Posted On Monday, Apr 20, 2015
The word "Akshaya" denotes something that never diminishes or is indestructible and in India traditionally gold is considered as an embodiment of permanent value - hence beginnings made, or valuables bought, on this day are considered to be auspicious - certain to bring luck and success in material terms. Hence, Akshaya Tritiya is the second biggest gold buying day in India - highlighting its importance to the culturally entwined Indian mindset.
Last year on Akshaya Tritiya, we suggested that you refrain from buying gold, and keeping in mind the cultural affinity one should only consider a token purchase of gold if at all. The main reason for this was the artificial premiums that were prevailing on account of import restrictions introduced by RBI and the government. The premiums were to the tune of 5-7% in the domestic market which was indeed burdensome from a monetary perspective. Also, the odds were not in favour of gold as it faced tail winds from the looming rate increases in the U.S., ensuing dollar strength and falling commodity prices. Therefore, it did not make financial sense to purchase gold by paying a hefty premium over and above the gold rate and an onerous 10% import duty.
A lot has changed this Akshaya Tritiya
Premiums have vanished as the government has withdrawn the draconian 80:20 import rule leading to easing of supplies.
Gold prices have fallen by approximately 7.5% since then. Much of the odds seem to be priced especially surrounding the interest rates in the U.S. This does not mean that gold prices cannot fall further but the downsides can probably be limited. Our optimistic view comes from the fact that there can be disappointments surrounding interest rate increases by the U.S. Federal Reserve. The U.S. Federal Reserve is still expected to begin hiking interest rates from its zero-bound level this year. But, how far can the Fed actually raise rates in a global environment of slow growth and deflationary concerns? As the market figures out that Fed will stay behind the curve,do very little and keep real rates negative for much longer, gold prices should start moving northwards.
The import duty still remains at 10%. We were hoping for a cut in import duty in the budget but the same did not materialize. We now believe the government is in no hurry to cut import duty any time soon given the substantial revenues that get generated from custom duty and at the same time serves as some disincentive for gold purchases which has been bothering governments from a current account perspective.
Expectations surrounding interest rate increases in the U.S have lately been the single most important determining factor for gold prices. Market expectations are eyeing September 2015 – when the US can initiate moving interest rates from the prevailing near-zero levels. Markets will soon thereafter realize that the Fed will be slow in raising rates and we expect them to be behind the curve keep real rates negative, it is then the gold prices should start increasing.
It could very well be the time to buy some gold on this auspicious occasion. It’s difficult to predict when and at what levels gold prices could bottom and start rebounding, but it’s good to remember that the main reason to own gold is just the sheer fact that it is a good portfolio diversification tool and thereby helping you to reduce overall portfolio risk. With Akshaya Tritiya tomorrow (21st April 2015) and given the above discussions, it does make sense to add some gold to your portfolio.
The markets have also increase their trading hours for Gold ETF`s tomorrow, giving you that much more time to invest. Please click here to see the circular.
As seen every year, there is bound to be a beeline of buyers geared up to buy gold this festive season.
Rather than paying high premiums and making charges this year, why not try something a little different from the comfort of your home?
Buy Gold ETFs listed on stock exchanges
• Price efficient vehicle
• Backed by physical gold
• Pure Gold – 0.995 fineness & above – categorized as 24 Karat
• No worries on storage and safe keeping
Amongst the gamut of Gold ETFs, Buy the Quantum Gold ETF
• Buy gold in denominations of as low as ½ Gram – Each unit approximately represents ½ gram of gold
• Pure Gold - 0.995 fineness & above – we conduct purity test of all the gold held by the fund once a year
• All the gold held by the fund is fully insured
• Low Tracking Error
So don`t lose more on prices, making charges, purity etc by buying physical gold, this Akshaya Tritiya, buy gold by investing in Quantum Gold ETF on NSE
This Akshaya Tritiya make an auspicious beginning by buying gold on the NSE (code: QGOLDHALF) in form of Quantum Gold Fund.
|Name of the Scheme & Primary Benchmark||This product is suitable for investors who are seeking*||Risk-o-meter of Scheme|
|Quantum Gold Fund|
An Open Ended Scheme Replicating / Tracking Gold
|• Long term returns |
• Investments in physical gold.
Investors understand that their principal will be at Moderately High Risk
Disclaimer, Statutory Details & Risk Factors:
The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.
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