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Wish to Buy Gold? Know The Options:

Options to invest in Gold:

Here,will not be any investor who can deny the importance of Gold as a safe asset class.

So there are number of modes of investment available in the market.Of course,each one have its own advantage and disadvantage.Investors must check which one is suitable for him before investing.

  • Physical Mode:

This is the most traditional way of investing in Gold.But most of the times the purpose is not the investment.But it is accumulation for childrens marriage,symbol of prosperiry,use at different functions like marriage.It can be in the form ornaments or Gold coins.

It has its own disadvantages also.Most important issues are purity and safekeeping.

We can not assured of the purity as we do not have such expertise in general.Also separate investment in the form of Lockers is required for safekeeping.

  • Gold ETFs:

Gold ETFs are Exchange traded funds offered by some mutual fund houses.Investors must have D-Mat account to invest.This is safe investment and there is no risk of theft as well easy liquidity.

Disadvantage is requirement od Dmat account.There is very less awareness regarding share investments.Also delivery brokerage  payable for each of the transaction.

  • Commodity Exchanges:

Commodity exchanges in India like Multi commodity exchange (MCX),ICEX (Indian Commodity Exchange), NSEL(National Spot exchange). Mcx and ICEX allows future trading only.At MCX we can trade 1Kg Gold,10 Gram GoldM,8Gram Goldguine.

Disadvantage is that there is a risk of down/up side,opposite to position.It is not useful for longterm investment but for short term trading only.

At NSEL,we can purphase apprx 1 Gram as one unit and kept in D mat mode for long time.It requires to open a trading account with NSEL registered broker.

  • Mutual Fund Schemes:

 Mutual fund houses have started to launch Gold Savings Fund Of Fund schemes.Money is invested in Gold Etfs which in turn invests in certified physical Gold.This is the only way where we can invest thorough systematic way.

Disadvantage is that investors are payable of Fund management fees to the respective AMCs.

Factors affecting commodity market:

 

Currently there is growing craze of commodity trading in India. Numbers declared from exchanges like Multi-commodity Exchange (MCX), ICEX (Indian Commodity Exchange), National Spot Exchange Limited (NSEL) shows the growth in volume day by day. But, there is also a negative corner to it, many times retail investors’ loose money in commodity market. Why this happens…..There is no fantastic market than it, then also why we are not able to make money in this market? Lack of knowledge of market is the major reason behind it. In this post, we have taken a view of factors which affects commodity market. Hopefully it will helpful to commodity traders.

  • First of all we should understand that though we are trading in Indian exchanges, domestic events have a very small role to play in commodities unlike to equity markets. Data releases from United States, European countries, Major metal consumer/producers countries like China, Chiele have major role to play in commodity market.
  • Indian market takes clue from International market like NYMEX (New York Mercantile Exchange), LME (London Metal Exchange) and varies accordingly.
  • Demand-Supply: More is demand; there will be more price rise. There is daily, weekly inventory data release from London metal exchange.Demand supply ratio can also be changed due to events like labor strikes at important strikes, environmental issues, Geopolitical situations etc.
  • Major factor which affects the base metal prices is Jobless Data (Unemployment claims) release from US. It is an indicator which majors the number of individuals who filed for unemployment insurance with the government for the first week than in the last week. In general, higher is unemployment, bad news for base metals and dollar which is U.S. currency.
  • Next important release is GDP release. GDP (Gross Domestic Product) is a primary Gauge of any nation’s health. Good GDP numbers especially from US and other European countries leads to more risk taking and rise in commodities like base metals.
  • FOMC meeting releases: US Federal Reserve declares the information about economic health and Federal reserve interest rates time to time .It has instantaneous effect on marker, especially precious metals like Gold and Silver are major to affect.
  • Retail Sales: This report is change in the total value in the retail sales. Positive figures indicate economic growth.
  •          Housing starts/New Home sales: This report is a measure of the number of new residential buildings which began construction during the previous month. It’s a leading indicator of economic health because building construction produces a wide-reaching riffle effect.
  •  Crude oil inventories are released normally on Wednesday (8 Pm IST),, has instantaneous effect on crude oil prices.
  • Natural Gas inventories are released, In general every Thursday (8:30PM IST).Report has instant effect on Natural Gas prices.

These are the very common factors. Traders are advised to keep close watch on datas time to time and avoid taking position before major release.

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Information provided on this blog is for general purpose only & not investment advice.Please take advice of SEBI Registered Investment Advisors before taking any investment decision.
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