Re: GOLD Where is it heading?
In an effort to boost business, Indian Bank is hoping to increase retail sales of its gold coins, which it launched in March.
The government-owned bank has so far sold over 20,000 coins across its 1,400 branches but with new plans to introduce more high-value coins, it expects to have made a net income of 100 million Rupees from the coins by April next year.
A spokesman for the bank told Reuters that since margins on other banking products have been falling, selling gold was seen as a positive business decision.
Banks in India are allowed to freely import gold and sell it on. Initially, they operated as channels for jewellers, importing the precious metal only after jewellers placed an order to eliminate price risk.
However, with prices at an all-time high, increasing numbers of Indian banks are now selling to the general public.
Oh dear, the general public, the last bastion of utter stupidity.
rederob
What about ducati's supply and demand data?
Where is it tabled as it des not tally with anything from WGC?
But of course it does my good fellow, it comes directly from the table that you posted on pg24.
Here is my post #485
Nonsense, the figures come from your own data;
Jewellery consumption, from Q4 2004 to Q4 2005 has fallen 15%
All the other figures also come from your own data.
What has obviously confused you is
Q4 2004- Q4 2005 you must read the whole sentence if it is to make any sense. Therefore while total demand in 2005 as compared to 2004 grew by 5% (revised to 4%) the figure is deceiving, as demand was not growing at the trend pace, it had dramatically slowed.
That trend has been continued in 2006;
Q1 2005 to Q1 2006.......(-22%)
Continuing to use quarterly data to prove a case means that one fails to account for "averaging" of data, which reduces statistical volatility.
This is imperative as gold prices change considerably in the course of a year.
ducati's analysis continues to be deceptive and deficient.
Nonsense.
Using quarterly data is the only real chance you have of the price reaching, and exceeding your $800+ targets. If I were to use *long term averages* then the price would fall to absurdedly low levels.
For example;
If we said that Gold tracked inflation, then taking the long term trend of inflation at 2.5% and utilizing $700 as the *price*;
Let's look at some very long term data. If an individual purchased an ounce of gold in 1802, it would have cost him about $20. Today, that ounce is worth over $700, a return that is well under 2% a year. Twenty dollars put in the bank at compound interest would be worth almost $100,000 today. And if our investor bought $20 of stocks in 1802 and reinvested the dividends, those stocks today would be worth over $200 million! That is a return of over 8% per year. Gold doesn't measure up in the very long run.
Therefore, even the central argument of Gold being an inflation hedge, just doesn't work out. If for 20yrs you had held it at $350'ish, then you were in dire trouble
A person who believes that a commodity is in oversupply because people are selling their jewellery to meet demand and Central Banks are releasing stocks into the market, deserves to be treated accordingly by the market.
Seemingly the laws of supply & demand have simply passed you by.
Assuming supply from mining is fixed at level *X*
When price is low, and demand is higher, price will rise, and continue to rise until demand is satisfied.
Demand will be satisfied when supply from any source, exceeds the demand. Eventually, at some price, the price induces existing owners to sell (provide supply) to satisfy the demand.
Therefore, by definition supply has increased.
Should price fall, then the supply exceeds the demand, until again, price finds an equilibrium, when demand, again exceeds the supply, or, that supply will not provide that supply below a certain price level, thus, demand will again exceed supply at a specific price point, that will be equilibrium.
Therefore WHO constituted the DEMAND that was causal in the rapid price rise? You say fundamental demand; jewellery, industry, investment.
Only one area demonstrated growth far above trend, and that was investment. The component of investment that grew was speculative, viz. $140 Billion supplied via Hedge Funds etc to the commodities markets.
Jewellery, the industries largest sector, has shown shrinking demand, and increasing supply, ergo, the current price is speculative, and will become increasingly volatile as the drama plays out.
Ducati has called my analysis shoddy in the past.
I do not however mislead people into thinking that income dictates demand: It is a factor, but there are other factors that have great importance and must not be ignored.
And it is continuing in the same manner.
Income quite clearly does
dictate demand
Your statement is so devoid of thought, as to be nonsense.
If I can't afford it, I can't buy it. If I can't buy it, my vote doesn't count.
The *other factor's* are negatives.
Competition from other luxury items, but more importantly,
competition from better investment asset classes
To remove the egg from his face, ducati should now extrapolate the differential of income growth between USA and India to determine which nation is likely to have a greater impact on gold demand going forward.
Ideally he can also look at their comparative population growth rates to complete the picture.
If I could find the egg, I most certainly would.
Again your analysis is devoid of thought. You have assumed that as income growth grows in India & China, which is probable, that their ownership of gold will increase proportionally.
There are two factors to consider;
1.....Will they pay above the inflationary rate? History suggests that they will not do so, that they understand quite clearly, the price you pay, governs any returns that you may realize.
2....Will they continue to view gold as an investment?
I do not think that they will. Indians in particular are astute when it comes to finance, and they will increasingly eschew gold, for more lucrative asset classes.
jog on
d998