Investment in Gold - Part 1 of 4

Continuing from one of my previous mail threads about Gold, I’ll be sharing a 3 part series about investment in Gold. So here’s Part 1 of 3.

Gold prices are impacted by the following:

• Jewelry off take (pure consumption demand)

• Industrial use

• Geo-political concerns

• US dollar movement against other currencies

• Indian rupee movement against the US dollar

• Central Banks diversifying into bullion (Central Banks normally invest in bonds of other countries mostly US, Germany, France, Canada – AAA+ rating :-) )

• Central Bank Sales Slowing and Massive De-Hedging

• Gold Mine Production

• Fall in Supply

• Buying of gold can be broadly classified into 2 categories

o Consumption and

o Investment

• By world statistics, gold is mostly bought for consumption, investment and finally for industrial use

Gold for Consumption:

• Buying of gold is influenced with the intent to HOLD and NOT SELL

• Forms of buying gold is in jewelery, coins, bars

• Industrial Use

• Mostly bought my individuals and manufacturing companies in the hi-tech sector

Gold for Investment

• Buying of gold is influenced with the intent to SELL and NOT HOLD

• Forms of buying and selling of gold is Gold ETFs, Gold Mutual Funds

• Speculative buying in form or Gold Futures

• Mostly bought by investment management companies, central banks, speculators / traders and lastly by retail investors