, and we need to arrest it” while unveiling banking rescue plan — admitting extreme uncertainty about financial stability . IF I say in Rogers words, US administrators are good friends of Gold. They design the policies assuring Gold is benefited out of that. Could it be declaring packages! Could it be spending tax payers’ money recklessly!! Could it be raising debt to unprecedented level!!

I still recommend buying Gold, if not entered yet and hold on it. Short term target is $1150 by June’09. Though do not stick to the time period since volatility and uncertainty can increase or decrease the time difference.

Sugar ( Shree Renuka Sugar) : Its price was RS. 73, on 31st Dec the day it was recommended. As I am writing today, its quoting Rs 85. Thus, return of 16.4%..

As I wrote in trail mail that sugar is the cheapest commodity on earth in inflation adjusted price terms. It’s trading at 1/10 of its high.

Latest updates from Agriculture ministry: India will produce 40 lakh tones less sugar this year reducing estimate from 220 lakh tones to 180 lakh tones and close to 100 lakh tones less than last year’s record production of 284 lakh tones. India’s domestic consumption demand hover around 230 lakh tones and do not forget that India is second largest producer of sugar, largest consumer of sugar and also has significant export share in world market. This year world is in major deficit of sugar. This is rare because India will be producing less sugar than it would need for domestic consumption, for the first time in four years.

I still recommend buying Shree Renuka Sugar, if not entered yet and hold on it. Sugar price is expected to go up to Rs. 25-26 from current price of Rs. 21-22 end of first half of 2009 and higher in second hald of 2009, once election is over.

G-sec Funds: G-sec long and Short term funds have delivered approx. 1-1.5% return. Further rate cuts are expected before govt. goes for election.

Crisis is still not over in the world. Though India has started resisting further decline in line with Global markets, but if situation in US deteriorates further as anticipated, govt. will have no option but to reduce rates further in line with other developed and developing nations to sustain the GDP rate of 6-7 % in next fiscal.


Dhaval Shah

Investment Academy | Baroda | 09825528815


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