Gold Bubble But made of steel

Monday 25^th April-2011 Silver was trading @ its all time high (75000/kg approx), and so was gold, speculations and sentiments were high in anticipation of the future course of Bull Run or a steep correction. Analysts gave a note of pause and caution as they foresee a correction happening which they were anticipating to happen since the rally started.

Silver has given returns like never before in the past one year or so, the price use to be around 23000/ kg almost a year and half ago and since then it has almost tripled. With this sudden rally people believe that it is a bubble and will burst one or the other day; I also see it as a bubble but bubble of steel J which means it is not going to burst.

The reason of sudden spurt in the prices of gold and silver is not only because of the consumer demand of the precious metals having gone up, but there are other factors that are fuelling the demand. Crude is constantly trading at a price tag of above 100$, globally inflation is a cause of concern and precious metals are viewed as a hedge against inflation.

It’s not that the gold and silver are rising in prices, but the fact is that the US dollar is slowly losing its place as the world's reserve currency. If the dollar were to be dumped as the world's reserve currency, severe inflation would result, since the purchasing power of the dollar and dollar denominated assets will diminish rapidly.

History has stories to tell that hard assets, especially gold, silver, and land retain the monetary values in times of severe inflation, hyperinflation, civil unrest, and war, and that’s why people buy gold and silver for this exact reason.

Gold and silver or for that matter any precious metal is not to be treated as stock and equities, rather they are to be treated as insurance; when the currencies are loosing shine.
We need to think; if this would have been a bubble then why the central banks around the world would be buying so much of it.

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Silver smiles with a Golden tooth

Gold and silver prices are breaching there historical records, largely being fuelled by global unrest, inflation and economic volatility. Gold Prices are shying a bit as compared to silver price which is literally on fire. With each passing day, silver is breaching its historic highs and rising by an average 1000 INR on a daily basis.

I happened to visit a jeweler shop last Monday as I was looking for a semi precious stone, out of curiosity I inquiring about the silver and gold prices and was in a state of shock to leant 64250/kg and 21850/ 10 gram respectively. I knew that silver is going to over shine gold in years to come, but will happen so early was never anticipating.

Today 7 days later (Monday 25^th April-2011) purest form of Silver is hovering around 73800 and gold around 22450. Silver has appreciated by 10% whereas gold hardly by 4%. All that will shine is silver

Though I’m not a trader in the precious metal arena but I believe that there are enough sentimental, global and economical factors to give support to the gold and silver prices, and if you ask me will the prices ease up? I will say “BIG NO”.

With the marriage season setting in and “Akshay Tritiya” on 6^th may-2011 there are enough reasons for gold and silver to scale up, Hindus believe Akshay tritiya as the most auspicious occasion to buy gold/ silver and usually start purchasing for marriage and other social functions.

Apart from the demand arising due to marriage season, indications of good monsoon will also add fuel to the demand, again pushing the price higher. Till the monsoon gets over there are no factors which can dilute the demand and so the price.

Of course There is some gap between the end of monsoon and next festival season during which the prices can have a set back only if inflation comes under control. But despite of all our measures we are not able to tame the inflation; these precious metals are considered as the best hedge against inflation and therefore prices will not come down till the point inflation is beyond our control.

Once Diwali season sets in no factor can downcast the prices and rising demand will further fuel the prices, looking at the overall scenario I think silver will touch 1 lac /Kg and gold to 25000/10 gm by the year end.

So if you are investor and having interest to buy; buy it now, before the rally reaches to the point of reversal.

Image source : preciousmetalshop.com

Love is Blind

You will find many organizations working for welfare and rehabilitation of mute species “animals I’m taking about” but hardly have I seen any organization helping human beings in disguise due to those mute species. My apology they are not mute species, basically they speak, and they might be speaking about a hell lot of things.

Though they can’t express their experiences in human language and neither can human understand their language but studies and observations done by Animal lovers, scientists who interact with animals reveled that they too have emotions and they have their own ways of expressing their emotions through there speech and actions.

They have capacity for pain, fear love and hatred and emotions doll out in form of voice, cry and fight. They might be laughing even…J I don’t know as I haven’t seen neither understood them as to how they laugh… J but the factors and expression of their emotion is really annoying.

I boast on animal loving individuals of my society, the residents are really very genuine and very loving and caring for all mute species, but the one species that attracts the most affectionate is dog. I don’t know for what reason but my housing society is flooded with street dogs; why not people taking utmost care of pregnancies of the species and offshoots during their breeding period, might be someone have suggested them to do so.

Every residential block is hijacked by a group of dogs, as people love them deeply they feed them with milk, biscuits and all those foodies that a dog can eat. They arrange everything for the dogs; right from warm cloths to cold water for chilling out..!!! Dogs are happy I believe… do they laugh…??? I still don’t know, but they have become greedy as a result of which there are frequent fights for the right of resident and territory.

During the day time they enjoy all the foodies and are dozing most of the time; in the nights they are on strict vigil, they shout and cry a lot for god knows reasons; disturbing the sleeps of residents. But as love is blind, resident don’t let ears to that. They patrol their territory and visit every floor on the block; in the morning when they feel that everyone is about to wake up they wind up there patrolling and before leaving the job they never forget to do the dirt in the corridors; might be some ecstatic feeling compelling them to do so.

Really a menace… Dog menace… lot of dirt, attack on kids and elderly people… but who cares after all "Love is Blind"

I frequently think “who lets the dog out?”
Image source: http://www.dzynsunlimited.com/

Rich banks poor borrower

High interest rate regime is giving sleepless nights to the borrower; Loans getting expensive day by day be it home, auto, personal or corporate loan. The cost of capital has increased enormously and within past 12-15 months the rates has been adjusted at least 5 times by the cash-credit monitoring body.

Well the moment loans gets costlier the deposit rates also increases benefiting the depositors specially peoples who are depended on income of interest. But my apprehension is with the way interest income is treated under tax bracket. Tax on the interest is treated as per the depositors’ tax slabs and in turn the depositor gets merely 2-3% higher returns as compared to saving bank accounts.

A person, who is not employed in any of the government machinery, is practically making his living by his own efforts, as per my opinion he should be totally exempted from income tax, because the government system is not facilitating him in earning his livelihood, and all the infrastructure and service which one uses being a citizen, are getting taxed directly or indirectly. Whatever little one saves becomes the scapegoat of income tax and he is left with practically petty returns. If I’m asked to reform “Taxes on Interest” I would certainly give a waiver/exemption on deposits which are equal to annual income of the depositor as generally people have more liabilities in terms of loans and expenses as compared to deposits they have parked with the banks.

Rising interest rate somewhat balances of inflows and outflows of interest component but still there persists a gap between the amount parked as FDR’s and the loan outstanding, on top of it one is liable for the income tax on interest earned from the Deposits which further dents the balancing.

Financial institutes offering long term loan have practically discontinued fixed interest loan as they are not very sure about the cost of capital in the longer run and that’s the reason the only option the borrower is left is “Floating rate interest” which means that rate will be driven by cash-credit equation. Borrower taking a long term commitment is always in a double whammy; one side his cost of borrowing shoots up with rising interest rate and on the other side the deposit rates doesn’t adjusts to the increased deposit rates.

I’m not sure that whether the financial institutes provides floating rate deposits or not, but in normal case if one needs to avail the increased rates he needs to discontinue with the earlier deposit and initiate a newer one, But here the financial institutes play foul, they charge depositors with an penalty for this switchover . The monetary value of penalty reduces the effective ROI of the deposits and generally depositors hesitate for switchovers.

The decision makers of cash- credit policy should work towards abridging the gap and evolve a win-win situation for the depositors and financial institute. Is someone paying ear to this..!!!? Hope that it is getting heard by the decision makers…!!!

Image source: loancentral.com

Memoirs of my Revolution

For most of us College days are memories for life especially for the hostelers who spend years with the same roommate, sharing all momentary stages, moments of happiness sorrows, joy and worries with each other like any other family members. Most of them remember and cherish each and every day throughout the life, but for me it was a little different experience and a big challenge to survive all odds.

I got admission to a college which was not in my home town and so I got enrolled to the college hostel, I was getting out from the comfort of home and was preparing for a big struggle for every other thing. Well the building was not bad, but the environment was not very conducive, no need to mention we didn’t share a good rapport with our immediate seniors. Ragging though was not an issue for me at that point; no complains about that but there were many things “unwritten laws “which we were bound to abide and to some extent were not acceptable to me.

Juniors were supposed to get ready before 6.00 am as after that; senior would be using the washrooms and toilets and they didn’t wanted any fuss in between. My goodness 6.00 a.m. in the morning..!!! is this a time to take a bath? I couldn’t digest it.

Seniors wanted a privilege in the dinning even, they would be the first to have breakfast, lunch and dinners and once they are done we could continue with our course. I don’t think that the meal course was worth this discrimination, I never relish that Food, chapattis used to be over baked, vegetable curry use to be in form of soups; couldn’t understand till my last day whether it was a main course or starter… i.e. to be ate along with chapatti or were to be taken as a soup J

One code of conduct stated that no one should sleep before 12.00 midnight, my goodness a person who is awake before 6.00am, exhausted the entire day in the college, didn’t had a proper meal how can he be agile till 12.00, On top of it we were supposed to be in full formal dress till we go to bed, L….. Fastening all the buttons of shirts, even the collar button…. I hate fastening the collar button for the matter of fact I never even fasten the button below that, neither I like to dress in formals.

That’s not all done with the problem, after ragging seniors generally give treats… a universal face…. with us also the decorum was followed. We use to get 2 cream biscuits, Oh my God…. two biscuits only, that too with cream… L

For juniors Smoking, drinking and consumption of tobacco in any form was strictly prohibited in hostel, now imagine a person having all above good habits getting deprived of his needs and on top of that facing perpetual fuss over the code of conduct… how could one survive?.

Difficult it was to survive with all these restrictions in place, and so I moved ahead, moved to a place where I can wake up and sleep as per my wish, I could have meals according to my taste and answer my genuine and cosmic needs.

Though some of the senior members were very genuine, loving and caring but the set of code of conducts made life miserable. Rest of my batch match continued the hostel life whereas I chose my path of independence,

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