Category: Gold

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How to BUY Gold IN stock market – GoldETFs

https://youtu.be/_WbzlSb_fN8

Gold in the form of jewellery is not only used as a wearble but also works as a tool to tide over financial emergencies. So, buying gold has traditionally been a financial support system over the years.

There are ways of owning gold – paper and physical. You can buy it physically in the form of jewellery, coins, and gold bars and for paper gold you can use gold exchange traded funds (ETFs) and sovereign gold bonds (SGBs). Then there are gold mutual funds (fund of funds) which further invest in gold ETFs. There are gold MFs (fund of funds) which invest in the shares of international gold mining companies.

For buying physical gold, one may reach out to the neighbourhood jewellers. Few jewellers allow placing an order on their websites too. Further, there are e-commerce websites such as Amazon India, Paytm and Snapdeal where one can buy gold coins online to get the coins delivered at home.

PHYSICAL GOLD
Jewellery
Indians certainly cherish possessing gold. But owning it in the form of jewellery has its own concerns about safety, high costs, and outdated designs. Then there are the ‘making charges’, which could prove to be a costly affair. The making charges on gold jewellery, which typically ranges between 6 percent and 14 percent of the cost of gold (may go as high as 25 percent in case of special designs) are irrecoverable.

Gold Coin Scheme
Gold coins can be bought from jewellers, banks, non-banking finance companies, and now even e-commerce websites. The government has launched ingeniously minted coins which will have the National Emblem of Ashok Chakra engraved on one side and Mahatma Gandhi on the other. The coins are available in denominations of 5 and 10 grams while the bars will be for 20 grams.

The Indian Gold Coin and Bar will be of 24 karat purity and 999 fineness carrying advanced anti-counterfeit features and tamper proof packaging. All coins and bars will be hallmarked as per the BIS standards. These coins are distributed through designated and recognised MMTC outlets and through specified bank branches and post offices. MMTC also offers a transparent ‘buy back’ option for Indian Gold Coin through its own showrooms across India. MMTC will repurchase the Indian Gold Coin, in intact tamper proof packaging and with original invoice, at the prevailing gold base rate.

Gold savings schemes
Gold or jewellery savings schemes come in two forms. A typical one allows you to deposit a fixed amount every month for the chosen tenure. When the term ends, you can buy gold (from the same jeweller) at a value that is equivalent to the total money deposited, including a bonus amount. This conversion is done at the gold price prevailing on maturity. In most cases, the jeweller adds a month’s instalment at the end of the tenure as a cash incentive or may even offer a gift item.

PAPER GOLD
Gold exchange traded funds (ETF)

An alternate way of owning paper gold in a more cost-effective manner is through gold exchange traded funds (Gold ETF). Such investments (buying and selling) happens on a stock exchange (NSE or BSE) with gold as the underlying asset. What’s more, the high initial buying and even selling charges that go into owning jewellery, bars or coins gives an extra edge to the low-cost gold ETF. The transparency in pricing is another advantage. The price at which it is bought is probably the closest to the actual price of gold and therefore the benchmark is the physical gold price.

What you need is a trading account with a stock broker and a demat account. One may either buy in lump sum or even at regular intervals through systematic investment plans (SIP). You may even buy 1 gram of gold.

Even though there are no entry or exit charges there are three costs that come with gold ETFs. One is the expense ratio (for managing the fund) which is generally low compared to other mutual funds and is around 1 percent. Second, is the broker cost that needs to be accounted for every time you buy or sell gold ETF units.Third, which technically is not a charge but impact returns is the tracking error. It arises because of the fund’s expenses and cash holdings thus not mirroring actual gold price.

Sovereign Gold Bonds (SGB)
Sovereign Gold Bond is another way of owning paper gold. They are issued by the government but availability is not ‘on-tap basis’. Instead, the government will intermittently open a window for the fresh sale of SGBs to investors. This could typically happen every 2-3 months and the window will remain open for about a week. For investors looking to purchase SGBs anytime in between the only way out is to buy earlier issues (at market value) which are listed in the secondary market.

Digital gold
You can now purchase gold coins, bars and jewellery online. ‘Digital Gold’, is offered on the mobile wallet platform of Paytm and ‘GoldRush’ is offered by the Stock Holding Corporation of India on their website, while Motilal Oswal has launched Me-Gold, a digital gold online investment. All of these are offered in association with MMTC – PAMP, (a joint venture between public sector MMTC and Switzerland’s PAMP SA)

Making a choice
The initial cost of owning physical gold in the form of bars or coins is anywhere around 10 percent and it is even higher for jewellery. SGB and Gold ETF, both paper-gold, are cost effective as there is no entry cost in SGB while costing for gold ETF could be around 1 percent.

SGB should benefit those who want to invest in gold for a longer period as its maturity is after 8 years, although the lock-in ends from the fifth year. However, gold ETF provides much better liquidity than SGB. Owing units is much easier than SGB as it’s entirely online in case of ETFs. The risk of owning, holding also doesn’t exist in both.

The big difference is on the taxation front. Gains in SGB on redemption are tax-exempt but gains in Gold ETFs after 3 years are subject to 20 percent tax post indexation.

The only disadvantage with gold ETFs is that its units won’t be earn the additional interest of 2.5 per cent per annum like you would get for SGBs.

Get clarity as to why you need to invest in gold – is it for marriage purpose or for pure investment. For investments, one should not have more than 10 percent of the total portfolio in gold. Choose between Gold ETFs or SGBs depending on how comfortable you are managing investments online and keep the worries of purity, security aside.

Courtesy: Economic Times (ET)

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5 Biggest Lessons From This Year’s Traders Carnival

https://youtu.be/oMHeaq_mZhY

The seventh Traders Carnival came to an end in Mumbai last week. The who’s who of the trading community gathered under one roof to share their expertise. From options trading to the Gann theory, the event covered a whole host of subjects. Here are five key takeaways from the event:

  1. The Big Lesson “Cutting your losses” is the biggest lesson that Atul Suri has learnt from this stock market. While a successful trade is measured in terms of money made, it is also measured on how small the losses were. “This market will give you opportunities. The problem is that most people are unable to cut their losses because their ego gets in the way and that’s where they get eliminated.
  2. The Two Sides Of (Trading Options) Coin One is an options buyer while the other is an options writer. Yet, Chandan Taparia of Motilal Oswal and options strategies PR Sundar have created wealth for their clients. In this interview, both Sundar and Chandan Taparia talk about how their own trading ways are beneficial and also how options buying and writing can be a risky bet.
  3. The How, The What & The Why Of Writing Options How writing options is useful in making money? What to do with your options when you are bullish and bearish? Options strategist Jegathesan Durairaj explains how it works, depending on the way he views the market.
  4. Do Your Own Research! (Can’t Emphasize Enough) When we asked JC Parets of AllStarCharts about how he manages to read 5,000 charts in a week, his answer was “I don’t know why others don’t!” Preferring to stay away from the fundamentals of a stock, Parets uses RSI (Relative Strength Index) as one of the major indicator for analysing a chart.
  5. Trading And Psychology Does ego play a key role in executing a trade? It does. For stock traders, a losing trade is a wrong trade. People start to doubt their system and skills and search for newer methods when that happens, said Rakesh Doshi, a member-broker of the National Stock Exchange. In this session, Doshi talks about conditioned behaviour and various other aspects related to a trader’s

Courtesy: BloombergQuint

 

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Spot Palladium Tops $1,800 Amid Growing Demand

https://youtu.be/PoOFOZ1vwzk

Oct.28 — Ira Epstein, director of Ira Epstein division at Linn & Associates, discusses palladium surging to a record high, extending a rally that has seen prices continue to hit fresh records. He speaks with Bloomberg’s Vonnie Quinn on “Bloomberg Markets.”

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Gold ETF – The best bet for a prosperous future

The year 2019 has been the year of bullion for the global commodity market wherein gold and silver prices staged a strong rally. A host of events that took place across the globe such as extension and intensification of Sino-US trade, geopolitical tension in the Middle East, US sanction on Iran, Nigeria, Venezuela, an extension of trade dispute of the US with Europe, Mexico and India attracted more buyers of gold. Weakening of global economic condition as measured by GDP, inflation, labor market condition, trade balance, etc. also attracted increased investment into the bullion market in general and gold in particular. As a result, the CME gold prices surged by 21.70% since closing on Muhurat Trading in 2018 i.e. on 7th November, 2018 till 17th October, 2019 while silver gained by 20.70% in the same period. On domestic market, MCX gold futures gave a return of 20.92% since Muhurat Trading of last year till 17th October, 2019 and silver surged by 19.05%. The details are presented in the table below.

The International Monetary Fund (IMF) has lowered the global economic outlook through its quarterly reports. In its April World Economic Outlook report, IMF lowered global growth forecast to 3.3% for 2019 from 3.6% in 2018 and for the year 2020, the projections were made at 3.6%. These projections were revised lower by 0.1% to 3.2% for 2019 and 3.5% for 2020 from April 2019 forecast. In the latest World Economic Outlook report released on 15th October, 2019, growth projection for 2019 was kept at 3.0% and for 2020 it was projected at 3.4%. Gloomy economic condition attracted yellow metal as the best investment option among asset classes.

On trade-related activity, the US and China kept on retaliating by imposing additional tariffs on import of goods and services. There were several rounds of discussion that took place at different levels including the meeting between US President Donald Trump and Chinese Premier Xi Jinping. However, both the sides failed to end the more than 1 ½ years trade dispute. Though there was a temporary relief in the form of delay in imposition of additional tariff, agreement between both the countries on buying the products and services did not really have a major impact on the market.

As the economic condition was worsening, the central banks stepped in to bring the economy back onto the growth trajectory through easing monetary policies. At the beginning of 2019, the US Federal Reserve was on the course to keep its interest rates rising. However, the stance was changed in second half of the year wherein it slashed interest rate by 25 basis points each in July and September 2019. This has resulted in fall in the US Treasury Yield of 2-year and 10-year to multi year lows thereby attracting investment flow into the bullion market.

Indian gold market follows the trend of international market and so the rally seen in global market was witnessed in the Indian market as well. The gold in international exchange rose to a 6-year high in 2019 while on MCX, the prices rallied to an all-time high thanks to the depreciation of Indian Rupee against the US Dollar. Apart from this, another factor that led to the rally in Indian gold was change in import duty on gold. During the second term of Modi government, the Finance Minister Smt. Nirmala Sitharaman in her maiden budget speech raised the import duty on gold and silver to 12.5% from earlier 10%. This rise in import duty sent shocking signals to the bullion market wherein the market participants were expecting cut in the import duty. 

The economic outlook is still bleak for major countries and this is prompting the central banks to step in to further ease the monetary policy. This step will attract further buying in gold and silver in the days to come. Recovery in the global economic conditions as well as end of trade war between US and China will change the trend in gold and silver.

This festive season, invest in gold via the ETF route.

Investment Required:

Investors can invest in Gold ETFs with a minimum investment of around Rs. 350 (1Mili Gram) and multiples thereof.

Advantages of buying Gold ETF:

1. Transparency in pricing

2. Available in Demat form

3. No fear of theft

4. Minimal or no charge of Buying and Selling

5. Prices of the ETF are closer to Spot Gold /Actual Gold

Invest in gold via ETF this Diwali and harvest future gains. Below is the list of ETFs as per the liquidity and returns over the past one year. Investors can choose Gold ETFs from the list below:

*list is as per traded value of the ETFs

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