Gold : How low can it go ?

by- Sugandha Sachdeva | AVP & Incharge- Metals, Energy & Currency Research at Religare Securities Limited 

With gold prices slipping to new five year lows, the sentiments have once again turned quite bearish. After respecting  the psychological level of Rs.25000/10gms at domestic bourses for a long time, prices have eventually breached the same, reflecting the lack of demand for the precious metal and unwinding of safe haven bets. In international markets too, the prices have plunged sharply and are trading below $1100 per ounce, significantly down from the all-time highs of $1920 per ounce. The universal safe haven asset has also failed to attract investors during the recent turmoil emerging out of Greece debt talks and the jitters in Chinese equity markets. So does that infer that prices may head further lower since the investors look in no hurry to take advantage of the lower prices? Well, the fundamentals are indicating something that’s not divergent from this thought ! Continue reading

The Fed may have quietly put off rate hikes to December 2015

The Federal Open Market Committee (FOMC) meet that ended on July 29th still leaves the big question open; will the Fed hikes in September or will they postpone the rate hike? For one, the Fed has enough time till September 16th as there are no intermediate meetings scheduled. That will give the Fed a full 7 weeks to analyze data on growth, labour, wages and inflation before arriving at a rate hike decision. However, as one breaks up the press release issued by the Federal Reserve Board after the FOMC meet, it looks quite likely that the rate hike may be put off from September to December. Let us understand why! Continue reading

Is gold losing its lustre or is it just a blip in its upward journey?

The price of gold has been on a virtual downtrend since September 2011. Of course, we are referring to gold in dollar terms. From a high of $1900 / troy oz it has fallen closer to $1100 / troy oz in a span of 4 years. There are a variety of reasons attributed for the end of gold as an alternate currency. Firstly, the dollar has been on a constant tear and typically the US dollar has been negatively correlated to the price of gold. Secondly, with the entry of ETFs large global ETFs like SPDR have started holding over 1300 tonnes of gold to back their gold ETF units. One needs to remember that SPDR today is the 6th largest gold holder. This investment demand has created volatility in the price of gold. Continue reading

America’s $2 trillion

That is a lot of money stashed away abroad

Most readers may be surprised to know that the US-based companies have kept cash profits to the tune of $2 trillion abroad. That is roughly equivalent to the GDP of India and roughly half the market capitalization of the UK stock market. Close to 9% of this stash belongs to Apple. In fact Apple has a cash chest of $200 billion of which $180 billion is held abroad. If you are wondering about the reasons for the same, it is all about taxes. Continue reading

Counter-vote by LIC – Minority shareholders assert themselves; and that is good

It is hard to say what will be the final outcome of the proposed Cairn-Vedanta deal but one thing comes out crystal clear. The minority shareholders are having a major voice in merger deals. But, first some background.

The recent amendments to the M&A rules in India specifically require approval for any merger from a majority of the minority shareholders. Let us understand this a little further. Continue reading

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