DO NOT BUY GOLD THIS AKSHAYA TRITIYA!

 

 

If Akshaya Tritiya is an auspicious day to buy GOLD, then, when, is an inauspicious day to Sell Gold?
These "experts"(?) always recommend to buy Gold, but never to Sell Gold!!!

Buying gold this Akshaya Tritiya isn't advised

For most of us Akshaya Tritiya would be an ideal occasion to buy gold, but experts predict further correction in gold prices going ahead. From strictly a financial point of view, experts feel it doesn't make much sense to buy gold at current levels.
Praveen Singh, senior analyst - commodities at Sharekhan says barring traditional significance, it probably doesn't make much sense to buy gold at current levels.

Jonathan Barratt, chief executive officer, Barratt's Bulletin advises investors to stay away from gold for the next few months. 

 "This is not a good time to accumulate gold and silver. It is just beginning of a decline. We have broken significant support levels. A bear market has started," Sudarshan Sukhani of s2analytics.com stressed.  

 SP Tulsian of sptulsian.com also believes that weakness in Gold will continue for sometime. "Coming on gold the kind of technical levels which is being talked about are anywhere between USD 1200-1250 per ounce. One can look to see the level of Rs 25000." 

 

 Gold prices do tend to soften after the wedding season in May and before the festive season that begins after August, but there is no technical or fundamental reason to buy gold on Akshaya Tritya.
Because Akshaya Tritiya comes only once a year and anyway the prices are lower than what it ought to have been. On the flip side, if you research well, Akshaya Tritiya was only meant for engaging in some good deeds and not worshiping Goddess Mahalakshmi. The gold craze was created by our friends in the jewelry business. Three cheers to the visual media.

 

A seller is always bullish on Gold. If you ask a barber whether you need a haircut, he will 100% say, YES.
Gold is due for a correction. If not price correction, definitely Time correction.
I personally recommending to my clients to avoid buying GOLD for investment purposes.

 As gold offers no regular cash flows, there is no intrinsic value that we can assign to, say, a bar of gold. This means that gold prices can theoretically decline to any extent in a corrective phase. It would be a good idea to start buying now, but to phase out your purchases over 4-5 instalments to benefit from volatile prices. 

If your Asset Allocation is telling you to BUY Gold., then buy Gold ETFs or Gold Saving Funds via SIPS. 

My choice would be RELIGARE GOLD FUND. 

 

 

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Avoid Jewellers Gold Savings Scheme.... Here's why

Indians Love Gold!
Jewellery Houses like Tanishq, PC Jewellers and GRT Jewellers have been quick to latch on to this craze of Indians and have launched innovative Gold Savings Schemes to lure buyers. With as little as Rs.1000/- per month, you can save systematically with the jeweller for 11 months and the Jeweller will usually add a month's instalment FREE (some jeweller even pay two instalments) at the end of the saving period.
Yes, depending on Jeweller and scheme, these schemes offer returns in the range of 8% to 18%.
So, in essence, these Jeweller Gold Saving Schemes are EMI in Reverse. They help you buy Jewellery at a Future Date by saving and accumalating.
Sounds good. Then, what's the catch? Why are Financial Experts suggesting you to avoid these Jeweller Gold Saving Schemes?
REASONS TO AVOID JEWELLERS GOLD SAVINGS SCHEME
There are several reasons and let us look at them one by one and see the reasoning.
1. Almost every Jeweller offers you Gold only at the end of the Term and at that days price. This means you are more likely to get less Gold because of the Appreciation Factor.
Ex : If you are investing Rs.3000 on the 10th of every month to buy 10 grams of Gold at the end of the year and if the Gold price steadily goes up, then obviously you will left with less Gold and you will be forced to put extra money to buy your 10 gms Gold.
So, if say you started your instalments in January and the Gold price was 2800 per gram and at the completion of your instalments in November, the December price of Gold is 3000 per gram then you are forced to pay Rs.3000 per gram whereas the Jeweller would have bought at Rs.2800 per gram.
This drawback could be avoided if you investing through Gold Savings Schemes by Mutual Fund as the averaging works better.
		2. Almost every Jeweller forces you to buy Gold Jewellery and does not give you Cash in return. Now, what this makes you, you are forced to pay Making Charges fo Jewellery and either you pay extra cash or buy less Gold.
In Mutual Fund gold Savings Schemes you are getting CASH and thus saved the igomy of paying Making Charges, etc.
3. The Gold Savings scheme by Jewellers do have SEBI approval and thus there is no monitoring of the cash you pay. These Jewellers may be using your fund for Working Capital, business, etc and nobody checks their books. So, if tomorrow, suddenly Gold price crashes and all Investors stop their instalments and ask for Gold, then you never know how many of these Jewellers would be able to keep their word.
In Mutual Fund Gold Savings Schemes, SEBI is mandatory. Their books are mandatory checked. All your funds/investments are backed by Physical Gold.
4. Very few Jewellers offer 24 Karat Gold. Almost every jeweller offers only 22k gold. So, since you will not get cash from the Jeweller, you are buying Gold which is not 100% pure.
In Mutual Fund Gold Savings Scheme, your funds are backed by 24k Pure Gold.
5. Resale value of Jewellery is lesser. Jewellery is not made of 24 Carat Gold and also carries making charges, resale value of Jewellery is much less compared to Gold coin/biscuits/Gold bars. Since you are forced to buy Jewellery and do get cash/gold coins from the Jewellery, you are again losing.
In Mutual Fund Gold Savings Scheme, since you paid cash, you can either reinvest or buy Gold Coins instead of Jewellery.
6. You have to buy from the Same Jeweller even if the Jeweller does not have designs of your choice.
In Mutual fund Gold Savings scheme, since you are paid cash in lieu of Gold, you can buy from Jeweller of your choice.
7. If at the end of the Instalment period, if you are in need of Cash for emergency, you wont be able to use this money as you are given only Jewellery. The best you can do is to sell the piece of Jewellery and forgo the making charges.
In Mutual Fund Gold Savings Scheme, you are paid cash always.
8. In Jeweller Gold Saving Scheme your Gold purchase attracts Wealth Tax and also Capital Gain Tax (if you sell within 3 years).
In Mutual Fund Gold Savings Scheme, there is no Wealth Tax and you are taxed for Long Term Capital Gains just after 1 year (in physical gold, you have to wait for 3 years).
IN A NUTSHELL :
Jewelers not only earn interest on the buyer's installment but also sell the jewelry after earning a handsome margin. For 20 grams gold jewelry, he earns Rs 600 making charge and sells 22 carat gold at rate of 24 carat gold. So he earns approx 8% extra by selling gold of 22 carat purity.
For jewelers, this scheme is a win-win situation as he gets the chance to sell his product, and at the same time he earns interest on the customer’s installment.
Some jewellers do offer "zero wastage" to lure gullible investors, but do note that these "zero" wastage if only for few select designs/pieces. INtricate desingner Jewellery could still see a higher levy.
For lower middle class people, and for people who want to accumulate Gold for marriage or other purposes in near future, the Jeweller Gold Saving Scheme looks okay, but for all other purposes, Mutual Gold Saving Scheme is the BEST.
If you are hell bent on investing in these schemes of Jewellers, then I feel that PC Jewellers and GRT are better among the Worst.
While you may argue, that since the Jeweller gives me 1 month instalment FREE and the returns works out to 15%, do note that the same investment in Gold Saving Scheme via SIP would have given you 27% return. Jewellers are not here for charity, they give FREE last instalment with money made from your previous instalments!
Purity is another matter of seriuos concern. Though the use of "hallmark" has reduced this malice, still it persists.
Indian households predominantly purchase gold in the form of jewellery. Gold Jewellery has aesthetic appeal and is widely used for ornamentation. Besides, investment in gold jewellery is also done for a special occasion such as a marriage, birth of a child etc. However, jewellery by itself has a major drawback - there is a loss of around 30% due to making and melting charges when you buy and sell.
WHAT I FEEL.................
Gold continues to be a non-productive asset and over long periods of time, returns from gold seldom beat returns from productive assets classes like equities. Unless you are an active investor who can spend a lot of time rebalancing your portfolio, I recommend an exposure of anywhere between 5 to 15% of your total assets in gold.
GOLD ETFs:
Gold ETFs or Gold Saving Schemes by Mutual Funds offer you the option of buying in monthly instalments which ensures that you buy Gold at various Price points thus averaging out your Purchase price.
If you really want to accumulate Gold through monthly instalments, the BEST option would be invest through Gold Savings scheme offered by Mutual Funds. This will also help you in averaging your instalments.
BUT I STILL MAINTAIN, IF YOU WANT TO BE WEALTHY, THEN EQUITY IS THE BEST INVESTMENT. NOT GOLD, NOT DEBT, NOT FDs, NOT EVEN REAL ESTATE.
If you had invested Rs.100 in 1980 in both Gold and Equity (Sensex), the value of gold now would be Rs.1314 and that of Equity (Sensex) would be Rs.15600/-
The most important thing is the proper asset allocation.Both equity and gold mutual funds have a place in a portfolio.For long term investment equity mutual funds should form core of the portfolio with gold funds acting as a hedge to balance and add stability to the overall portfolio.So, invest in a gold fund once you have built a well diversified portfolio of equity mutual funds with 5 to 10% portfolio allocation to gold.
As has been pointed out often, gold is an unproductive asset. Unlike stocks or bonds, it's a type of asset where value depends on nothing but a shared belief that the value will rise and keep rising.
ANOTHER POINT TO NOTE :
Most investors invest in Bank Recurring Deposits to buy Gold at a future date. This is not a good idea since Interest Rates may not keep pace with the rise in Gold price and they will not be able to achieve their objective.
FINAL WORD :
Gold Jewellery Schemes aim is to give you Gold/Jewellery whereas gold Savings Funds/Gold ETFs aim to give you Cash.
So, if you want to buy Jewellery in the near future (say 1 year), then go for Jewellery Gold Savings Schemes, but if you want to buy Gold as an Investment or if your Gold usage is at a later date (say your daughter's marriage, which is several years away) , then its Gold Savings Fund/Gold ETF blindly.
Caveat, if it is for consumption, then unless you have a very trusted and reliable Jeweller (ready to buy back from you), dont think of these Gold Savings Schemes by Jewellery Stores.
Buy Gold ETF , Sell the Units when you want gold and from the money you get , go buy gold !
Happy Diwali and best of luck,
Srikanth Matrubai

Also visit http://equityadvise.blogspot.com

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SBI GOLD FUND - INVEST

SBI has come with SBI Gold Fund.
You can invest if you are under exposed to Gold.

SBI has launched SBI Gold Fund – its FoF that feeds into its gold ETF.
The SBI Gold Fund is very similar to Reliance Gold Savings Fund and hence
the working of the fund is known to most of you, my clients.

If you have not yet understood its working…please read…
http://goodfundsadvisor.blogspot.com/2011/02/reliance-gold-savings-fund.html

This fund will be investing in the gold exchange traded fund (ETF) as an
underlying. So this method is very convenient to those investors who are
not very comfortable with buying the gold ETF through the stock
exchanges.
SBI Gold  fund will enjoy the same tax benefits as any exchange traded gold
ETF.
There will no limits on investment.

GOLD PRICE OUTLOOK :

Gold has been a star performer for the past 4 years.
Being seen as a safe haven across universe, Gold has been chased by all

types of investors. The recent Economic upheavel across the World has

pushed up the Gold prices and there is no reason why Gold should not do
well.
Gold, as we know, has been a star performer for the past couple of years.
Gold is a counter cyclical in nature and hence an ideal asset tool in
diversification.
Gold should be looked at as a diversification, as a hedge in your portfolio.
Even if everything else goes wrong, this is one asset that would do well,
particularly in times of uncertainty. So it should be looked at from an asset
allocation or diversification point of view, rather than taking a view on the
price where it is trading today.

Why invest in SBI Gold Fund??

There are 6 reasons for you to invest in a Gold Saving Fund and SBI Gold
Fund in particular…
1.
In Gold ETF space, SBI Gold has been a outperformer because the Fund has
been fully invested and has minimal tracking error.
2. The SIP option gives you the advantage of buying Gold in as small
quantity of Rs.100/- which is not possible with a Gold ETF.
3. Yes, being a Fof, there is no Compulsion of Demat Account.
4. Excellent way to accumulate Gold without being concerned about the
Secuirty, Purity, making charges, etc.
5. Taxation laws enable you to take the benefit of Long Term Capital Gains
after just period of one year of its holding which is not so in case of Physical
Gold.
6. The Biggest plus point for the Gold Saving Fund according to me, going
forward, Gold is going to be more and more volatile, hence will benefit SIP
investors immensely.
SIP in SBI Gold Fund NFO is likely to generate higher Returns than GOLD
ETF, with the assumption that Gold Prices may continue to be VOLATILE by
5-10% . Investor will be invest in this Fund during Declines in Gold
Prices(via SIP of course). This is likely to Reduce the Cost of Purchase of GOLD UNITS in Fund
of Funds.

Gold recent sharp rise will see it going periodic price correction which will
help SIP investors average their cost.
For someone, who has no exposure to Gold at all, this Fund is an excellent
way to get an exposure and set his Asset Allocation right.
If you are investing through Sips, YES go for SBI Gold Fund…otherwise it is a
Strong NO!!!
Best of luck,
Srikanth Matrubai

Also visit
http://equityadvise.blogspot.com

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SUNDARAM EQUITY PLUS FUND - A REVIEW AND ANALYSIS

MORE STABLE, LESS RISKY

Aiming to get the best of Gold and Equity, Sundaram Equity Plus Fund follows successful UTI Wealth Builder Series II Fund.

UTI Wealth Builder Series II has been very successful. It has beaten its Benchmark both in Positive and Negative times.
It has risen more and fallen less.

Can we expect the same from Sundaram Equity Plus Fund.... well that depends on how well the Equity portion is managed as the Gold investment does not need the skill of the Fund Manager expect in the extent of exposure towards Gold.
The Sundaram Equity Plus Fund aims to invest around 65% in Equity and 35% in Gold ETFs.

Gold, as we know, has been a star performer for the past couple of years. Gold is a counter cyclical in nature and hence an ideal asset tool in diversification.
But, going forward, Gold is not expected to repeat its Extraordinary performance and hence this fund could struggle to give Alphe returns.

Now, since the Fund Manager has indicated that he will be tilted towards Large Caps, and with balance in Gold ETFs, the Fund will not be volatile and may at best give you Par returns. If you want Alpha returns, then this fund is NOT for you.



Tax Advantage :
Since more than 65% is intended to be invested in Equities, there will be No Long Term Capital Gains Tax.

RECOMMENDATION :
Sundaram Equity Plus Fund is suitable for conservative investors who are looking to hedge their equity portfolio with Gold.

Sundaram Mutual Fund fans can sure go for this fund, others are better off by separating their investment and themselves investing in a Diversified Equity Fund and taking a SIP in Reliance Gold Savings fund which in turn invests in Gold ETFs.

Also read....
http://goodfundsadvisor.blogspot.com/2011/04/invest-in-gold-best-way.html

Alternatively, investors can consider investing in

UTI Wealth Builder Fund Series II

Axis Triple Advantage Fund

Canara Robecco Indigo Fund

Best of luck,
Srikanth Matrubai


Also visit http://equityadvise.blogspot.com

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