Socgen Declares “The End of The Gold Era”.What is our call?

April 3, 2013

Socgen Declares “The End of The Gold Era”.What is our call?

Greetings from Hitesh! For a change Experts are busy giving their views on GOLD nowadays. Research guys from Societe General have come out with 27 pages report on Gold. Let us see what it says.

Call Of Societe General On Gold:-

The analysts at Societe Generale have just published a massive 27-page special report titled: “The End Of The Gold Era.”

”Our expectations for rising interest rates, driven in part by a positive view of the US economy with an associated improvement in the dollar, could be the perfect storm to start a longer-term bear market,” ( in Gold)

“Our expectations for rising interest rates, driven in part by a positive view of the US economy with an associated improvement in the dollar, could be the perfect storm to start a longer-term bear market,”

SocGen notes two statistics:-

1.   “Since the beginning of January of this year, gold ETFs have dumped roughly 140 tonnes of gold and February witnessed the largest monthly outflow on record.”

2.   “The overall investor outright short in late February by hedge funds was at its highest in 12.5 years.”

They further add……

“But inflation has so far stayed low (US inflation has been trending lower since late 2011) and now we are beginning to see:

1) The economic conditions that would justify an end to the Fed’s QE;

2) Fiscal stabilisation that has passed its inflection point; and

3) A US dollar that has begun trending higher. It seems unlikely that investors would want to add much to their long gold positions in this context.”

“Our base case is that the Fed’s balance sheet will continue to expand at $85bn/month through September, at which point purchases may be tapered modestly to $65bn/month until being fully terminated at the end of the year.”

What we had Said on 28^th June 2012 ?  

Long before all these experts could tell you, on 28^th June 2012, we had written our most read email “Should You Invest in Gold and Silver Now?” In that we had categorically said……

“With 30% down side and 30% gain…..Risk reward ratio in Gold is not favorable. However, in silver 30% down side with 60-70% gain…risk reward ratio looks favorable.”

What happened after we said the above :-

Gold has come down, while Silver had moved up from Rs.52000 per kg to Rs.64000 per kg and its again come down to 52000.

We were proven 100% Correct way ahead of the market experts.

What is our call now?

1.   If USD moves up as expected by all experts, Rupee will also go down……so the fall in Gold prices in India may not be as much as it is in Dollar terms.

2.   In order to manage the CAD, Indian Govt has already hiked Import duty in last year only. This has already increased the cost of import in India. High import cost will also take care of fall as far as Indian market’s are concerned.

3.   For international market, the assumption of Termination of QE by FED by the year end 2013, looks impossible. So, we do not see fall up to USD 1375, as these guys are talking about.

4.    We recommend investments only and only if we can make good money during our targeted period……our goal is not to go Right or Wrong.

5.   Looking at the events till July 2013, we see cherry picking opportunities in Equities rather than in Gold.

What Next?

Looking at our track record of being way ahead of the market experts, I leave it up to you to follow me or not? Our experiences tell us that those who follow us, always bless us.

You can follow my @hiteshmparikh on twitter.

If you need personalized guidance, do write to us.

Live With Passion, Invest with Passion.

Hitesh Parikh.