What is our View on Gold at this moment of time?

27^th April 2020

What is our View on Gold at this moment of time?

Dear Fellow Travellers,

Greetings from Hitesh! The glitter of Gold is everlasting. Thousands of years have gone but the one thing which has stood the test of time is GOLD. When WAR like situation comes or when there is uncertainty due to any other reason (like CORONA) – the first choice of the smart investor is GOLD. The same thing can be seen in the last month. Gold has moved up from USD 1480 to USD 1780, a gain of 20% plus. In India gold has moved from Rs.41000 per 10 grams to Rs.53000 per 10 grams (Tanisq online price as on yesterday).

Many guys are expecting gold to touch Rs.82000 per 10 grams. I am sharing my view.

What is my understanding/questions?

1.  While it is a fact that price has moved up – but nobody was able to buy or sell gold/gold ornaments due to LOCKDOWN in India and World over.

2.  It means No transactions have happened for the 20% rise!! Those who have stocked are happy with the price increase calculations.

3.  But once lockdown opens – as and when it happens – will the price sustain?

4.  Gold is the only commodity that has risen in this time – stocks are down / oil is down and other commodities are also down.

5.  If I am a billionaire investor and I want to make another Billion in this market – will I buy Gold or Short Gold? 

What is the likely scenario in India post-Lockdown open?

1.  Many Residents will come out to sell their jewelry/gold at higher prices.

2.  All Jewellers will reduce their buying price of GOLD at that time (irrespective of their selling price).

3.  Their reasons would be – no demand for new jewelry at this price in their store or no cash as their shops were closed for a month or more. They are 100% right in this.

4.  So, I see effective Gold Prices for the normal seller like you and me would be low compared to the market price.

What International Cartel may do?

1.  All oil-producing countries are in soup due to Sell off in Oil due to lack of storage place and consumption. One of them is RUSSIA. Russia is having a good reserve of gold. I am sure they will take advantage of high prices to book profit and come out of their poor economic conditions.

2.  If I look at the SMARTEST of the SMART top guys – they have an opportunity to make tons of money by going short in GOLD.

3.  I will be surprised if they don’t sell GOLD till USD 1200 very fast as and when they start selling. In 2012, also they sold from USD 1900 to USD 1100.

What can drive gold prices up?

Liquidity and uncertainty are everywhere. With no suitable buying idea – that liquidity may go towards GOLD. Another reason for Gold to go up is the ability to store it easily (compared to oil). So, Gold prices may go up further before they start selling.

What should Small investors do?

If he has bought the GOLD for trading or investment purpose – he must set a target for booking profit. Ideally, he can keep rolling stop loss and ride the teji, as long as they move up the price. The advantage of this approach would be that he will be able to ride the teji along with saving his profit.

In any case, as long as Lockdown is there – nobody will be able to buy or sell Gold. So, we will have to wait to open the LOCKDOWN and see the movements thereafter.

Where will Smart Investors Invest?

Many stocks with strong fundamentals and excellent future prospects are available at attractive valuations at this moment. I would go with them rather than investing in Gold at this moment.

What NEXT?

If you really want to make big money, you have to think about what the TOP guys will do in these circumstances. Your success will depend on your accuracy of guessing there move and taking it before they take it.

We have a track record of giving our calls well ahead of the market moves and market experts. If you like our accuracy, you can contact us for personalised guidance.

Wish you all a very happy investing.

Follow me on Twitter @hiteshmparikh / WhatsApp – +91-9869425399.

Live With Passion…Invest With Passion.

Hitesh Parikh