Many people ask about GOLD. Is it a Buy?
Our Analysis is based on US $ only. We buy 1 oz bars only. We started from $260 in 2002
We will provide some views in terms of Indian National Rupee (INR) and cannot guarantee in INR as the Indian Policies change every minute and a dysfunctional & corrupt governments add to the illegal demand for Gold in India
Gold is in Bear mode since August 2011 from $1943/oz and today it is at $1570. It has lost nearly 20% of its value due to US $ strengthening against the major Currencies (Please see US $ chart below). 13week Moving Average(MA) has crossed below 65 Week MA. This happened only once in last 10 years Aug 2008 and stayed there for 8 months.
We think it will take another 4-6 months and may touch $1400/oz intra day. That will be your next buy. We have a target of $3500-$4000/oz in the next 5-8 years. downside is limited.
Weekly chart of GOLD Contracts on the Chicago Mercantile Exchange(CME).
In India, price of Gold is Rs 30,000/10 gms from Rs 31,700. You seem to wonder why it has not changed? Our RBI Governor has brains of Chanukya. When Gold was $1940 in August 2011 on CME, minuscally traded Rupee was fixed @Rs44/US$. This translates to $1940 X Rs 44= Rs 85360 /oz (bar) ..
As Gold started dropping 20% in the international market, RBI started to artificially devalue the Rupee, by keeping high interest rates. Today Gold in India is $1570 X Rs 55= Rs 86350 /oz (bar) .. WOW no change
If RBI would not have done this and GOLD in India would have fallen 20%, real estate would have collapsed by equal amount. Hence the Rupee is at 55 today.
How long will it be at 55? let us analyse further
If you analyse the 10 year Weekly chart of USD, it has been on a decline, we think it will touch the Upper channel of 86 in the next 2-3 months.. may not be.. At that time we expect Indian Rupee to be at Rs60/USD. Plan your remittances then.
Last year we told Rupee will touch 55 when it was @44, some people laughed.. ok wait and see.
Please leave comments..
Venkatesh
