I wrote to you on 7th January asking Are you prepared for crash in Gold Price? and to give you an idea, I also mentioned $1100.
In my latest article posted on 5th April, I categorically said that Gold and Oil will continue to correct, easing inflation in India. I also gave specific target of $1400 and very high expectations of Gold dipping below $1300. For Oil, I placed target at $84. During this deflationary wave, we may see Oil correcting further to the lows of $ 76 and very high expectation to settle around $ 69.
The question, you may asking to yourself and advisors/experts would be, where to invest in 2013?
I still suggest if you have not invested in Government securities(Bonds), you are missing quite a good opportunity of earning min. 17.5% to max 27.5% returns in next 1-1.5 years with guaranteed capital. Contact me soon to invest.
Gold and Oil price correction is nothing less than blessings of God on India. Much of our domestic problems have roots in this two commodities( except dysfunctional government). Rupee was weak adding further inflationary pressures in last 2-3 years. Rupee was weak because of higher current account deficit and partly due to higher fiscal deficit. Higher fiscal deficit was taken care by Finance Minister in last budget. But, to contain current account deficit was beyond our control. Current account deficit is Export-Import. When we Import more than what we export, we have to sell our currency in world market to buy foreign currency to pay Companies/Firms/Sellers. As we depend heavily on Gulf nations for our Crude Oil needs, the higher the Crude Oil price goes, higher deficit it adds resulting weak currency. The unexpected factor, Gold, worsened the situation further, post 2008. Investor found solace in Gold, hurt by Government policies( bailout/monetary easing/sovereign debt/ cheapening currency). When Europe started bursting, it fuelled Gold buying further. India’s Gold import continued to increase. Gold import had become headache. Rest of the imports add value or are necessity as Crude Oil, Capital goods, food grains. But, Gold does not add value and only adds deficit.
Half of our deficit comes from Crude Oil imports and one third comes from Gold import.
Both commodities are correcting and I expect to correct them further to the target levels mentioned above.
Lower prices of these commodities will ease inflation and inflationary expectations in India. And, there was one reason, RBI was not aggressively slashing rates then that was higher inflation and higher inflationary expectations.
There is already pressure on RBI from industry and Finance ministry quarters to focus policy on Growth instead of Inflation, when GDP has come down to decade low levels, Industrial production is in negative territory, banking credit off take figures are easing and Car sales, too , are hitting lowest growth numbers of decade.
Therefore, I have no doubt and reiterate once again, this is once in a decade opportunity, wherein safely you can earn double digit returns with capital guarantee as you are buying GOI bonds.
I do not see any other opportunity parallel to this one in year 2013.
I suggest readers to join my Plateau-Mountain-Cliff Wealth Enhancement Services. Where in you will get my recommendations on India Equity, Global Equity, Gold, Silver, Crude Oil, Currency and Debt Market, all in one package. Click to read — https://investmentacademy.wordpress.com/2012/12/26/plateau-mountain-cliff-wealth-enhancement-services/
Blog: https://investmentacademy.wordpress.com/ Cell: 98255 28815
Disclaimer: This is a free daily investment newsletter published by Investment Academy. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. Author might have open positions in the stocks and Indices recommended above.
From: Investment Academy [mailto:academyofinvestment]
Sent: 07 January 2013 14:07
Subject: What If Gold crashes to $ 1100!! Are you prepared??
Read entire article before arriving on decision. Do not jump off to sell. Read rationales discussed here..
Have you subscribed to my Plateau-Mountain-Cliff Wealth Enhancement Services?
Last 4 days left. Join before 10th Jan, 2013 to avail whopping 50% discount.
I have tracked Gold very closely since 2007. I recommended Clients to buy Gold, when it was trading at $ 700 giving target of $ 2250. My Clients have earned superlative returns in Gold. I had recommended Gold, because there were rational behind it, certainly not because it has eternal value and to store it in safety vault.
I recommended Gold because
I could see that Globally Equity markets are trading at historical high values but far away from reality.
I could see Fundamentals were deteriorating globally notwithstanding markets were scaling newer highs.
World had reached to higher supply built up and demand push should cool down
And when economy crashes and markets tanks
World across Central Banks will pump in trillions of dollars to save the economy
I could see that quantitative easing will not solve problem but will exacerbate it as capital will not flow to intended assets
I could see easy money will drive commodities and metals to the roofs
Biggest of all
I wrote number of times that in time to come, Government will lose trust of the citizens & investors and precious metals will become insurance against Government default
I wrote that excessive printing will lead to higher inflationary environment and higher inflationary expectations and that leads to higher Gold prices ( precious metals)
I wrote that never ever historically, we have seen such a massive printing across the globe.. may it be developed or emerging, east or west, all joined the race of printing to ensure that their economy is least affected in this crisis.
I also presented statistics of money printing vs Gold price.
Every 1 % more currency printing( quantitative easing) in US gives 1 % rise to the Gold’s price
Every 1 % more currency printing( quantitative easing) in Europe gives 0.9 % rise to the Gold’s price
Every 1 % more currency printing( quantitative easing) in India gives 0.7 % rise to the Gold’s price
Gold is still considered as best inflation hedge, insurance against Govt’s default, true money, key currency to hold during war time.
Gold always retains its purchasing power while currency always lose purchasing power
But, nothing goes up forever how true or good it may be….
I believe Gold will hit the wall in 2013.
2012 was the 12th straight up year for Gold. Gold has not seen such a persistent stupendous rise in past century. We have historical evidences which supports rally for straight 10 years or less.
During last rally between 1970-1980, Gold paused after April 1974 to Aug 1976. For more than 2 years and corrected 46 % from $ 189 to $ 104 before final leg up.
Also understand that Gold is trendsetter. We can get the sense of inflation and deflation from Gold’s trend.
Recent development across the world shows restraint in continuing monetary and fiscal easing.
In US, either through higher taxes or through expenditure cuts, Govt will ensure that People are left with less money to spend. US Govt is under tremendous pressure from rating agencies to keep his house in order to retain AAA rating. In short, US will have to ensure that it spends less and save more or/and it spends same but earns more through higher taxes.
Central bank of US released minutes of Dec meeting and many participants argued about the long term effects of continued monetary easing. Somewhere in mindset of policy makers, the fear of long term effects of Quantitative Easing and failure of monetary easing done so far has compelled them to relook at the policy.
Entire Europe is in some or other way exercising austerities. China is trying to cool the growth. Indian Finance Minister also declared to be ready for bitter medicine in 2013. After having expanded balance sheet of Govt and Central bank for last 4 years, time has come to either pause for a while or cut it back to remain healthy and to take care of long term consequences.
As I explained earlier that higher money printing raises Gold prices. Similarly, reduced money printing will reduce Gold prices to similar extend.
Hence, I advise to remain on sidelines until we are clear of policy mess.
Last 3 weeks of closings of Gold has come near $ 1655. Gold’s direction further from this level will be decisive trend setter for Gold and rest of the markets.
As you can observe in attached chart. Gold is forming rectangle along with declining triangle.
I advise to remain sideways until Gold breaks out on either side.
I advise you to Join Plateau-Mountain-Cliff Wealth Enhancement Services to get precise moves of Gold, Indian Equity market, Foreign Equity markets, Currencies, debts and broad economic trends of the world.
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