gold project roshan

PROJECT REPORT ON

“AN ANALYTICAL STUDY OF GOLD AND GOLD ETF’s AS AN INVESTMENT OPTION’’

IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE COURSE

MASTER OF MANAGEMENT STUDIES

UNIVERSITY OF MUMBAI

SUBMITTED BY

ROSHAN BANGERA

ROLL NO: 2009 03

BATCH: 2009-2011

SPECIALISATION: FINANCE

UNDER THE GUIDANCE OF

PROF:ANJALI KULKARNI

VISHWESHWAR EDUCATION SOCIETY’S

INDIRA INSTITUTE OF BUSINESS MANAGEMENT

SANPADA, NAVI MUMBAI

Indira Institute Of Business Management

INDEX

CHAPTER CONTENT PAGE NO

EXCECUTIVE SUMMARY 2

1 INTRODUCTION 3-4

2 COMPANY OVERVIEW 5-10

3 CONCEPTUAL BACKGROUND

1. Industry Overview

2. Indian Commodity Market

3. Commodity Trading

4. Commodity-Gold

5. Terminologies in Gold Market

11-32

4 OBJECTIVE 33

5 RESEARCH METHODOLOGY 34

6 DATA ANALYSIS AND INTERPRETATION

1. Gold as an Oppurtunity

2. Gold ETFs as an Oppurtunity

3. Gold V/S Gold ETFs

4. Gold V/S Stock

5. Investment Pattern and Preference

35-56

7 CONCLUSION 58-59

8 BIBLOGRAPHY 60


EXECUTIVE SUMMARY

This project gives emphasis on the trading strategies which are followed by different trading

firms and brokers and also it gives emphasis on how different factors like inflation affects the

price of gold. This will include learning of the gold market in detail how the market started,

what was the need behind creating such markets, who regulates this market, what is the

minimum requirement, etc. The main idea behind this market research is to gain basic idea what

strategies different trading firms and brokers use to gain maximum profit .

Globally there are ExchangeTraded Funds( ETFs) on Silver, Gold, Indices. Gold ETFs are a

special type of ETF which invests in Gold and Gold related securities. Investors can buy G-

ETF units from secondary markets either from the quantity being sold by the APs or by

other retail investors.


1) INTRODUCTION

India was mainly characterized by people who saves and saves-heavily. It was the country of

savers. But post-independence the growth has picked its pace and also is the rate of inflation.

Prices of essential commodities like food, housing, gas, electricity, education etc has been

increasing at a dramatic pace of more than 9%. This is one of the biggest disadvantage of a

growing economy, inflation rate seems to fly like a limitless bull. Investment is required to fight

inflation and in addition make your money grow.

INDIA AS INVESTMENT PERSPECTIVE

India is viewed as investment opportunity by Indian Investors and Foriegn investors as they are

confident in the future growth prospects of India. This confidence is fueled by a consistent GDP

growth of around 8%to 8.5%. Average performance of various asset class is as listed below:

Savings account (3% to 3.5%)

Bonds (6% to 7%)

Bank or Companies Deposits (6% to 7%)

Gold (8% to 10%)

Real Estate (10% to 12%)

Stocks (12% to 15%)

Art (15% to 20%)

Short term investment horizon and GDP growth which is almost assured at 8% to 8.5% the

focus on investors in Indian market shall be more on selecting a suitable asset class for

investment rather than debating of growth and risks of investment. India will grow and top brains

are convinced and assures average retail investors of this growth scene

Gold is primarily a monetary asset and partly a commodity.


More than two thirds of gold's total accumulated holdings account as 'value for

investment' with central bank reserves, private players and high-carat Jewellery.

Less than one third of gold's total accumulated holdings is as a 'commodity' for Jewellery

in Western markets and usage in industry.

The Gold market is highly liquid and gold held by central banks, other major institutions

and retail Jewellery keep coming back to the market.

Due to large stocks of Gold as against its demand, it is argued that the core driver of the

real price of gold is stock equilibrium rather than flow equilibrium.

Gold ETFs are transparent investment vehicles that will have to conform to rigid regulations on

investment norms and valuations.

Gold ETFs allow investment in gold in small denominations, which makes it easier for the retail

investor to participate.


2) COMPANY PROFILE

STERLING FINANCIAL SERVICES

A financial powerhouse Sterling Financial Services Established in the year 2001 started with

corporate financing i.e. bill discounting. With a basket of services across all verticals in finance,

Sterling Financial Services offers you the perfect blend of financial services right from Equity

Broking, Advisory Services that cover Portfolio Management Services, Mutual Fund

Investments, and Insurance.

Sterling Financial Services believes in being technologically advanced so that we can offer you –

our tech-savvy customers - an integrated and innovative platform to trade online.

Sterling Financial Services is affiliated with NSE, BSE and MCX.

PRODUCTS OFFERED UNDER STERLING FINANCIAL SERVICES

LIFE INSURANCE

HDFC Standard Life Insurance, Birla Sun life Insurance,LIC,ICICI Prudential Life Insurance.

GENERAL INSURANCE

Mediclaim, Vehicle, Personal accident, Fire Insurance

DEPOSITS

Company deposits, Postal savings , HDFC Ltd Deposits, RBI Relief Bonds, Tax Saving Bond.

LOANS

Home Loans,Personal Loans


CORPORATE FINANCE

Bills Discounting, Intercorporate Deposits

MUTUAL FUNDS

HDFC,Franklin, HSBC, BIRLA Sunlife, Reliance, DSP, ICICIetc

EQUITY TRADING/DERIVATIVES

Buying selling of shares on BSE NSE, Derivatives.

SERVICES TO THE CUSTOMERS

EQUITY

Autorized and Registered SubBroker of ICICI for Equity and Derivatives.

Trading in shares :

Sterling Financial Services offers you various options while trading in shares

Cash Trading :

This is a delivery based trading system, which is generally done with the intention of taking

delivery of shares or monies

Margin Trading :

You can also do an intra-settlement trading upto 3 to 4 times your available funds, wherein you

take long buy/ short sell positions in stocks with the intention of squaring off the position within

the same day settlement cycle

MarginPLUS Trading : Through MarginPLUS you can do an intra-settlement trading upto 25


times your available funds, wherein you take long buy/ short sell positions in stocks with the

intention of squaring off the position within the same day settlement cycle. MarginPLUS will

give a much higher leverage in your account against your limits

Trading on NSE/BSE :

Through ICICIdirect.com, you can trade on NSE as well as BSE

Market Order :

You could trade by placing market orders during market hours that allows you to trade at the

best obtainable price in the market at the time of execution of the order

Limit Order : Allows you to place a buy/sell order at a price defined by you. The execution can

happen at a price more favorable than the price, which is defined by you, limit orders can be

placed by you during holidays & non market hours too.

DERIVATIVES

FUTURES

Through ICICIdirect.com, you can now trade in index and stock futures on the NSE. In futures

trading, you take buy/sell positions in index or stock(s) contracts having a longer contract period

of up to 3 months

Trading in FUTURES is simple! If, during the course of the contract life, the price moves in

your favour (i.e. rises in case you have a buy position or falls in case you have a sell position),

you make a profit

Presently only selected stocks, which meet the criteria on liquidity and volume, have been

enabled for futures trading


Calculate Index and Know your Margin are tools to help you in calculating your margin

requirements and also the index & stock price movements. The ICICIDIRECT UNIVERSITY

on the HOME page is a comprehensive guide on futures and options trading

OPTIONS

An option is a contract, which gives the buyer the right to buy or sell shares at a specific price,

on or before a specific date. For this, the buyer has to pay to the seller some money, which is

called premium. There is no obligation on the buyer to complete the transaction if the price is

not favorable to him

To take the buy/sell position on index/stock options, you have to place certain % of order value

as margin. With options trading, you can leverage on your trading limit by taking buy/sell

positions much more than what you could have taken in cash segment

The Buyer of a Call Option has the Right but not the Obligation to Purchase the Underlying

Asset at the specified strike price by paying a premium whereas the Seller of the Call has the

obligation of selling the Underlying Asset at the specified Strike price

The Buyer of a Put Option has the Right but not the Obligation to Sell the Underlying Asset at

the specified strike price by paying a premium whereas the Seller of the Put has the obligation of

Buying the Underlying Asset at the specified Strike price

By paying lesser amount of premium, you can create positions under OPTIONS and take

advantage of more trading opportunities.


LIFE INSURANCE

Sterling Financial Services has a wide array of insurance plans that have been designed with the

philosophy that different individuals are bound to have differing insurance needs.

The ideal insurance plan is one that addresses the exact insurance needs of the individual that

will depend on the age and life stage of the individual apart from a host of other factors

COMMODITY

Indian markets have recently thrown open a new avenue for retail investors and traders to

participate: commodity derivatives. For those who want to diversify their portfolios beyond

shares, bonds and real estate, commodities are the best option.

Sterling Financial Services With a perfect blend of philosophy, knowledge and highly skilled and

dedicated professionals it strives to offer its client the best investment solutions.

MUTUAL FUNDS

Mutual Funds are that alternative which offers the ideal platform to participate in the Equity &

Debt market indirectly through Sterling Financial Services .

With variety of mutual fund plans we meet long term and short term financial aspects.

It is a financial one stop shop.

3) CONCEPTUAL BACKGROUNDIndira Institute Of Business Management

3.1 INDUSTRY OVERVIEW

The transition form a "nation that only saves" to a "nation of investors" is evident. Taking

the statistics of last 35years, the number of retail as well as institutional investors in India

has multiplied several folds.

Not only Indian investors but international investors is eying India as an Investment

heaven. Only next to China, India has been rates as the fastest growing economies in

recent times. India has learned to differentiate between saving and investment. If earning

money is a need then savings and investment should be a habit. Savings in isolation is not

of much help because inflation is eating our money.

Inflation makes our money less powerful each day. This is the reason why we need to

fight inflation (to protect our money) by a great tool called investment. India is growing

and a person who is investing is actually contributing to the growth of the nation; in

return he/she will get the desired returns.

Important is to identify a suitable "asset class" for oneself and start investing in it. Like

retired people would like to invest in bonds, deposits; middle aged men would like to

invest in mutual funds, real estate but people who are young and dynamic would like to

invest in direct equity like stocks.

This an opportunity for all Indians and overseas investors to invest heavily and bank on

India growth. Investors should buy assets whether it is stocks, real estate etc focusing on

long term perspective.

The reasons are because India is the largest democracy in the world, politically stable.A

resilient economy with a wide base of agriculture, mining, manufacturing &

services.Country on a high growth path & moving rapidly towards a free market

economy – the liberalisation & reforms process has gathered momentum.Huge domestic

consumer market – 1050 million population including 270 million classified as middle

class

Diversity of cultures co-existing in harmony.2nd largest pool of English speaking

scientists, technical & IT manpower after USA.Reservoir of natural resources – oil, gas,

coal, iron ore & other minerals.Cost effective labour & low cost of living.Well


established financial system – capital & money markets, banking, mutual funds, leasing,

general & personal insurance.

INVESTMENT OPTIONS AVAILABLE IN INDIA

As stated earlier, the investment industry is huge; therefore the types of investments are also

varied. Different types of investments are:

Cash investments: Cash investments comprise of savings bank accounts, certificates of deposit

(CDs) and treasury bills (TBs). All these types of investments render a low interest rate and

prove to be quite risky during times of inflation.

Debt securities: This type of investment gives returns in the form of fixed periodic payments

and the fixed capital appreciate at maturity. This is safe bait for the investors in the investment

industry and has always proved to be the risk free investment tool. Though, it is generally low in

risks, the returns are also lower than the other peer securities

.

Stocks:Investors can also buy stocks (equities) from the secondary markets and be a part of any

business corporates that are listed in the bourses. By this way, one can become the part of the

profits that the company generates. But one should remember that stocks are generally more

volatile and carries more risk than bonds

.

Mutual funds:They are usually a collection of stocks and bonds that a fund manager selects for

an investor such that the returns are maximum. The investor does not have to track the

investment, be it a bond, stock- or index-based mutual funds

Derivatives: Derivatives are financial contracts, whose value is derived from the value of the

underlying assets like equities, commodities and bonds. They can take the form of futures,


options and swaps. Investors choose derivatives as they are used to minimize the risk of loss that

result from variations in the underlying asset values.

Commodities: The items that are traded on the commodities market are agricultural and

industrial commodities and they need to be standardized. Commodities trading have always been

giving high returns and thus they are the riskiest of all investment options. One, who trades in

commodities, requires specialized knowledge and analytical capabilities

Real estate: Investing in real estate has to be a long term affair. Funds get hooked into the real

estate sector for a considerable time period.

3.2) INDIAN COMMODITY MARKET

India commodity market consists of both the retail and the wholesale market in the country. The

commodity market in India facilitates multi commodity exchange within and outside the country


based on requirements. Commodity trading is one facility that investors can explore for investing

their money. The India Commodity market has undergone lots of changes due to the changing

global economic scenario; thus throwing up many opportunities in the process. Demand for

commodities both in the domestic and global market is estimated to grow by four times than the

demand currently is by the next five years.

INDIAN COMMODITY MARKET - GLOBAL SCENARIO

Despite having a robust economy, India's share in the global commodity market is not as big as

estimated. Except gold the share in other sectors of the commodity market is not very significant.

India accounts for 3% of the global oil demands and 2% of global copper demands. In

agriculture India's contribution to international trade volume is rather less compared to the huge

production base available. Various infrastructure development projects that are being undertaken

in India are being seen as a key growth driver in the coming days

WHOLESALE MARKET

The wholesale market in India, an important component of the India commodity market,

traditionally dealt with framers and manufacturers of goods. However, in the present scenario,

their roles have changed to a large extent due to the enormous growth that the economy has

witnessed. The lengthy process of wholesalers buying from manufacturers; then selling it to

retailers who in turn sold it to consumers does not seem feasible today. An improvement in the

transport facility has made the interaction between the retailer and manufacturer easier; the need

for a wholesale market is gradually diminishing.

.RETAILMARKET

The retail market in India is currently witnessing a boom. The growth in the India commodity

market is largely attributed to this boom in the retail market. Policy reforms and liberal

government policies have ensured that this sector is growing at a good pace. Some of the reasons

attributed to the growth of retail sector in India include the large population of the country who

has an increased purchasing power in their hand. Another factor is the heavy inflow of foreign


direct investment in this sector. More than 80% of the retail industry in the country is

concentrated in large cities.

3.3) COMMODITY TRADING

Commodity trading is an interesting option for those who wish to diversify from the traditional


options like shares, bonds and portfolios. The Government has made almost all commodities

entitled for futures trading. Three multi commodity exchanges have been set up in the country to

facilitate this for the retail investors. The three national exchanges in India are:

Multi Commodity Exchange (MCX)

National Commodity and Derivatives Exchange (NCDEX)

National Multi-Commodity Exchange (NMCE)

Commodity trading in India is still at its early days and thus requires an aggressive growth plan

with innovative ideas. Liberal policies in commodity trading will definitely boost the commodity

trading. The commodities and future market in the country is regulated by Forward Markets

commission (FMC).

MCX (MULTI COMMODITY EXCHANGE):

Multi Commodity Exchange of India Ltd, (MCX) an independent and de-metalized multi

commodity exchange, has permanent recognition from the Government of India. MCX, a

state-of-the-art nationwide, digital exchange facilitates online trading, clearing and settlement

operations for a commodities futures trading. Key shareholders of MCX are Financial

Technologies (India) Ltd, State Bank of India, Union Bank of India, Bank of India,

Corporation Bank & Canara Bank. Headquartered in Mumbai, MCX is led by an expert

management team with deep domain knowledge of the commodity futures markets and has

successfully established a thriving digital market for trading in Gold, Silver, Steel, Kapas,

Cotton, Rubber, Black Pepper, Oil & Oil Seeds, Ferrous and Non-Ferrous Metals, Agri

Commodities, Pulses and Soft commodities

MCX now stands amongst the top five bullion exchanges in the world and the largest gold

futures exchange in India. Between November 11, 2003 and August 12, 2004, MCX has

clocked a total Gold turnover of more than 340 tons valued at around Rs. 20,000 crores, which

accounts for 90 per cent of the gold futures trading in the country. MCX offers two types of

contract in Gold i.e. Gold (1 Kg) and Gold Mini (100 Gms) facilitating a large spectrum of

market participants to do trading. MCX has also recorded Gold physical delivery in numerous

contracts to the extent of 1.5 quintals.


NCDEX (NATIONAL COMMODITY & DERIVATIVE EXCHANGE

LIMITED):

National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally

managed on-line multi commodity exchange. The shareholders are :

Promoter shareholders: Life Insurance Corporation of India (LIC), National Bank for

Agriculture and Rural Development (NABARD) and National Stock Exchange of India

Limited(NSE) .

Other shareholders: Canara Bank, CRISIL Limited (formerly the Credit Rating

Information Services of India Limited), Goldman Sachs, Intercontinental Exchange (ICE),

Indian Farmers Fertilizer Cooperative Limited (IFFCO) and Punjab National Bank (PNB).

NCDEX is the only commodity exchange in the country promoted by national level

institutions. This unique parentage enables it to offer a bouquet of benefits, which are

currently in short supply in the commodity markets. The institutional promoters and

shareholders of NCDEX are prominent players in their respective fields and bring with

them institutional building experience, trust, nationwide reach, technology and risk

management skills.

NCDEX is a public limited company incorporated on April 23, 2003 under the Companies

Act, 1956. It obtained its Certificate for Commencement of Business on May 9, 2003. It

commenced its operations on December 15, 2003.

NCDEX is a nation-level, technology driven de-mutualised on-line commodity exchange

with an independent Board of Directors and professional management - both not having any


vested interest in commodity markets. It is committed to provide a world-class commodity

exchange platform for market participants to trade in a wide spectrum of commodity

derivatives driven by best global practices, professionalism and transparency.

NCDEX is regulated by Forward Markets Commission. NCDEX is subjected to various

laws of the land like the Forward Contracts (Regulation) Act, Companies Act, Stamp Act,

Contract Act and various other legislations.

NCDEX is located in Mumbai and offers facilities to its members about 550 centers

throughout India. The reach will gradually be expanded to more centers.

NCDEX currently facilitates trading of 57 commodities.

GOLD CERTIFICATION IN INDIA

Gold is a physical asset its value is based on its purity so to protect customers from any

manupalation government has introduce hallmarking wherein certain standards is given to

the gold based on its purity so that the customers do not suffer.

The government has taken steps to protect the public from buying adulterated gold;

Hallmarking of gold jewelry is one such step. Hallmarking of gold jewelry indicates the

accurate finding out and official recording of the proportionate content of precious

metals present in gold. The marking is done either by laser marking machine or by

punches.

Hallmark is the official mark used in several countries across the world as an assurance

of purity or fineness of gold jewelry.

The Bureau of Indian Standard or BIS was named by the Government as the lone

agency in the country for providing hallmarking of gold jewelry under the provisions of

the BIS Act, 1986.


INDIAN STANDARD GOLD AND GOLD ALLOYS

IS 1417 Grades of gold and gold alloys, Jewelry/Artefacts-Fineness and Marking

IS 1418 Assaying of Gold in Gold Bullion, Gold alloys and Gold Jewelry/ Artefacts -

Cupellation (Fire Assay Method)

IS 2790 Guidelines for manufacture of 23, 22,21,18,14 and 9 carat gold alloys

IS 3095 Gold Solders for use in manufacture of Jewelry

MEASUREMENT

Weight Conversion Table

To Convert from To Multiply by

Troy Ounce Grams 31.1035

Grams Troy Ounce 0.0321507

Kilograms Troy Ounce 32.1507

Kilograms Tolas 85.755

Purity

Gold purity is mekarat asured in terms of karats and fineness

Karat:Pure gold is defined as 24

Fineness: Parts per thousand thus 18 karat = (18/24)th of 1000 parts =750 fineness


TRADING OF GOLD ETFs

Just like you trade in shares. You will need to have a demat account. Also, you need to register

yourself with a broker having membership of the NSE.

Once these GETFs are listed the daily movement in their prices can be checked online like the

way you keep track of your equity portfolio.

The price of GETF unit will track the price of physical gold in the international market like the

London Bullion Market association.

Listing on the NSE will help the buyers and sellers meet on a single platform for trading in

GETFs. This will enable them convert their units into cash easily.

BROKERAGE CHARGES

The brokerage charges here are not too high. It ranges from 0.4 per cent to 0.6 per cent of your

transaction value.

IOt would be Rs 4 to Rs 6 as brokerage charges if you buy units worth Rs 10,000.

TAXES

Since GETFs are being sold as non-equity there is no buying/selling of shares schemes there will

be dividend distribution tax (DDT) .

Dividend will be taxable in the hands of investors if and when these GETFs declare dividends.

dividend is money distributed to unit holders if the scheme declares a profit.

Current law stipulates DDT of a shade over 14 per cent for individual investors and a shade

below 22.5 per cent for corporate investors. This tax is inclusive of surcharge and education cess

(a type of tax).


GUARANTEE ABOUT THE PURITY OF GOLD BOUGHT

The custodians appointed by both Benchmark Mutual Fund and UTI Mutual Fund. Both the

mutual funds have appointed the Bank of Nova Scotia as the custodian (safe keeper) for the gold

bought on behalf of investors.

The amount of physical gold held by the custodians in both these schemes will be of fineness

(purity) of 99 parts per 1000. In other words, this gold will be 99.5 per cent pure. We call this

degree of purity as 24 carat gold in general parlance.

What's more the gold held with the custodian will be fully insured and will not be used for

lending.

3.4) COMMODITY-GOLD

Gold is the oldest precious metal known to man and for thousands of years it has been valued as

a global currency, a commodity, an investment and simply an object of beauty.

MAJOR CHARACTERISTICS


Gold is unique as it is both a commodity and a monetary asset.

Its stability and high value makes it virtually indestructible and ensures that it is almost

always recovered and recycled.

There is no true consumption of gold in the economic sense as the stock of gold remains

essentially constant while ownership shifts from one party to another.

Although gold mine production is relatively inelastic, recycled gold or scrap ensures

there is a potential source of easily traded supply when needed, and this helps to

stabilize gold price.

Economic forces that determine the price of gold are different from, and in many cases

opposed to the forces that influence most financial assets.

“Gold is a very solid asset. Buying physical gold does have advantages compared with other

investments. Investments in gold-backed financial products and paper gold should be left up to

the professionals," says Mark Robinson, a bullion analyst based in Dubai

.

Gold is the oldest precious metal known to man. Therefore, it is a timely subject for several

reasons. It is the opinion of the more objective market experts that the traditional investment

vehicles of stocks and bonds are in the areas of their all-time highs and may be due for a severe

correction.

Why gold is "good as gold" is an intriguing question. However, we think that the more pragmatic

ancient Egyptians were perhaps more accurate in observing that gold's value was a function of its

pleasing physical characteristics and its scarcity.

CHARACTERSTICS OF GOLD

Durable

– The most malleable and ductile element


Consistent

– A 995 Gold purity level is identical at all places

Valuable

– Gold is Precious, is a rare metal and hence Valuable.

Low Risk

– Gold is not subject to the risk of bankruptcy or default

– Gold cannot be created at will and it is real

GLOBAL SUPPLY and DEMAND SCENARIO

The total above ground stocks of gold is estimated to be around 1,63,000 tones by Gold Fields

Minerals Services (GFMS) as on end of 2008

Out of this total stock, 51% is estimated to be present as jewelers, 18% as official reserves,

17% held as investment, 12% used for industrial purposes and 2% is unaccounted for.

Jewelers accounts for almost two-thirds of annual gold demand with investment and industry

being the other main drivers. The total annual global demand for gold has averaged 3530 tones


in the last three years (2005 - 2008). However, it is expected to dip slightly in 2009, owing to

the sharp rise in prices.

Five countries, viz., India, China, USA, Turkey, Saudi Arabia and UAE account for above

60% of gold demand, with each market driven by a different set of socio-economic and

cultural factors.

The total global mine production is relatively stable, averaging approximately 2,455 tons per

year over the last three years. Recycling of old gold scrap and official sector sales are the other

major sources of supply, which have averaged 1084 tones and 378 tons in the last three years.

South Africa has been a major gold producer since 1880s and it is estimated that about 50% of

all gold ever produced has come from this nation. While, during the early 1980's it produced

about 1000 tones, the output in 2007 dropped to just 272 tones.

China with a production of 276 tones overtook South Africa as the world's largest gold

producer in 2007 for the first time since 1905 that South Africa has not been the largest. The

other major producers are USA,

Australia, Russia and Peru.

WORLD GOLD MARKETS

OTC markets at London(LBMA) New York and Zurich

Gold derivative exchanges at New York-CME(COMEX), Tokoyo(TOCOM),Mumbai(MCX)

Istanbul , Dubai, HongKong and Singapore to are doorways to important consuming regions.

London as the great clearing house

New York as the home of futures trading


Zurich as a physical turntable

Istanbul, Dubai, Singapore and Hong Kong as doorways to important consuming regions

Tokyo where TOCOM sets the mood of Japan

Mumbai under India's liberalized gold regime

INDIA IN WORLD GOLD INDUSTRY

(Rounded Figures) India (In Tons) World (In Tons) % Share

(Rounded Figures) India (In Tons) World (In Tons) % Share

Total Stocks 15000 160000 9

Central Bank holding 558 30,100 2

Annual Production 3 2450 0


Annual Recycling 250 1100 23

Annual Demand 700 3550 20

Annual Imports 600 --- ---

Annual Exports 60 --- ---

INDIAN GOLD MARKET

India is the world's largest consumer of gold. Indians normally buy about 25 per cent of the

world's gold, purchasing around 700 - 750 tons of gold every year.

However, the sharp price increase in 2008 and 2009 has impacted demand with total

demand in 2008 dipping to 660 tones. It is further expected to shrink in 2009 with demand

in first three quarters of 2009 totaling only around 265 tons against 553.5 tons in the same

period of the previous year.

As India's domestic primary production of gold is very less, at around 2-3 tons a year, the

country imports most of its domestic requirement.

Thus, India is also the largest importer of the yellow metal and has averaged imports of

around 600 tons a year. However, 2008 imports dipped to around 400 tons of gold and it is

further expected to dip to around 200-220 tons in 2009 owing to high prices.

India's gold demand is firmly embedded in cultural and religious traditions. It is also

valued in India as a savings and investment vehicle and is the second preferred investment


after bank deposits.

Gold hoarding tendency is well engrained in the Indian society and unofficial stocks held

by Indians is estimated to be well above 15,000 tones, which is around 9% of the total

global gold stocks.

Domestic consumption is dictated by monsoon, harvest and marriage season. Indian

jewelers off take is sensitive to price increases and even more so to volatility.

In the cities gold is facing competition from the stock market and a wide range of

consumer goods.

Facilities for refining, assaying, making them into standard bars, coins in India, as

compared to the rest of the world, are insignificant, both qualitatively and quantitatively.

In July 1997 the RBI authorized the commercial banks to import gold for sale or loan to

jewelers and exporters. At present, 13 banks are active in the import of gold. This reduced

the disparity between international and domestic prices of gold from 57 percent during

1986 to 1991 to 8.5 percent in 2001.

Indians have a huge fascination for gold. This is evident in the fact that India is the largest

consumer as well as importer of gold in the world. Gold plays a very important role in the social,

religious and cultural life of Indians. India Gold Market looks poised to achieve greater heights

given the fascination for gold in the country. India consumes about 800 MT of gold which

accounts to about 20% consumption of gold globally. More than 50% of this is used for making

gold jewelry.


The domestic India gold market is estimated to be more than US$15 billion and is expected to

rise significantly in the coming years. During April 2008 to February 2009, gems and jewelry

worth US$ 17.79 billion was exported from the country. United Arab Emirates imported more

than 30% of gems and jewelry from India, making it the largest importer from the country. Hong

Kong was the second largest importer with 25% followed by United States with 20%. The gem

and jewelry industry accounts for more than 10% of India's total commodities exports.

.

FEATURES OF INDIAN GOLD MARKET

Though India is the leading consumer of gold in the world, the gold market in India is largely

fragmented and unorganized. Due to the non availability of a benchmark price, the gold prices in

India vary very much from region to region. The festive and the wedding season in the country

witnesses a heavy demand for gold. Despite the global economic recession, the gold

consumption in the country during these times has not abetted.


FACTORS AFFECTING INDIAN GOLD MARKET

The monsoons and the harvest of the country have a significant affect on the sale and purchase of

gold in the country. Both these factors determine the amount of purchasing power that people

will have, which in turn decides on the amount of gold consumption and other consumptions as

well. Purchasing gold and other precious metals on occasions like Akshaya Tritiya is considered

to be auspicious

3.5) TERMINOLOGIES IN GOLD MARKET

This guide is intended to provide a basic understanding of commodity futures terminology.

Though the terminology of trading agricultural commodities goes far beyond the scope of

this guide, this information can be used to build a knowledge base from which a broader

understanding of the futures market can be developed.


ARBITRAGE: The simultaneous purchase and sale of similar commodities in different

markets to take advantage of a perceived price discrepancy.

BASIS: The difference between the current cash price and the futures price of the same

commodity for a given contract month.

BEAR MARKET: A period of declining market prices.

BULL MARKET: A period of rising market prices.

BROKER: A company or individual that executes futures and options orders on behalf of

financial and commercial institutions or the general public.

CALL OPTION: An option that gives the buyer the right, but not the obligation, to

purchase (go “long”) the underlying futures contract at the strike price on or

before the expiration date of the option.

CASH (SPOT) MARKET: A place where people buy and sell the actual (cash)

commodities, that is, a grain elevator, livestock market, or the like.

COMMISSION (BROKERAGE) FEE: A fee charged by a broker for executing a

transaction.


CONVERGENCE: A term referring to cash and futures prices tending to come together as

the futures contract nears expiration.

CROSS-HEDGING: Hedging a commodity using a different but related futures contract

when there is no futures contract for the cash commodity being hedged and the cash and

futures markets follow similar price trends. For example, hedging cull cows on the live

cattle futures market.

DAILY TRADING LIMIT: The maximum price change set by the exchange each day for

a contract.

DAY TRADERS: Speculators who take positions in futures or options contracts and

liquidate them before the close of the same trading day.

DELIVERY: The transfer of the cash commodity from the seller of a futures contract to the

buyer of a futures contract.

FORWARD (CASH) CONTRACT: A cash contract in which a seller agrees to deliver a

specific commodity to a buyer at a specific time in the future.

FUNDAMENTAL ANALYSIS: A method of anticipating future price movement using

supply and demand information.


FUTURES CONTRACT: A legally binding agreement, made on the trading floor of a

futures exchange, to buy or sell a commodity or financial instrument sometime in

the future. Futures contracts are standardized according to the quality, quantity and delivery

time and location for each commodity. The only variable is price, which is determined on an

exchange trading floor.

HEDGER: An individual or company owning or planning to own a cash commodity —

corn, soybeans, wheat, U.S. Treasury bonds, notes, bills, etc. — and

concerned that the costs of the commodity may change before it can be either bought or sold

in the cash market. A hedger achieves protection against

changing cash prices by purchasing (selling) futures contracts of the same or similar

commodity and later offsetting that position by selling (purchasing)

futures contracts of the same quantity and type as the initial transaction and at the same time

as the cash transaction occurs.

HEDGING: The practice of offsetting the price risk inherent in any cash market position by

taking an equal but opposite position in the futures market. Hedgers use the futures markets

to protect their business from adverse price changes.

INITIAL MARGIN: The amount a futures market participant must deposit into a margin

account at the time an order is placed to buy or sell a futures contract.


4)OBJECTIVES

To know the investment pattern and preference of investors

To understand various investment options available.


To explore gold as investment.

To explore gold ETF’s.

To determine factors contributing to selection of gold/gold ETF’s for investment .

To compare gold v/s stock as investment options.

To compare gold v/s gold ETF’s.

.

5)RESEARCH METHODOLOGY

It is a descriptive research as this research is conducted on the basis of the secondary data

through various sources and through data available with Sterling Financial Services.

To know the investors preferences and to know about their pattern a data of 300 investors was

taken.


SAMPLE SIZE:300 investors

As per the data available with Sterling Financial Services few investors was taken and the

sampling technique used is judgemental sampling.

6)DATA ANALYSIS

As the data is collected from the secondary source the data anlysis is done with the

help of

Table comparision

Comparitive analysis

Graphs


Bar diagrams

Pie charts

6.1) GOLD AS AN INVESTMENT OPPURTUNITY

Gold holds its own in any investment evaluation on its strengths as a hedge against inflation,

value in the event of political uncertainties and its traditionally negative co-relation with other

asset classes such as stocks, fixed income securities and commodities.


The value of goods and services that gold can buy has remained stable unlike currencies that

have seen significant fluctuation. A study spanning a 400-year period has shown that the basket

of goods and services that gold could buy over the period has remained the same.

Gold protects your portfolio from volatility because the factors, both at the macro-economic and

micro-economic fronts that affect the returns from most asset classes do not significantly

influence the price of gold. Just after 9/11, while stockmarkets and bonds crashed across the

world, gold held steady and, in fact, rose on that day by six per cent.

For a given level of returns from a portfolio, the risk or volatility can be reduced by adding gold

to it. Similarly, crises such as wars, which have a negative impact on prices of most asset classes,

have a positive impact on gold prices since the demand for gold goes up as a safe haven for

parking funds. It is the only medium of exchange completely free of credit risk as it does not

imply a liability for any other entity.

RETURNS EXPECTED FROM GOLD

The 35 per cent return that gold has delivered in the last one year and 170 per cent

absolute return in the last five years is not par for the course. In the period 1970-1982,

gold prices had a compounded annual growth rate (CAGR) of around 21 per cent while

inflation grew by 14.1 per cent over the same period. But in the following 23 years,

inflation grew by 7.6 per cent while gold prices grew by 7.78 per cent.

Over the long term the realistic returns from gold would just beat inflation. Factor in

entry loads (a high 2.5 per cent for UTI-Gold) and annual fund management costs of 1

per cent or more, and the returns are not appealing, though the costs are expected to come

down in the long run.

In the short and medium term investment in gold can be very rewarding considering that

the prices have come off the highs quite a bit and the indicators all point to a revival in

the price rally.

Global demand for gold is 1,000 tonnes more than supply. With no new mining capacity

coming through, most of the gold is being recycled. Inflationary pressures in the world


economy are positive drivers of gold prices. The central banks of Russia China and West

Asian countries are giving strong buying support to gold prices.

Gold prices could also go up due to demand from gold ETFs, as they did in the London

Stock Exchange in 2004. Investing in gold requires constant evaluation of international

developments especially of crude oil prices, unfavourable geopolitical developments and

the strength of the US dollar.

Adding gold to a portfolio introduces an entirely different asset class- a tangible & real

asset which increases the portfolio's degree of diversification. Effective portfolio

diversifier

As depicted above, while the overall return of a portfolio without gold is 14%, that of a

portfolio with gold is over 16%. Hence an allocation of physical gold in a financial


portfolio not just helps reduce the impact of the volatility created by the other asset

classes like equity, bonds etc., but also increases the average return over a period of time.

A financial portfolio containing gold is generally more robust because it improves the

stability and predictability of better average returns.


Gold is the most liquid asset class due to its universal acceptance as an alternative to

currency, and also because globally, the gold market is functional 24x7.

Same cannot be said about any other asset class as they take much longer time to

liquidate (from 1 day to upto 3-4 months)

Effective hedge against currency risk

Due to its inverse relationship to dollar, gold has always proved to be an effective hedge

over a period of time.

Effective hedge against Inflation


Source : Bloomberg


A study conducted by WGC in UK shows that one ounce of Gold would consistently

purchase the same amount of goods & services as it would have done 400 years ago,

making it the perfect hedge against inflation over a long period of time.

Other Reasons

More liquid as compared to the other asset classes Gold can be bought, sold or traded

globally.

Performance of gold not linked to performance of any company, industry or government.

Gold needs no professional manager unlike mutual funds

Gold is an asset, which is not simultaneously a liability, unlike stocks

It doesn't require political & social stability to survive, in fact it thrives under worst

societal conditions.

Gold doesn't ever loose its intrinsic value.


Inspite of the growing demand for gold in India, average retail household has seldom

considered “investing in gold” because of the absence of an efficient and effective

platform.


http://www.traderslog.com/wp-content/uploads/2010/06/rowlandgold.gif

6.2) GOLD ETF’s AS AN INVESTMENT OPPORTUNITY

Gold ETFs are open-ended mutual fund schemes that will invest the money collected

from investors in standard gold bullion (0.995 purity). The investor's holding will be

denoted in units, which will be listed on a stock exchange.

These are passively managed funds and are designed to provide returns that would

closely track the returns from physical gold in the spot market.

An investor can buy and redeem the units either directly from the mutual fund, subject to

certain stipulations, or from the stock exchange.

For example, in Benchmark Mutual Fund's scheme, the units will be allotted in such a

way that the value of each unit will correspond to one gram of gold. This means that if an

investor invests Rs 10,000, when the price of 10 gm of gold is Rs 9,650, he will be

allotted 10.20 units (Rs 10,000 - 1.5 per cent entry load / 965). Each unit will initially

represent one gram of gold though this will come down gradually when gold is sold to

meet fund expenses.

Benchmark Mutual Fund allows its investors to buy and redeem the units after the new

fund offer, either directly from the fund (subject to certain stipulations), or from the stock

exchange.

UTI Mutual Fund's scheme allows investors to redeem units only through authorised

participants, or by selling in the secondary market. The price of the units in the secondary

market will, to a great extent, reflect the price of one gram of gold.

Other funds such as Tata Mutual Fund expect to allot units at face value (Rs 10,000 -

entry load/10). The net asset value (NAV) of these schemes would reflect the value of the

underlying gold. The price of these units in the secondary market would reflect the NAV

and the supply and demand of the units.


Benchmark and UTI will appoint market makers (authorised participants) who will buy

and redeem gold units from the fund as well as in the secondary market. This is expected

to keep the price of the units in the secondary market close to the fund's NAV and the

spot price of gold.FV

ADVANTAGES OF GOLD ETF’s

There are enough reasons why gold should be included in any investor's portfolio

whether in physical or paper form. Investing in gold ETFs will give the investor all the

advantages of investing in gold while eliminating drawbacks of physical gold -- cost of

storage, liquidity and purity, among others.

Gold ETFs are transparent investment vehicles that will have to conform to rigid

regulations on investment norms and valuations. This assures the quality of gold that the

fund will invest in and transparency in calculation of NAVs and, consequently, the

market price at which these units will trade.

Gold ETFs allow investment in gold in small denominations, which makes it easier for

the retail investor to participate. On the secondary market, the minimum lot is one unit.

This enables the investor to accumulate units over time and reap the benefits of rupee

cost averaging. The units can be redeemed either from the fund directly or from the

market.

Investing in paper gold gives investors tax advantages over investing in physical gold.

Gold ETF units held for more than one year qualify for long-term capital gains at 20 per

cent, whereas the holding period in physical form has to be three years to qualify for

long-term capital gains. For less than three years, the gains are taxed at 30 per cent. Also,

gold held in paper form is not liable for wealth tax.


BENEFITS OF SEQUENCING TAX DEDUCTIONS

There will be no wealth tax or securities transaction tax STT when you sell your GETFs.

There is no STT because this is a non-equity scheme. STT is applicable only when shares

are bought or sold.

The case for wealth tax would have existed if you were in possession of gold in physical

form. The magic of GETFs lies in this. They convert your money into gold which again is

converted into units in demat form.

CALCULATION OF GOLD ETFs

Cost of one unit of GETF = Cost of one gram of gold on the date of allotment.

This is the standard adopted by both the schemes mentioned above.

Assuming that the date of allotment is March 12 and the cost of one gram of GETF then is Rs

1,000.

Ideally you must get 10 units of GETF. However this is not the case.

Most mutual fund schemes impose a kind of tax called 'load' while buying or selling units. The

former is called 'entry load' and the latter is called 'exit load'.

In the entry load of 2.5 per cent for UTI Gold ETF where the minimum investment is Rs 20,000.

Assuming that the price of gold on the day of allotment is Rs 1,000.

In this case, the cost of one unit will be Rs 1,000 plus the entry load of 2.5 per cent. This works

out to Rs 1,025 per unit accounting for the entry load of Rs 25 (2.5 per cent of Rs 1,000).

Hence you will get only 19.5 units (Rs 20,000/Rs 1,025) of UTI Gold ETF instead of 20 units

because of the 2.5 per cent entry load.

For Benchmark Gold BeES, however, the entry load was only 1.5 per cent that is Rs 15 per Rs

1,000. This translates into Rs 1,015 per unit.


Rs 20,000 invested in this scheme during the offer then would have fetched you only 19.7 (Rs

20,000/Rs 1,015) units.

Both the schemes do not levy any entry load when these GETFs start trading on the NSE.

If the price of gold on the day of listing plus the brokerage charges (Rs 4 to Rs 6 per Rs 1,000;

yes there are brokerage charges) is less than when you would have bought it during the offer

period plus the entry load.

It will go wrong if the price of one gram of gold is more than Rs 1,025 after listing.

This is not the that gold prices will move only in one direction. They can also drop when the

units are available for trading on the NSE.

INVESTORS IN GOLD ETF – WORLDWIDE

Globally the following class of investors invest in Gold ETF’s

Retail Investors

Bullion traders

Private banks & other Financial Institutions

Market professionals (hedge funds, market makers, stock lenders)

Insurance companies

Pension fund holdings


CREATIONS AND REDEMPTIONS

ETFs are different from Mutual funds in the sense that ETF units are not sold to the public

for cash. Instead, the Asset Management Company that sponsors the ETF (Fund) takes the

shares of companies comprising the index from various categories of investors like

authorized participants large investors and institutions. In turn, it issues them a large block of

ETF units. Since dividend may have accumulated for the stocks at any point in time, a cash

component to that extent is also taken from such investors. In other words, a large block of

ETF units called a "Creation Unit" is exchanged for a "Portfolio Deposit" of stocks and "Cash

Component". The number of outstanding ETF units is not limited, as with traditional mutual

funds. It may increase if investors deposit shares to create ETF units; or it may reduce on a

day if some ETF holders redeem their ETF units for the underlying shares. These

transactions are conducted by sending creation / redemption instructions to the Fund. The

Portfolio Deposit closely approximates the proportion of the stocks in the index together with

a specified amount of Cash Component. This in-kind creation / redemption facility ensures

that ETFs trade close to their fair value at any given time.

Some investors may prefer to hold the creation units in their portfolios. While others

may break-up the creation units and sell on the exchanges, where individual investors

may purchase them just like any other shares. ETF units are continuously created and

redeemed based on investor demand. Investors may use ETFs for investment, trading or

arbitrage. The price of the ETF tracks the value of the underlying index. This provides an

opportunity to investors to compare the value of underlying index against the price of the

ETF units prevailing on the Exchange. If the value of the underlying index is higher than the

price of the ETF,

The investors may redeem the units to the Sponsor in exchange for the higher priced

securities. Conversely, if the price of the underlying securities is lower than the ETF, the


investors may create ETF units by depositing the lower-priced securities. This arbitrage

mechanism eliminates the problem associated with closed-end mutual funds viz. the

premium or discount to the NAV.


6.3) COMPARISON OF GOLD ETF WITH PHYSICAL GOLD

Parameter Jewelers Bank Gold ETF

How gold is

held

Physical

(Bars / Coins)

Physical

(BarsCoins)

Dematerialized

(ElectronicForm)Pricing Differs from one to

another. Neither

transparent nor

standard.

Differs from bank

to bank. Not

Standard.

Linked to International Gold

Prices and very transparent.

Buying Premium

above gold price

Likely to be more Likely to be more Likely to be less

Making

Charges

Charges are

incurred

Charges are

Incurred

No Charges are incurred

Impurity Risk High Nil Nil

Storage

Requirement

Locker / Safe Locker / Safe Demat Account

Security of

Asset

Investor is

responsible

Investor is

responsible

Fund House takes the

responsibilityResale Conditional and

uneconomical

Banks do not buy

back

At Secondary Market Prices

Convenience in

Buying / Selling

Less convenient, as

Gold needs to be

moved physically

Less convenient,

as Gold needs to

be moved

physically

More Convenient, as held in

electronic form under the demat

account

Quantity to

Buy / Sell

Available in

standard

denomination

Available in

standard

denomination

Minimum is ½ or 1 gram

according to the fund

Bid Ask

Spread

Very High Can’t Sell Back Very Low

Risk of Theft Yes, possible Yes, possible No, Not possible

Wealth Tax Yes Yes No


TAX IMPLICATIONS

Sr

No

Parameter Local Branded

Jweler

Bank Gold Etf

1 Wealth Tax Applicable Applicable Applicable Not Applicable

2 Short Term

Capital Gain

Tax

Applicable

Before 3 Years

Applicable

Before 3 Years

Applicable

Before 3 Years

Applicable

Before1year

3 Long Term

Capital Gain

Tax

Applicable

After 3 Years

Applicable

After 3 Years

Applicable

After 3 Years

Applicable After

1 Year

Long Term Capital Gain Tax

• Long Term gains tax of 10% or 20% with indexation will be applicable

Short Term Capital Gain Tax

• The tax bracket under which the investor is applicable

Securities Transaction Tax

• No STT will be applicable on units traded on the exchange


Source:Bloomberg

6.4 )GOLD V/S STOCK

•Performance of gold not linked to performance of any company, industry or government.

•Gold needs no professional manager unlike mutual funds.

•Gold is an asset, which is not simultaneously a liability, unlike stocks.

•It does not require political & social stability to survive, in fact it thrives in the worst conditions.

•Gold will never loose its intrinsic value.

Market Moving Factors

Indian gold prices are highly correlated with international prices. However, the fluctuations in

the INR-US Dollar impact domestic gold prices and have to be closely followed.

The global prices are driven by a host of factors with macro-economic factors like strength of

the economy, rising importance of emerging markets, currency movements, interest rates

being major influencing factors.

Supply-demand is a major influencer, amid rising global investor demand and almost stable

supplies.

Shifts in official gold reserves, reports of sales/purchases by central banks act as major price

influencing factors, whenever such reports surface.

The investment in gold is influenced by comparative returns from other markets like stock

markets, real estate other commodities like crude oil.

Domestically, demand and consequently prices to some extent are influenced by seasonal factors

like marriages. The rural demand is influenced by monsoon, agricultural output and health of the

rural economy


GOLD : HEDGE AGAINST INFLATION

CA GR Returns Gold Inf lation

1 Y ear 14.93% 6.58%

2 Y ear 24.95% 5.30%

3 Y ear 16.56% 5.25%

5 year 16.04% 5.34%

10 years 8.84% 4.95%

Rs. 100 invested on 31/1/1997 in Gold would have become Rs. 233.33 as on 31/1/07 The Goods

and Services would cost Rs 162.11


6.5) INVESTOR PATTERN AND PREFERENCE

1) No people invested in different investment options

INVESTMENT OPTIONS NO OF PEOPLE

EQUITY 207

MUTUAL FUNDS(MF) 180

GOLD 60

GOLD ETF’s(GETF’s) 40

EQUITY MF GOLD GETF's0

50

100

150

200

250

INVESTORS

Interpretation:Most of the investors prefer equity for investments as the return is much

higher and the amount one can invest is also small.


2)Which one is preferred amongst gold and gold ETF’s?

Preference for Gold ETF 40

Preference for physical gold 60

As per preference

GOLDGOLD ETFs

Interpretation :Investors prefer investment in gold rather than investment in gold ETFs as

the awareness for gold ETFs is still low in India.


3)Which gold ETF is the most preferred by investors?

SR

NO

LIST OF ETFs NO OF INVESTORS

1 KOTAKGOLD 7

2 GOLDSHARE 8

3 GOLDBEES 17

4 RELGOLD 5

5 QGOLDHALF 2

6 SBI GETS 1

KOTAKGOLD

GOLDSHARE

GOLDBEES

RELGOLD

QGOLDHALF

SBI GETS

0 2 4 6 8 10 12 14 16 18

INVESTORS


Interpretation : Goldbses is preferred by investors to invest in gold ETFs because it is the

oldest and it has provided higher returns over a long period of time.

4)People who had invested only in one investment option?

SR

NO

INVESTMENT OPTION NO OF PEOPLE

1 EQUITY 67

2 GOLD 20

3 MUTUAL FUND(MF) 50

EQUITY MF GOLD0

10

20

30

40

50

60

70

80

Series 1

Interpretation: There are few investors i.e 137 investors who don’t have a diversified portfolio.


7)CONCLUSIONS

Internationally trading in Gold has given the investors very safe and very fruitful option.

Today people who earlier feared from entering the market are investing in Gold as it is

the most safest asset and also its price is less fluctuating.

Gold Market has developed vastly since it was started. Recently gold prices touched the

height of Rs.19000/- per 10gm which astonished everybody.

The reason may be any but today people willing to invest in Gold rather than Stock.

Adding gold to your portfolio gives higher returns.

Gold ETFs are another option which investors can look forward for.

In last 10 years prices of gold have been increased.

Gold has significantly low correlation to other assets like equity indices, fixed income and

commodities. Therefore adding gold to a portfolio may help improve risk adjusted returns or

reduce volatility for the expected return.


There is need for an instrument which has,small denomination ,cost

efficiency ,convenience for long term holding ,greater uniform

availability ,transparency,liquidity, tax Efficiency

Gold ETF’s Can fulfill this Need

IMPROVING STABILITY AND PREDICTABILITY OF RETURNS

Gold improves the stability and predictability of portfolio returns. It is not correlated

with other assets because the gold price is not necessarily driven by the same factors that

drive the performance of other assets

Adding gold to a portfolio introduces an entirely different class of asset. Gold is unusual

because it is both a commodity and a monetary asset

Gold is one of the few financial assets that is not linked to a liability. It can provide

'insurance' against extreme movements on the value of traditional asset classes.


8)BIBLOGRAPHY

www.google.com

www.mcx.com

www.nseindia.com

www.bseindia.com

www.netdania.com

www.dailyfx.com

Article Source: http://EzineArticles.com/?expert=Manish_Choudhary


http://www.dailyfx.com/

gold project roshan

Documents