Gold and silver touch all-time highs: 2011 Review

The domestic market witnessed relentless buying in precious metals due to global volatility in view of escalating geo-political tensions across the Middle East, the subsequent impact on crude prices, sustained weakness in world equities, higher inflation and concerns over global economic growth

Mumbai: Continuing their record-breaking spree, gold and silver galloped to all-time highs in 2011 on strong demand for precious metals considered as a ‘safe-haven investment’ in times of economic turmoil and rising inflation, reports PTI.

Gold (99.5% purity) crossed the Rs29,000 per 10 grams-level to a historic high of Rs29,155 per 10 grams on 8 December 2011, on good local demand in view of the marriage season coupled with investment buying due to weak equity markets.

Pure gold (99.9% purity) also logged a fresh peak of Rs29,280 per 10 grams during the year.

Silver (.999 fineness) prices hit an all-time high of Rs75,020 per kilogram on 25 April 2011, on heavy speculative and investment-driven buying in line with global markets, where the metal rose to a fresh 31-year high.

The metal witnessed a global rally amid speculation of a supply shortage. Furthermore, successful launching of E-silver by the National Spot Exchange (NSEL) sharply boosted the speculative nature of the metal.

The domestic market witnessed relentless buying in precious metals due to global volatility in view of escalating geo-political tensions across the Middle East, the subsequent impact on crude prices, sustained weakness in world equities, higher inflation and concerns over global economic growth.

In May, global markets witnessed a free-fall in prices of the precious metals as speculators dumped their long positions after metal exchanges hiked the margin requirement several times.

The overseas market saw the precious metals hold on to their risk aversion tag, hitting record highs due to continued worries over the global economic meltdown.

Nervous investors preferred to park their funds in gold as a safe investment instead of risky assets like equities after the euro zone debt crisis spread to more European countries, causing shivers in global financial markets.

Gold prices hit record highs as the dollar fell against a basket of major currencies after the US Federal Reserve’s decision to maintain its low interest regime in order to support economic recovery. In the Comex market, gold prices zoomed to a record high of $1,923.70 an ounce on 6th September.

Gold surpassed the psychological Rs29,000-mark in November on the back of heavy investment-driven buying as well as buoyant wedding season demand.

The precious metal saw high volatility in November in international markets in the backdrop of intermittent dollar strength amid the surprising decision of Greece to go for a referendum on a Eurozone bailout package.

Silver ready (.999 fineness) was trading at Rs52,285 per kg on 27th December, nearly 11% higher over last year’s close of Rs47,030.00 per kg.

Standard gold (99.5% purity) also flared up by about 34% to Rs27,500 per 10 grams on 27 December 2011, from Rs20,585 per 10 grams on 31 December 2010.

Pure gold (99.9 fineness) was quoted at Rs27,630 per 10 grams on 27 December 2011, as against Rs20,680.00 per 10 grams at the end of last year.

User

FDI flow soars but policy inertia spoils party: 2011 Review

The rise in the inflows should have cheered the investment climate. Instead, the mood is gloomy, especially after the government was forced to put on hold the big-bang policy of opening multi-brand retail to foreign investment

New Delhi: India received increased foreign direct investment (FDI) in 2011 than the previous year, but lack of big ticket policy announcements belied high expectations leading to gloomy mood among investors, reports PTI.

It is said that figures speak for themselves. Not in the case of the data relating to the foreign direct investment (FDI).

On the face of it, the country attracted FDI worth $22.52 billion between January and September 2011 against $15.97 billion in the same period last year.

The rise in the inflows should have cheered the investment climate. Instead, the mood is gloomy, especially after the government was forced to put on hold the big-bang policy of opening multi-brand retail to foreign investment.

“...going ahead, it may face a slowdown mainly because of global economic uncertainties. The government needs to work more on improving investment climate of the country,” Crisil principal economist DK Joshi said.

Industry and policy planners expected the window of FDI to get widened at a time when the global financial markets went into a tailspin following the European debt crisis and the flows from the foreign institutional investors (FIIs) not only dried but took a reverse turn.

The Sensex, reflecting the sagging confidence of the FIIs, has declined from 20,561.05 on 3 January 2011 to 15,175.08 on 19 December 2011.

FIIs have withdrawn Rs2,497.50 crore between January and 20th December, exerting pressure on the rupee which has seen a drop in value against the US dollar by 16% since July.

It was exactly in this backdrop that the policy makers and the industry looked towards the political leadership to take some big steps and liberalise the country’s FDI regime, so that overall overseas resources are robust.

But then, the “political compulsions”, as prime minister Manmohan Singh said, led to halt in the reforms process.

While the Department of Industrial Policy and Promotion (DIPP) did take several initiatives to boost the investment climate, it is felt that not enough preparations were done at the political level to get the UPA allies on board.

In the end, key UPA allies Trinamool Congress and DMK were not enthusiastic about opening the FDI for multi-brand retail.

Reforms in pensions and insurance by liberalising FDI in these areas could also go a long way in encouraging global investors. However, opposition parties, especially the BJP whose support is crucial for passage of certain bills in Parliament, are not on the same page with the government. The UPA is in minority in the Rajya Sabha.

On the positive side, major tie-ups were announced in the initial few months of the year which helped improve the inflows.

Reliance Industries’ $7.2 billion mega deal with British major BP Plc is seen as the biggest the FDI into India so far.

Japanese pharma major Daiichi Sankyo’s buyout of Ranbaxy Laboratories for $4.5 billion was the second biggest FDI.

User

What’s not

Sugar companies ended lower. KCP Sugar & Industries Corporation tumbled 10%, Dharani Sugars &...

Premium Content
Monthly Digital Access

Subscribe

Already A Subscriber?
Login
Yearly Digital+Print Access

Subscribe

Moneylife Magazine Subscriber or MSSN member?
Login

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)