According to the report, the current US and the Euro zone crisis will keep the gold prices bullish and they are likely to reach $2,000 an ounce in another 3-4 months
Gold prices are likely to touch $2,000 by March, driven by the global economic crisis, while gold imports may reach 1,000 tonne, a senior SocotiaMocatta official on Thursday said.
"Investor demand has compensated the decline in the jewellery consumption. The rising gold prices, which has boosted the investors appetite, may result in close to 1,000 tonne imports of the yellow metal," Rajan Venkatesh, managing director, India bullion, SocotiaMocatta, a part of the Bank of Nova Scotia, said on the sidelines of FICCI 'Gems and Jewellery Conference'.
The current US and the Euro zone crisis, he said, will keep the gold prices bullish and they are likely to reach $2,000 an ounce in another 3-4 months.
"People are losing faith in cash as load of the US currency can be printed," he said.
The gold prices today in India ruled at Rs28,500 per 10 grams, while it was $1,695.90 an ounce in the global markets.
On silver, Venkatesh said, the imports will be slightly lower than last year's 3,030 tonnes due to the rise in prices.
"Silver business is not that significant (by volume)... a couple of months ago it was very good when prices had tapered off," he said.
The demand will improve if the silver prices come down to Rs40,000-Rs45,000 a kg, he said.
Silver prices today stood at Rs56,250 per kg here and in the global markets it was at $31.88 an ounce.
Yes, the increasing price of gold continues to attract many buyers and investors. But did you know that gold has in fact gained just 8.9% on a compounded annual basis since 1991? And don’t be foolish to believe that the price will continue to rise always
IDBI Mutual Fund has announced the launch of a gold ETF fund, the latest to enter this segment after a series of ETFs launched recently by HDFC, ICICI and Birla Sun Life mutual funds.
IDBI Gold ETF is an open-ended gold exchange traded fund, like any other gold ETF, and there is nothing novel or different about it from the already existing gold ETFs.
A gold ETF is a paper asset designed to track the gold price without holding physical gold. But is gold a good asset to buy today? Nobody really knows. The price of the yellow metal has already jumped about six times over the past ten years, from $250 to around $1,500 and it may continue to rise or go down, depending on which way interest rates go.
Jumping into any asset that has already increased in value many times over does not make any sense, irrespective of the fact that it could head further up. The best investments are those that are available at a low price, are not very hot, and have started an uptrend, and not when they are already hot and you consider investing in anticipation that it would rise further.
Indians believe that the price of gold (as that of real estate) is always increasing. This is true. But let that not lead to blind belief. If you don't know by how much the price of gold has gone up over the past 20 years, or why, it would be blind to believe that it is going to continue to go up endlessly. 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. And I this is so, there is simply no logic in investing in gold. Of course, there is speculative merit aplenty, as long as you know when to pass it on to the next sucker.
The IDBI ETF will invest 95% to 100% of assets in gold and gold-related instruments with a medium-risk profile. On the other side, it would allocate up to 5% of assets in debt and money market instruments with low- to medium-risk profile.
The new fund offer price is Rs100 for cash at a premium equivalent to the difference between the allotment price and face value of Rs100. The allotment price would be approximately equal to the price of one gram of gold.
The scheme will be managed by Gautam Kaul and it will be benchmarked against the domestic price of physical gold.
Investors say paintings in which they invested were priced too high and hence could not find any buyers. Copal not too keen on promised buyback, says it was a “goodwill gesture”
Investors, who put their money into art funds launched by Copal Art in 2006, have alleged that they have been cheated by the management and haven't got their money back.
Copal's business model allowed investors to actually possess the paintings they invested in. Later, when the paintings would appreciate in value, they were to be sold through Copal's portals. Investors were promised multiple returns.
About a year ago, the company offered to buy back those paintings owned by its investors that had remained unsold. Investors, however, have complained that the exercise has not resulted in returns.
"There are four cases of cheque bounce and stop payments. These investors got money from Copal after sending legal notices. It's very difficult to believe Copal's promises and after the cases of cheques bouncing, investors are afraid of sending the painting (to Copal) without receiving the amount on the cheque," says Sachin Kaluskar, a financial advisor. Back in 2006, Mr Kaluskar was a partner of InvestmentIdea Financial Services that handled many transactions for those investing with Copal.
Strangely, Copal denies it is an art fund and says there is no buyback policy. "We would like to clarify that Copal is not a fund. Copal is an art advisory for emerging and established collectors of art," says Ajay Seth, chief mentor, Copal Art. "According to our service terms and conditions, we do not offer a buyback facility. The buyback service was an exceptional service provided as a goodwill gesture."
Mr Seth insists there are no instances of investors not receiving their money in full if they have returned the paintings to Copal, and that they are always in touch with their clients.
Investors, have a different story. Amit Makwana, from Junagadh, had invested in Copal's art fund, and also got some of his friends to do so. "I have not got my Rs2 lakh back. I had invested in a painting which was priced at Rs7,500 per sq ft on canvas. Now, I cannot sell at such a price, so I am holding back."
One of Mr Makwana's friends threatened Copal with legal action, after which, the fund agreed to buy back his paintings. However, Copal asked him not to deposit the cheque that he received, saying that the money was being transferred. When the cheque was deposited after two-three months, it was revealed that there was a stop payment order against it. When the investor threatened to go to court, Copal transferred his funds to his account.
Baroda-based advocate Amit Shah has filed legal complaints against Copal on behalf of two investors. "One investor got his money back after almost six months of dilly-dallying, after we filed a criminal complaint under Section 138 of the Indian Penal Code when the cheques for the buyback scheme bounced. Copal also claims that the paintings were damaged, which is a lie, because investors know how to take care of their investments. My second client has a huge portfolio of Rs45 lakh with Copal, and his case has suffered the same delay."
Though Copal denies not paying any investor, there have been many complaints. A chemical trader from Surat is following up with Copal for payment on behalf of his friends as well, but they have not received any money. A managing director of a chemical company is saddled with a Kishore Shinde painting-cum-sculpture since 2008, which hasn't found any buyers despite Copal's assurances.
Copal Art, a gallery in New Delhi, launched two art funds at a time when the economy was going through a short 'feel-good' phase. Unlike high-flying Osians which catered to HNIs, Copal said it was different-it allowed people to enter with an amount of Rs1 lakh.
But with the recession in 2008, all dreams crashed. Investors discovered that Copal had priced the paintings so high that there were no takers in the market. Replying to a question, Mr Seth said art had to be withheld for 3-4 years for value appreciation. Pressured by investors who threatened legal action, Copal decided to buy back the paintings from investors. The buyback is expected to finish by December.