Mutual Funds
Birla MF to launch gold ETF, the flavour of the season

Gold has gone up six times in 10 years. That’s exactly why you should not join the gold rush to invest in gold ETFs

After the recent launch of HDFC Gold ETF and ICICI Gold ETF funds, now Birla Sun Life Mutual Fund is launching its gold ETF fund. Birla Sun Life Gold ETF is an open-ended gold exchange traded fund just like any other gold ETF Funds.

Gold ETF is a paper asset designed to track the gold price. You can get rid of the problem of holding physical gold. But is gold a good asset to buy? Nobody really knows that. It has already jumped about six times over the past ten years, from $250 to around $1,500. It may continue to rise or go down if interest rates shoot up.

Jumping into any asset that has already jumped manifold does not make any sense, irrespective of the fact that it may head further up. The best investments are those that are low in price, not very hot and have started an uptrend-not when something is already hot and you invest in anticipation of a further rise.

Indians believe that gold (like real estate) always increases in price. This is true. But let that not lead to blind belief. If you don't know by how much gold has gone up over the past 20 years, or why, it would be blind belief to think that gold always goes up. It is a common belief that gold offers good returns over the long term. Again, not true. Since 1991, gold is up just 8.9% on a compounded annual basis. That hardly beats a recurring deposit scheme!

Gold is not an investment, but a speculative asset, influenced mainly by the dollar and US interest rates. If you invest in gold, you cannot be passive about it, expecting a rise year after year. Gold does well only in certain market conditions, that is, when real interest in the US is negative to zero. This has been the situation for a decade now and nobody knows how long it will continue. If it does, gold will rise further.

There are only speculative forces pushing up the price of gold, something that is beyond the grasp of an average saver. If so, there is simply no logical reason for them to invest in gold. There is speculative merit aplenty-as long as you know when to pass it on to the next sucker. Read the most comprehensive analysis of gold here.

The NFO opens on 25 April 2011 and closes on 9 May 2011 and will reopen not before 24 May 2011 for regular purchase and repurchase of the gold units in the form of ETF.

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SEBI bars 2 Pyramid Saimira directors from stock market trade

Last year, SEBI in a show-cause notice alleged that PSTL inflated its revenues and profits by fictitious entries in its accounts and had barred its managing director PS Saminathan from trading in stock market for 10 years

Mumbai: Market regulator Securities and Exchange Board of India (SEBI) on Monday barred the chairman and a whole-time director of Pyramid Saimira Theatre (PSTL) from trading in securities or from holding similar positions in any listed company for up to three years for allegedly inflating revenues and profits, reports PTI.

The two individuals are N Narayanan, who was whole-time director and V Natarajan, who was the chairman and whole-time director of PSTL, a SEBI order said.

"(SEBI) restrains N Narayanan and V Natarajan for a period of two years and three years respectively from the date of this order, from buying, selling or dealing in securities in any manner whatsoever or accessing the securities market, directly or indirectly and from being a director of any listed company," the market regulator said.

Last year, SEBI in a show-cause notice alleged that PSTL inflated its revenues and profits by fictitious entries in its accounts and had barred its managing director PS Saminathan from trading in stock market for 10 years.

It disclosed the same in the quarterly and annual accounts for the financial year 2007-08 and thereby misled the public in their investment decisions.

"It is also alleged that PSTL made false disclosures to stock exchanges on 30th January 2009 that it had entered into agreement with 802 theatres as on 30 June 2008," it added.

Drawing attention to the fact that whether whole-time directors can be held responsible for violations committed by the company, SEBI said, "A company does not have a mind of its own. ...the directors, particularly whole-time directors, are responsible for all acts of omission and commission by the company."

"The directors failed to exercise the duty of care by either actively allowing the management to fabricate accounts and make false disclosures or not setting up systems to generate accurate accounts and make correct disclosures.

"The former is more likely as the notices overlooked numerous red flags in the trend in revenues, profits, receivables, advances, etc. which could not escape the attention of a prudent person," the order said.

It could not be immediately confirmed whether these two notices are still on the board of the PSTL.

SEBI said the notices failed to ask the right question at the right time, thus failing in their duty of care as a director.

Last month, SEBI barred three independent directors and members of audit committee-K S Kasiraman, K Natarahjan and G Ramakrishnan-from holding a similar position in any listed company for two years for giving false and misleading statements.

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Hazare backtracks, to agitate if Bill not passed by 15th August

Social activist Anna Hazare said people being the masters need to monitor Parliament's decisions in a functioning democracy. This was true as Parliament has failed to pass a Lokpal Bill for the past 42 years, he added

New Delhi: Backtracking on his Sunday's statement, Anna Hazare on Monday stuck to his 15th August deadline for passage of the Lokpal Bill failing which he will resort to agitation, reports PTI.

"The joint drafting committee has a mandate to produce a strong Jan Lokpal Bill (JLB) which will be sent to Parliament. We hope that all political parties will vote as per the wishes of the people, which is overwhelmingly in favour of a strong Bill.

"Parties that vote against the Bill will be eventually hurting their popularity and exposing their mala fide intentions. In such an event, we will again take to streets," Mr Hazare said in a statement here.

At an interaction with Marathi journalists here on Sunday, Mr Hazare appeared to be flexible on the 15th August deadline saying he was open to extending it if he found that the government was on the right path.

"We will have to accept it. We believe in democracy," he has said in reply to a question on what would be his stand if Parliament rejected the Lokpal Bill drafted jointly by the government and representatives of the civil society.

Reacting to media reports, Mr Hazare said on Monday that the deadline for preparation of the draft bill remains 30th June, immediately after which it should be presented in the Monsoon Session of Parliament.

"Even the government has admitted that it is realistic for Parliament to deliberate and take a decision on the JLB by the 15th August deadline set by me. Thus failure of this deadline will invite mass protests by the people," he said.

He said people being the masters need to monitor Parliament's decisions in a functioning democracy. This was true as Parliament has failed to pass a Lokpal Bill for the past 42 years.

In addition, a significant number of elected representatives have used money, muscle power, election fraud, and misinformation in the media to win seats, undermining the sanctity and credibility of the parliamentary system, he said adding the citizens will have to ensure that a strong Lokpal Bill is passed.

He also said that confusion was being created in the media through government sources that the civil society has climbed down in the first Joint Drafting Committee meeting held on Saturday.

"It was rumoured that we agreed to the exclusion of the Prime Minister, cabinet ministers and judiciary from the Lokpal's purview. Civil society members have certainly not agreed to any of the above. JLB version 2.2 was presented to the government of India at the first meeting," he said.

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