Everybody loves gold

Everybody Loves Gold?April 15 2013

Deepak Singhwww.stateofthemarket.net

http://www.stateofthemarket.net/

www.stateofthemarket.net

Opening Remarks

Myth: You can never lose money on Gold

Belief:

Gold has been such a rewarding investment in

last 10 years that everyone holds this

belief

Indian households have bought some US$90 bn of

gold in the last three years…..Goldman Sachs


Here comes the shock

Dramatic Decline in Gold prices in 2013 from 1700 to now 1400

Gold now at 1410

Gold: The Bearish Era

Between 1980 and 2001Forgotten Period

Gold lost 60% of value during this period


Gold Bearish Era: 1980-2001

Gold peaked around 700-780 in 1980-1981 and then bottomed around 250-260 by 2000…..20 long years


Gold Super Bearish Phase: 1996-2001

It was the best economic expansion

period in US

Gold broke down below 200 week ma and

stayed below it for 5 years


Gold: At turning point in 2001-2002?

Dramatic Breakout above 200 week ma


Gold never looked back since then


But now the Trend Broken

Gold Breaks down below 200 week ma


What does it mean?

Logic:

When any asset becomes trendless…it’s less

rewarding to hold as an investment asset

Gold is set to become trendless

Gold is no more safe haven. It's is going to be very volatile on a day-to-day basis, but there will be no trend on longer-term basis….George Soros


What does this mean for India?

Can we go back to normal period?

Will demand reduce to pre-crazy levels to sub

1% of GDP from current 2.8% of GDP?

The answer is it depends how Gold

performs from here on.

The craze for Gold shot up dramatically in last 3-4 years


What if demand for Gold reduces?

What difference will it make for India?

As per some calculation:

It will free up $200 bn worth of cash flows over next 3-4 years to other

productive sectors of the economy.

Will it happen

?


Thank You

• Disclaimer - The state of the market presentation is Deepak's perspective on the market. The presentation is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this presentation you agree to make no trade relying in whole or in part on the comments of the writers

• Chartsource: Chartalert.com

• You can send me feedback at [email protected]• Twitter handle: smarket

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Economy & Finance

Everybody loves gold