We are in a seasonally lull period when it comes to gold purchases, especially in India. No major festivals around the corner and the end of another marriage season ensure gold buyers remain at bay.

Is this the right time to buy Gold? Gold markets saw a steep fall in prices recently with prices of this precious metal falling by almost $40 on a single day and still moving lower.

Lately, there has been increased volatility across all asset markets and traditional correlations aren’t working the way they used to earlier. The global economies barely managed to keep their heads up, the debt crisis emanating from Europe blew things apart. Stocks were pricing a full blown recovery whereas the recent correction led to questioning of the underlying reality.

Ben Bernanke, the current Chairman of the United States Federal Reserve, said he was ‘mystified’ about the recent rise in Gold. He said that he couldn't make any sense out of the rise in the gold price, because with the prices of most other commodities in declining trends there is obviously no "inflation" threat.

With gold prices ruling near record highs, many are questioning the sustainability of these price levels . Let us try to figure out whether the price increases have been fundamental in nature or otherwise.

LIBOR rates starting to soar, Stocks getting battered, Corporate Debt issues drying up - does this feel like dejavu, reminiscent of the build-up to the 2008 crisis?

Colloquially speaking, 'Gold' and 'Silver' are often mentioned in the same breath - "Sona - Chaandi",
"Au-Ag"... However in terms of investment, does the Silver lining make as much sense as the Gold rush?

"Gold is behaving strange!" - So say many confused investors after observing this commodity’s recent behavior – Gold moving in tandem with the dollar.

So what do policymakers do every time there’s an economic problem? They simply try to jump start the economy via financial intrusions. And what does this supposedly well-thought of step do? It buys time for the near term at the cost of fiscal clarity in the long run.

Rising prices (also known as "inflation" in financial jargon) has been a big worry, more so since this escalation in prices is unmatched by income growth, making it difficult for the common man to make ends meet. Take a look at the numbers: As reported on Bloomberg, Wholesale Price Inflation rose +9.90% in March while the more concerning Consumer Price Inflation which affects all of us is as high as +16% reported as of January (it is released with a lag).

The U.S. dollar has enjoyed a free ride since economic troubles got highlighted in the Euro-zone.

Recently the price of gold seems to be under pressure, showing a decline accompanied by high volatility. Two major reasons have been cited for this downward trend:

It's a knee-jerk reaction again.Back in 2008, when the financial crisis unfolded, we saw similar initial reactions from the financial community bringing in a sell off in gold along with other asset markets.

Gold began its bull run in 2001, and a noticeable pattern of this run was the consolidation phase post the attainment of a peak. Presently the price of gold seems to be in a correction / consolidation phase post their peak at $1226 levels.

India has been the largest consumer of gold. The motive behind buying has always been savings or investments as gold is considered a perfect store of value and a lender of last resort. Jewellery purchases usually constitute about 60-70% of the total, while the rest is accounted for by coins and bars which are sold at a premium of 5- 15%.

Well, there have been many who recently concluded that the 'bull run' of gold is drawing to an end. They obviously drew their conclusion from the correction mode that the price of gold has moved in to, after setting a record high at $1226 per ounce. There have also been some who were of the opinion that gold was in a bubble which has now popped and hence the price of gold should decline further.

"Can somebody explain that, if all gold ETF's track the same gold price, how is it that returns of the Quantum Gold ETF are at the bottom of the heap? Is it because the expenses are abnormally high?" asked an email.

Sure, gold can hit the Rs 20,000 per 10 gm mark. At any point in time, the price of gold in Indian rupees is a function of the price of gold expressed in USD (the base currency for pricing gold globally)...

Gold has broken the USD 1,100 barrier, and many chartists and technical analysts now believe that its momentum at present looks unstoppable. The purchase of 200 tons by the Reserve Bank of India - a respected and conservative central bank - has only contributed towards lifting this sentiment.

"Should we buy silver?" asked the email, "It is doing better than gold!" Recently, due to its stupendous performance in the near term, there has been an increasing interest amongst investors to allocate money to silver.