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  • Sudheesh Nambiath - Senior Analyst- Precious Metals, GFMS, South Asia & UAE, Commodities Research & Forecast, Thomson Reuters

    Sudheesh Nambiath

    Senior Analyst- Precious Metals, GFMS, South Asia & UAE, Commodities Research & Forecast, Thomson Reuters

    DATE: August 31, 2015, 12:00 PM

    SUBJECT: Is it a good time to buy gold?

    PF

CHAT CLOSED. READ TRANSCRIPT BELOW

  • MODERATOR:

    Hello and welcome to today's webchat with Sudheesh Nambiath, Senior Analyst- Precious Metals, GFMS, Thomson Reuters, on whether one should invest in gold at current prices



  • R

    RAMANATHAN

    I fear that with equites not faring well and prospects for real estate presumably on a weak footing, the only alternate investment avenue left is gold. But there are fears that even gold prices will crash. Is it worthwhile to invest in the yellow metal?

    SUDHEESH NAMBIATH

    Hello Ramanathan, We view gold prices in 2020 will be averaging at $1450 and USDINR will be averaging at same time will be averaging at 72.5. That is a 11% depreciation in INR and 28% appreciation of gold in dollar terms from current level i.e, $1130. That I believe is a good return when considering a diverse portfolio.


  • S

    SRINIJA

    Is it better to invest in Gold at the current levels or should we postpone it for now?

    SUDHEESH NAMBIATH

    Hello Srinija, Gold prices after tumbling to lowest in four years in rupee terms in July this year has gained by more than 10%. The strength is likely to continue into rest of the year as we target Rs. 27,800 by end of the year. In dollar terms price had fallen to the range we had forecasted early this year. Though for a technical chartist it may seem like a set up for another fall however we believe the fundamentals are getting stronger for gold to perform better for rest of this year.


  • H

    HANIMI REDDY

    I'm doing SIP into gold fund since last four years with an yield about -10%. Shall I continue to do SIP or stop? My investment horizon is 10 years.

    SUDHEESH NAMBIATH

    Hello Hanimi, the question is very pertinent and I have been asked this several times. At GFMS we do not give investment advice but provide market intelligence for making the investment making decision and give price forecast periodically. Answering your question, it seems your average purchase rate must have been near Rs. 28,600/ 10 gramme (basis last four year average price) and currently price is at Rs. 26,600. Timing the market is a challenge for non professional investors thus continuing with SIP is a better way to meet the long term goals. And given that your time horizon is 10 years more likely to see gold prices in rupee terms comfortably trading above Rs. 42,000 by then.


  • P

    PRADEEP NAIR

    If we buy gold like our parents for our kids for the next 15 years - is it a sensible way to save especially for daughters marriage?

    SUDHEESH NAMBIATH

    Hi Pradeep, I can not agree more with our parents wisdom on accumulating gold over the years. It has paid out well over these decades. Such a conventional way of saving has come to question as gold price has fallen from Rs. 33,000 to Rs. 24,000, eroding 27% of the wealth notionally. We view that USDINR will be averaging at Rs. 80 by 2024 and gold price will be supported by higher physical demand as we target $1750. Thus investing on gold periodically and adding more to your portfolio when prices fall sharply is a good way to stay invested in gold when your horizon is 15 years.


  • S

    SUNIL SHARMA

    Is it good to buy gold right now or will the prices go down till Diwali?

    SUDHEESH NAMBIATH

    Hi Sunil, Gold price in rupee terms has made a bottom for this year. Any further declines I believe should near Rs. 25,500 levels and by Diwali looking for price to touch Rs. 27,200.


  • G

    GAURAV

    Is it good time to buy gold in India? If yes, then why?

    SUDHEESH NAMBIATH

    Hi Gaurav, The first part of your question I have touched upon in the discussion before for which the answer is yes, it is good time to buy gold in India. Answering the second part, it is more to do with the economic activity in China, India and developed economies in addition to higher weightage we have given regarding the lift in physical demand. In a ten year horizon we forecast economic activity in China is set to decelerate as part of the transition to consumption-driven growth, while the risk of potential capital reversals from a policy tightening in the advanced economies and the country’s rapidly ageing population will dampen activity. In India, a gradual transition of the economy away from investment dependence towards more domestically driven growth will contribute to some moderation of economic activity in the longer term. Thereby leading to a weaker currency which is projected to average at Rs. 80 by 2024. With regards to the US economy while it shows signs of self-sustaining recovery, the US government will be also required to adopt concrete fiscal measures to place public debt on a sustainable path over the medium term. The prospect of monetary policy tightening along with fiscal consolidation will restrain growth in the longer term. Demographic changes such as ageing population and a declining share of the working age population will have adverse implications for growth. The US dollar will benefit from the sustained recovery and policy normalisation, strengthening against most currencies in the medium term. However, this growth will be in parallel to rise in gold prices with price averaging $1750 in 2024.


  • A

    ANILKUMAR

    Are people speculating in gold? What do the global trends suggest?

    SUDHEESH NAMBIATH

    Hi Anil, It is a highly liquid traded asset globally and is highly liquid holding in physical form too. Thus speculating is normal and it is the speculators which provide liquidity for the hedgers in the exchange, thus they play a key role in this ecosystem. Going by the managed positions in Comex basis the CFTC report, we are noticing rebuild of net long positions. The MCX has also been indicating similar trend where the open interest and volume has been on uptrend as prices gained from July low.


  • D

    DEVENDRA

    About a month back, almost every financial advisor was of the opinion that the price of Gold will fall further (to the level of Rs 22000 per 10 gm) by the end of the year. But now, due to external reasons, price of Gold is on upward trend. What way will Gold go in next 3-6 months of time?

    SUDHEESH NAMBIATH

    Hi Devendra, Gold prices after tumbling to lowest in four years in rupee terms in July this year has gained by more than 10%. The strength is likely to continue into rest of the year as we target Rs. 27,800 by end of the year and in dollar terms we are likely to see gold price cross $1200. Our conviction is very low for price to touch Rs. 22,000 considering the investment outflow thereby weakening rupee, possibility of Fed rate hike by end of this year and the fact that gold has factored in almost every negative news to keep it under pressure. And on physical side we are likely to see Chinese on rescue should there be any decline in prices, just the way India imported about 190 tonnes during July to August period as price fell sharply.


  • S

    SANDEEP

    With the current turmoil in the stock markets and real estate, what are the prospects for investment in gold in the short term - say 2-3 months, medium and long term - 2-3 years?

    SUDHEESH NAMBIATH

    Hi Sandeep, Allow me to get straight to your question as I have already explained reasons elsewhere in this forum. End - December 2015 target is Rs. 27, 800/ 10 grammes 5-year target is Rs. 33, 690 10-year target is Rs. 44, 850 In the latter two cases I have considered import duty as nil.


  • V

    VINEET

    If there is a wedding scheduled for next year, is the right time one can subscribe to the schemes by select jewellers wherein you accumulate a certain grammage every month?

    SUDHEESH NAMBIATH

    Hi Vineet, Sorry to disappoint you it is difficult to comment upon without understanding the details of such schemes as it varies from each store. And I do not want you to be mislead by a general comment from me. However, please read through the answers for other questions and your answer might be there.


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