Since last three days Gold has fallen almost by Rs.4000 and I got more than 20-25 calls from clients. Everybody was asking,” is this right time to buy gold??” So in this blog I am going to give my views on Gold.
India is largest importer of Gold in the World. Though we are largest importer, we are still price taker. Our Gold price is dependent on 2 factors.
1. Gold in Dollar terms 2. Dollar/ Rupee rate
Gold in Dollar terms
Normally Gold follows 20 years time cycle. The last Bull Run has started from year 2000. In 1980 Gold was around $875; in 2000 it made a low of $250. In 2008 it made a High of $1034 and corrected to $680 in 2009(30% from High). From $680 it started going up once again and made a high of $1920 in 2012. Now in this correction, Gold can go to $1250-$1300 once again. Long term investor should start investing around $1300. Normally the last leg is extended leg in commodity market. So Gold can go up to $3000 by 2020.
Dollar/ Rupee rate
As India is an importer of Gold, Dollar and Gold are positively correlated. Gold price in India increases with Dollar appreciation and vice versa. In 2000 Dollar was around 43 against Rupee; it has appreciated to 57 in 2012 by almost 35%. The Support from Dollar will continue for next 2-3 years. Currently $ is quoting at 54.20. In my opinion 53 is a major support level for Dollar, it will not break this level easily. On the upper side, if it breaks 55 levels then it will go up to 59 at least. As I said earlier also, last leg in Commodity and Currency are extended leg. So it can take Dollar to 62-64 levels also. In short, Dollar is going to support Gold prices in India, so keep your eyes on Dollar as well.
Gold in India
In 1925 Gold was around Rs.18.75 per 10 grams. In 2011, it became 26400 so Gold has given around 8.8% compounded annual growth rate (CAGR) for last 86 years in India. With the same return, we can expect Gold should be at Rs.40000 by 2016 and 55000 by 2020.
Yesterday Gold made a low of 25500; it has corrected almost 22% by its all time high of 32500. Normally 25% to 30% correction is considered to be healthy. Now the minor support for Gold is around Rs.25000 and if it breaks that it can go down to Rs22000 to Rs.23000 also. In my opinion one should start Systematic Investment Plan (SIP) around 25000 for next one year.
To Conclude, Gold should make a base around Rs.23000-Rs.25000 in next few months. Hence, long term investors can start accumulating Gold for the target of Rs.40000 by 2016 & Rs.55000 by 2020. So those who have missed the train earlier can enter Gold once again.
Happy Investing!!!
India is largest importer of Gold in the World. Though we are largest importer, we are still price taker. Our Gold price is dependent on 2 factors.
1. Gold in Dollar terms 2. Dollar/ Rupee rate
Gold in Dollar terms
Normally Gold follows 20 years time cycle. The last Bull Run has started from year 2000. In 1980 Gold was around $875; in 2000 it made a low of $250. In 2008 it made a High of $1034 and corrected to $680 in 2009(30% from High). From $680 it started going up once again and made a high of $1920 in 2012. Now in this correction, Gold can go to $1250-$1300 once again. Long term investor should start investing around $1300. Normally the last leg is extended leg in commodity market. So Gold can go up to $3000 by 2020.
Dollar/ Rupee rate
As India is an importer of Gold, Dollar and Gold are positively correlated. Gold price in India increases with Dollar appreciation and vice versa. In 2000 Dollar was around 43 against Rupee; it has appreciated to 57 in 2012 by almost 35%. The Support from Dollar will continue for next 2-3 years. Currently $ is quoting at 54.20. In my opinion 53 is a major support level for Dollar, it will not break this level easily. On the upper side, if it breaks 55 levels then it will go up to 59 at least. As I said earlier also, last leg in Commodity and Currency are extended leg. So it can take Dollar to 62-64 levels also. In short, Dollar is going to support Gold prices in India, so keep your eyes on Dollar as well.
Gold in India
In 1925 Gold was around Rs.18.75 per 10 grams. In 2011, it became 26400 so Gold has given around 8.8% compounded annual growth rate (CAGR) for last 86 years in India. With the same return, we can expect Gold should be at Rs.40000 by 2016 and 55000 by 2020.
Yesterday Gold made a low of 25500; it has corrected almost 22% by its all time high of 32500. Normally 25% to 30% correction is considered to be healthy. Now the minor support for Gold is around Rs.25000 and if it breaks that it can go down to Rs22000 to Rs.23000 also. In my opinion one should start Systematic Investment Plan (SIP) around 25000 for next one year.
To Conclude, Gold should make a base around Rs.23000-Rs.25000 in next few months. Hence, long term investors can start accumulating Gold for the target of Rs.40000 by 2016 & Rs.55000 by 2020. So those who have missed the train earlier can enter Gold once again.
Happy Investing!!!
