RBI Cautions banks on sale of gold

Curbs on loans against gold coins will moderate India's voracious appetite for the yellow metal and the country's huge import bill. Finding gold coins at your neighborhood bank branch may become tougher. The central bank has suggested that bank should not aggressively sell gold products at their branch. This is the latest attempt by the central bank to stem runaway gold imports, one of the key reasons behind the widening trade and current account deficit. RBI is trying to check the import of gold, which is a major contributor to the country's widening trade and current account deficit. Also an anvil are fresh regulations for incentivizing cross -selling of gold, other financial products to curtail money-laundering. The move indicates that RBI will not give long- standing demand by banks to allow them to buy back gold coins. Bankers believe that the move won't be able to reduce gold sales as customers can always approach jewellers for the same. On the other hand jewellers are happy that they will not have to rush to banks for procuring gold as people will sell gold coins in the open market.

Will RBI action be heplful or harmful?

RBI has cut down the Repo Rate by 25 basis point but, the question remains the same whether the cut will improve the conditions or will not make any difference or make adverse impact. The Macro Report tempers hopes by citing low business & consumer confidence. The Business Expectation Index as under: 1. Consumer confidence declining as policy actions yet to show. 2. Business Optimism continues to be low. 3. Fiscal deficit and current account deficit still a worry. 4. RBI expects inflation to remain above comfort zone. India's strong dependence on external and short-term debts for financing CAD remains a key concern.

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ETF's Can Get Returns On Par With Market

The legendary mutual fund always insisted on bringing down the costs of fund management for the simple reason that any savings on costs by the mutual fund scheme that you have pit your money in would add to the corpus. And, in the long run, this could make a substantial difference to the total corpus you accumulate compared to what you would have got if the costs were higher.

The result of such a logic was the launch of exchange traded funds, popularly known as exchange traded funds (ETF's), although lately other types of ETF's have also been launched in the market with varied degrees of success.

ETF's are usually passively managed funds, meaning these funds track some benchmark index or the price of some physical or financial assets and, unlike regular mutual funds, do not try to outperform their benchmark index by regularly buying selling the portfolio of  stocks.

So, naturally ETF's come with much lower costs compared to actively managed ones. Supporters of the active funds management style often say that good fund managers can beat the market and give you higher returns, but the fact of the matter is at times even the best of the fund managers also underperform the market. One of the best things about ETF's is that if you are invested in an ETF, you would get a return that is on par with the market.

The chance of you being disappointed with your returns in comparison with the market returns is very low, according to an official at a domestic house.

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Markets Overview

DJIA

14,784.93

72.38

0.49%

FTSE 100

6,446.31

19.89

0.31%

OIL (WTI)

93.68

0.68

0.73%

GOLD

1,466.70

13.10

0.90%

EUR-USD

1.3098

0.0067

0.52%

USD-JPY

98.1100

0.0600

0.06%

आरबीआई ने सोने के सिक्कों और गोल्ड से संबंधित निवेश उत्पादों की बिक्री को लेकर तकरीबन 30 बैंकों पर अपनी निगाहें जमा दी हैं। भारतीय रिजर्व बैंक दरअसल यह पता लगाने की कोशिश कर रहा है कि इन बैंकों के कर्मचारी इस तरह के उत्पादों की बिक्री की खातिर ग्राहकों को गुमराह तो नहीं कर रहे हैं।

Trees Don’t Grow Gold

The fall in the materials and energy sectors was not matched by the finance sector. Financial stocks were down, but not nearly as much as anything commodity related. That’s worth noting. There are at least some sectors of the market taking note of underlying events in the real economy.

Energy and materials are not sectors likely to be driven by enthusiasm for more quantitative easing by the Federal Reserve. In fact, the fall in commodities and most of the stocks in extractive industries can be seen as a market repudiation of the healing power of QE. Bernanke may be pumping up financial stocks and financial earnings, but he’s doing a whole lot of nothing for the well-being of the real economy.

It should be noted that all of this price action in gold, commodities and the stock market happened before two explosions near the finish line of the Boston Marathon late Monday afternoon. Markets have become less sensitive to these types of events over the years. But the explosions in Boston will certainly contribute to a sense of fear and uncertainty in the markets. In the past decade, those two sentiments have usually been accompanied by rising gold prices. But gold is currently in the grip of an epic liquidation.

Who is selling and why? Those are interesting questions. But ultimately, both are unknowable. It could be leveraged hedge funds who were long gold or who used gold as collateral to lever up on stocks. It could be owners of large positions in ETFs. It could be manipulation. It could be panic.

What are the “fundamentals”? That gold is an asset that is no one else’s liability, for starters. Beyond that, the last month has provided you with evidence that in a pinch, the political and monetary authorities will confiscate your savings. Central banks across the planet continue to print money and monetize government debt. These are all facts too.

It tells you that the people who control and profit from the printing and use of paper money are willing to do just about anything to retain their rank and privilege. It’s their system, and it works well for them. They do not like the gold price acting as a signal of public confidence (or lack thereof) in paper money or public finances.

But take all the emotion of wild price swings out of it, if you can. Ask yourself whether you think paper money will gain or lose value over the next 10 years. And then ask yourself if you would rather have money in the bank or precious metals in your hands. The answer to that question will tell you all you need to know.

Invest in companies that everybody else is avoiding. . .

Don't get me wrong - I'm not telling you to invest in bad stocks. People are obviously avoiding them for a reason.

But sometimes, even perfectly good stocks get ignored due to some misconceptions. Those are the companies I'm telling you to go after.

Let me explain...

See, we all know there are no better companies than the large caps when it comes to stability.

• Large caps are all well-established companies with stable earnings and no extensive liabilities.
• They are well-managed and have consistently performed across business cycles
• They have the resources to not only weather the downturns and disturbances, but also emerge stronger from them
• Long-term prospects for large caps are outstanding

So the risk associated with large caps is very low, and you can be almost certain of steady returns and dividends from them year after year.