Returning to my old home

After a gap of six years, I am resuming to post. All these years were kind of capacity generation, evolving from novice to proficient and skill development which I honestly admit that lacked when started this blog. I have developed a fair capacity in terms of understanding the financial markets and economics, policy making, debate and putting all that in a right manner for discussion.

So, its opportune time for me to start my old journey which I left in mid-way. As the events unfolded over the last 4-5 months in markets, most of them political and some economical are calling up my inner thrust to put out what I think about it. Yesterday's Dr. Rajan, new RBI governor, whom I followed since 2007 when the US sub-prime crisis burst ( street folks have forgotten the crisis name leave alone the crisis); took in charge Central bank and redefined the Central bank Governorship on the first day itself.

It appears Dr. Rajan had set some short term goals when he come to RBI as special officer on duty and announced the first phase measures on day first and declared a set of goals with time table. We have never seen such act by RBI Governor on the first day itself in office. As he said, this first day  action underlines the new agenda what he has set for RBI, "Transparency & Predictability" which reflected in his speech.

I will post more on the actions taken by him juxtapose to his recommendation on financial reforms which are going to reflect in his decisions and thus transform RBI the "Central bank of emerging market-India" to "Central bank of Developed market".

GOLD ETF'S : What is this recipe ?

GOLD ETF'S : What is this recipe ?
If your are an investor, take note of this situation: Inflation is rising, interest rates for your bank deposits are falling, realty prices are no more reliable unlike the past, returns from equity market in short or medium term investments are diminishing. What will you do in such a scene? It's a perfect plot for a tragic story for any investor. But, at times like this the old wisdom of Indians will bail you out. So, go for gold.
Hang on, if you don't have enough money to buy a 50-gm gold bar, you can buy units of a gold exchange traded fund (ETF) either directly from a mutual fund house or from a stock exchange.
As of now, four mutual funds - UTI Mutual Fund, Benchmark Mutual Fund, Kotak Mutual Fund and ICICI Prudential Mutual Fund - have filed prospectuses for gold ETF with Sebi. UTI Mutual Fund and Benchmark Mutual Fund were given the nod by the Sebi. Other fund houses have also firmed up plans to come out with gold ETFs soon.

THE IMPACT AND BENEFITS :-
The Sebi decision is bound to leave many gold chit fund owners red-faced. Because, the move is set to unsettle their businesses. Till now, gold chit fund operators in states like Kerala had a field day as there was hardly any proper trading option for the investors. The chit funds were run without proper rules and regulations. They used to promise everything for the investors but delivered nothing. And investors used to bank on the chit fund owners' credibility and social status to put their money in the schemes.
Things are changing with the introduction of gold ETF. Gold ETF is an open-ended mutual fund scheme where money raised is used to buy gold instead of company stocks as in the case of an equity fund. The gold ETF is then listed on bourses and the units are traded on stock exchanges like shares of companies. Investors can also buy their units from and sell them to the fund house at the applicable net asset value. Gold ETF gives investors returns that closely track yield on gold prices in the domestic market.
In other words, the price per unit of gold ETF will approximately be the market price of 1 gm or 0.1 gm of gold depending on the face value of the scheme units. Since it is an exchange traded fund, the net asset value and portfolio holding of the scheme are determined real time. But, gold funds are more liquid than open-ended equity schemes because the units can be bought and sold on a stock exchange on a daily basis under the regular settlement provision.
Investors will have to pay the brokerage, stamp duty, security transaction tax and service tax on purchase and sale of gold ETF units. Buying the units from and selling them to the mutual fund house will attract entry and exit loads. But, the gold bullion under a gold ETF scheme is kept with a custodian on behalf of investors. The custodian, which must be a Sebi-registered bank, buys and sells (to fund redemption of units) gold in physical form. All this means lot to an investor as he/she can rely on the scheme, which is always guided by the Sebi rules. So, there will be no question of losing credibility.

Something to rise for Gold

Gold zooms due to spectacular rise in overseas mkts

New Delhi, Jan 13 (PTI) Gold prices zoomed on the bullion market today on brisk buying by stockists triggered by a spectacular rise on the overseas front, recording a handsome gain of Rs 190 at Rs 9175 per ten grams.In line with the general trend, silver and silver coins registered a significant rise on all round buying support.Trading activity picked up after reports that the precious metal had recorded a significant gain in two months in New York last night, as a decline in the value of the dollar boosted the appeal of gold as an alternative investment.Gold, sometimes moves in the opposite direction of the dollar, which fell 6.9 per cent last year against a basket of six major currencies, including the euro and the British pound. Gold rose 23 per cent in 2006. The dollar today fell from a seven-week high against the euro.In overseas markets, gold futures for February delivery rose 14.40 dollars, or 2.4 per cent, to 628.30 dollars an ounce, a biggest gain since November 9.Marketmen said the precious metal prices spurted even as the physical demand in domestic market was almost nil due to off marriage and festival season.They said Exchange-traded funds linked to the price of the metal that now trade in New York, London, Singapore, Mexico and France have already attracted a combined 11 billion dollars in investments since November 2004.Traders said there were reports that the council plans on starting a similar fund in India, Italy, Germany, Belgium and the Netherlands. PTI