What Happens When You Tell Indians to Stop Buying Gold

India’s demand for gold during the second quarter of 2013 topped all other countries, according to the latest World Gold Council data. As noted by GoldCore, the demand for gold in India rose to its “highest in the last 10 years,” with jewelry, bars and coins demand, capping 310 tons during the period.

You can see India isn’t the only country in the East enamored with gold. I’ve discussed many times how China’s love for physical gold has endured, as gold deliveries on the Shanghai Gold Exchange climbed to record levels and jewelry stores were flooded with buyers in Beijing, Shanghai and Guangzhou.

Now the World Gold Council (WGC) confirms that in the second quarter, 60 percent of jewelry demand and almost half of all bar and coin demand came from these two countries alone!

This tells us that the Love Trade shines on. Like gold, the Love Trade doesn’t tarnish; it holds its luster.

In India, the Love Trade holds steady in spite of the government imposing import tax hikes on gold in an attempt to reduce the country’s current account deficit. In fact, according to the WGC, gold jewelry, bar and coin demand in India alone was 70 percent stronger in the second quarter of 2013 compared to the same quarter last year.

When the increased duties were implemented, I was skeptical that gold demand would be curtailed because of India’s affinity to the precious metal.

For decades, Indian families have celebrated weddings, births, festivals and holidays centered on gold and these traditions are passed down from generation to generation. Take the wedding industry, for example, where about half of the gold that Indians buy each year is for a wedding. With an estimated 10 million weddings taking place every year in India, the country sees a lot of gold buying out of love.

India’s culture is very different from that of many Western countries.

However, the record gold buying we are seeing today isn’t only out of love. I believe Indians are also buying out of fear due to its infamously poor and corrupt government policies.

I often say how government policies can be precursors to change. Good policies can drive economic growth and markets respond positively. Bad policies can have the opposite effect. At the same time Indians buy gold out of love for their family and close friends, they are also buying gold out of protection.

Take a look at the chart below, which shows gold’s return in Indian rupee compared with gold’s return in the U.S. dollar. In the U.S., where the dollar has strengthened, gold has increased only 12 percent on a cumulative basis over the past three years. But in a country with a significantly weakening currency, gold gained nearly 50 percent.

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With the government in India recently raising its import tax for gold to 10 percent, I firmly believe Indians will continue indulging in gold, even if they have to smuggle it in.

Gold Setting Up a New Bottom

Gold is setting up a new bottom where I peg at $1550 and its next test of a new high will be $2000 by June July or later this year. It depends on the outcome of the US fiscal mess and the budget cuts.

I also feel that the US and world stock markets are threatening to crash which obviously is highly deflationary.

However making a bet, I believe the markets will not be permitted to crash. Therefore gold has a likelihood of hitting $2000 this year, or at least testing this and over the $1800 former high.

I estimate this a 75% probability.

Obviously, if the markets crash hard, then all the resource stocks crash too for a time. Gold would crash most likely for a time too. As would silver (I talk about gold all the time but silver is included to me so keep that in mind).

I suspect that the US will come up with some ridiculous compromise and the US stocks will at least be stable or even rally. This is gold bullish.
The outcome of the US fiscal sequestration the way I say here is 55%.

If US sequestration fails, I mean the avoidance of it, the chances of a major US and world stock crash in the months between now and July are 70-80 pct.

Overall the world has decided to make the central banks the guarantors of all markets for some reason. Why I can’t say. But according to my tracking of public reports, the world central banks have put out an incredible $35 trillion backing up markets of all sorts since 2007/8. Much of this was currency swaps between the US Fed and the ECB to support the Euro.

Gold Going to $2500, $3500

Then $4500… and by that time I think the US bond market will explode.

The US passed the ‘fiscal cliff’ by making an agreement to raise taxes over 600 bn and cut spending $20 bn. Wow.

In two months the US has to raise the debt limit. The Limit is already reached but the Treasury is using side measures to cover the deficit till then. Supposedly they can make a new deal.

Given the fact that the US is the only major economy with any solvency left, even with their immediate national debt at $16 trillion, and a POTUS(president of the united states) who is determined to borrow as much as possible in is his remaining time (guy has no real knowledge of much of anything really) …that

The Gold price will ratchet up inexorably this year, I would be super surprised if it did not easily break $2000 a month or two after they automatically raise the debt limit for the US in two months. In fact I think the gold price will break and hold $2000 and then immediately test $2500 for a time, before being beat back to the new low baseline, $2000, and during 2013, it will fluctuate between $2000 and let’s be a bit more generous $3000. (Really my estimate is $2000 to $2500).

But my more generous estimate will be probable. The US fiscal situation is out of control. As I stated it’s the only major economy left with some credit.

Seriously. China. Laugh. They are fake, and have a banking system far worse than US.
Europe. Laugh. Need I say more?

Japan, laugh, they are on the verge of a bond crisis and using extraordinary measures now to fund their huge deficits, and have a trade collapse and are now even on the verge of saber rattling with China over those small insignificant islands.

And THEN, we talk the war potential in Asia over this and also the Mid-East. It’s an easy call to say that gold is headed really to more like double its present numbers. Over $3000.

It is tough to catch the currency fluctuation and predict the gold price in INR but probable range will be Rs.35000/10gms to Rs.45000/10gms on higher side Rs.65000/10gms.

Dhanteras 2012, 11 November, Subh Muhurat

Dhanteras, Sunday, Kartik Kishna Paksha, 11 November 2012

In the North India, Dhanteras is celebrated with full faith and enthusiasm on Trayodashi of Kartik Krishna Paksha. Apart from Dev Dhanvantri, Goddess Lakshmi and God Kuber are worshipped on this day. Yam Dev is also offered Deep Dan on this day. it is believed, worshipping Yam Dev on this day cancel any premature death. After worshipping Yam Dev, a lamp should be lit on the entrance door facing the south direction for the whole night. Few coins and kodi are put in this lamp.


Importance of Dhanteras
Purchasing new gifts, coins, utensil and jewellery is considered auspicious. During Subh Muhurat, Puja is performed and seven cereals are worshipped. seven cereals include wheat, Urad, Moong, gram,barely and Masoor. Golden flowers are used while worshipping Bhagwati. This day, white sweets are used in form of Navedy. Worshipping of goddess Lakshmi is considered favorable on this day.

Dev Dhanwantri was born on Dhan Trayodashi. Lord Dhawantri is the doctor of all God. Hence, many new inventions in the field of medical science are started on this day. It is auspicious to buy silver on the day of Dhantares.


Dhanteras Puja Muhurat 
1. Pradosh Kal
Pradosh Kal is the time of 2 hours 24 minutes after sunset. Deep Dan and Lakshmi Pujan is considered auspicious during this time.

On 11 November 2012, sunset time will be from 17:44 to 20:08 in IST. During this period, Taurus Lagna will be the fixed Lagna from 19:05 to 20:08. The muhurat time will bring wealth in Home and family.

2. Chaughadia Muhurat
11 November 2012, Sunday 
Amrit Muhurat from 06:10 to 07:37am 
Shub Muhurat from 09:04 to 10:32 am 
Char Muhurat from 17:49 to 19:22 
Labh Muhurat from 22:27 to 24:00 

Worshiping in the above mentioned Labh Muhurat increases the benefits. By the auspiciousness of Subh Muhurat, individual gets favorable health, wealth and longevity. Worshipping is Amrit Muhurat is considered to be most favorable.


Auspicious Muhurat in Evening 
The time of Pradosh Kal,fixed Lagna from 19:05 to 20:08 will be the most auspicious for the Pujan of Dhanteras. 

What to purchase on Dhanteras 
Bringing home the silver idols of Lakshmi and Ganesha, increases wealth, success and growth at house, offices and business organisation.

Lord Dhanwantri appeared in sea with an urn, hence, there is a tradition of buying utensils of this day. It is believed buying utensils or silver increases their count by 13 times. Also, buying seeds of dried coriander and keeping them in house increases wealth. On the day of Diwali, these seeds are sown in garden or farms. These seeds are the symbol of growth and wealth increment in a person’s life.

Dhanteras Pujan
The worshipping of Dhanteras should be done in Subh Muhurat. First of all 13 lamps should be lighted and Kuber in the Locker should be worshipped. Lord Kuber is worshipped and offered flowers and it is said the I worship you Kuber lord who sits on the best plane similar to Garudamani, holding Gadha in both the hands and wearing crown on head, dear friend of lord Shiva.

After this worship with incense sticks, lamps, Navedy and chant the following mantra

'यक्षाय कुबेराय वैश्रवणाय धन-धान्य अधिपतये 
धन-धान्य समृद्धि मे देहि दापय स्वाहा ।' 


Dhanteras Story
Once upon a time, a king ruled a state. After many years, a child was born in his house. An astrologer said about king’s child that the boy will die after 4 days from his marriage.

King felt very depressed on hearing the words of astrologer. To save his son from any such incident, king had sent the boy to a place where no lady used to live nearby. Once, a princess passed from that path. Prince and princess saw each other and fascinated. They decided to get married.

According to the predictions made by astrologer, exactly after 4 days Yamdoot can to take the life of the prince. Seeing Yamdoot, wife of prince started mourning. Yamdoot requested Yamraj to tell a way to save the life of prince. Yamraj said, if ,a person who worship him on the Trayodashi night of Kartik Krishna Paksha with lamps facing the south direction then he never has the fear of sudden death. Since that day, lamps are lighted outside the house in south direction on Dhanteras.

Happy Durga Pujo 2012

Chinese and Indian physical demand for gold to support higher price in coming days

The bulk of the world's GDP growth comes from emerging markets.

Developed nations are expected to post a 1.3% GDP growth rate in 2012, versus a 5.4% pace for emerging markets, according to Nomura economists.

Meanwhile, Chinese GDP growth in 2012 is pegged at 8.1% and India's GDP pace is forecast at 5.5%, says Nomura. While both China and India have seen slower growth rates this year from 2011, it stills smokes any numbers coming out of Western Europe, the U.S. and Japan.

Gold has rallied for many reasons in recent years, including safe-haven flows, a desire for wealth preservation, concerns over currency debasement, an inflation hedge, and in response to the massive global central bank monetary policy accommodation that has flooded the world's financial system with liquidity.

But, in the years ahead, perhaps one of the most important factors for gold investors to remember is physical demand from emerging markets nations, which continue to be the engine for global GDP growth.

Chinese and Indian physical demand for gold stems from a different place than most Westerner's desire to hold gold. Eastern physical demand stems from deep-seated cultural affinity for holding the yellow metal. It is tradition; it is a sign of having made it to the middle class. It is a way to save for a dowry. Jewelry is a way to display a family's wealth.

In Indian gold markets, jewelry is not priced with a rupee amount. The "price tag" simply reveals the number of karats of gold in the necklace or bracelet. The price of the jewelry is changing with real-time changes in the spot metals markets. The seller will calculate the current price of the necklace based on the spot gold pricing. A lot more like a trading floor than a jewelry store.

China is the world's fastest growing market for gold jewelry demand, according to the World Gold Council. And, Chinese consumers seek the highest levels of jewelry, with over 80% made from 24 karat gold. India is the world's largest market for gold jewelry. In the second quarter 2012, "India and China continued to dominate global consumer demand, accounting for a combined 45% of total jewelry and bar and coin demand," the World Gold Council said.

While recent figures have shown slowdowns in some of the pace of the physical demand, the trends do remain in place, and with a deep seated cultural affinity to buy and trust in gold, those trends will continue.

Unless Western nations are able to shift the current navigation courses for their economies, it will likely be emerging markets nations that will be driving the global growth engine in years to come. With those stronger growth levels comes more citizens rising into the middle class in those emerging economies and more individuals able to reach the milestone for success in their culture—physical gold ownership.

Forget about the Fed, global central banks and the potential for future inflation, emerging market physical demand for gold will be a strong and steady support to the rising price of gold for years to come.

Golden time for GOLD

Gold is on the rise after months of sluggishness.

After all, it’s been almost a year since the $1900+ record high was reached, yet the gold price hasn’t declined even 20%. Think about it… considering the 170% gold rise (from the 2008 low to the year ago record peak), gold has only given back 19+%.

Gold’s strength reinforces the reality of an unbalanced financial world.

Accumulation time is drawing to a close, but it’s still not too late to buy new positions.

Gold will now look promising by staying above $1630, but it’ll be clearly out of the woods above its 65-week moving average at $1650. How high could gold go?

GOLD TIMING: Bottom in & poised to rise further

Many of you know the ins and outs of favorite intermediate indicator.

This is pretty technical. But if you follow along I think you’ll agree that this indicator helps measure the timing and growth potential for each intermediate gold rise, as well as the declines. It’s worked well over the years, including during the bull market of the 1970s.

Bear markets also have these intermediate moves, but with subtle differences.

Gold is a cyclical market and its moves tell us a lot about the world and other markets. Right now, it’s telling us the 11 year bull market is alive and doing well.

SO WHERE ARE WE NOW?

Here’s a twist and some food for thought…  Gold fell from its September record high almost a year ago and it declined nearly 20% to its December low. This fall alone could’ve been a D decline because the indicator fell to the low area and gold tested its moving average.  The percentage decline was also in line with former D declines.

Then the 16% rise to the February high was within reason for an A rise, while the 14% decline from the February highs to the recent May lows was also normal for a B decline.

If this proves to be the case, and the B low is complete, then gold is getting ready to take off in another C rise. And if the bull market stays true to form, we’ll see a record high reached before the leg up is over!

Once gold closes and stays above $1650, we could see it jump up to the $1700 level. Above $1700 means $1800 would be the next target.

If gold rises in a C rise, similar to the 2006-2008 C rise, gold could then reach record highs near the $2200 – $2400 level.

An Ending Made For Gold - Golden

Over the past several months, the markets have tested investors’ conviction to gold. Since February, the price of the yellow metal has steadily stepped lower, rallying somewhat in May before falling again when Ben Bernanke disappointed by not providing the U.S. with more stimulus. Meanwhile, the dollar gained ground as global investors fled the euro.

In the ongoing eurocrisis, we won’t know the details of how Europe will clean up its debt mess for a while, but we’re pretty confident the story ends well for gold.

In one possible outcome presented by Bank of America-Merrill Lynch, austerity is “not the answer on its own” when it comes to restoring confidence in fiscal policies. Take a look at the levels of household and bank debt in the U.S. compared to Europe. Over the past few years, debt in the U.S. has decreased as the private sector has delevered.

In the eurozone, though, you’ll see that banks and households have maintained status quo when it comes to their levels of debt. On all three measures, loan/deposit, household debt/disposable income and debt/income, ratios have remained around the same level, according to BofA.

BofA’s economics team says that even though the long-term refinancing operation (LTRO) has helped in Europe, about 1.7 trillion euros are required to deleverage all the banks in the region. That means there’s more work to be done for Europe via a major deleveraging process, which will undoubtedly weigh on economic growth. To keep the eurozone’s head above water, more money will likely be needed, requiring the European Central Bank to start up its printing presses similar to what we saw in the U.S. over the past few years.

As gold bugs know, when central banks increase the supply of money, currencies become devalued and investors seek a better store of value. The excess liquidity in the market has historically found its way to riskier assets, benefiting gold.

This currency devaluation is what we believe will eventually bring Indians back to gold. Take a look at what gold costs in rupees. India has seen ongoing weakness in its currency as its economy has slowed. This has kept gold near record highs, causing the Love Trade in India to stumble.

The global easing binge from central banks around the world over recent months should have translated to higher commodity prices. This has not occurred: Not only has gold declined, but the price of oil has also decreased considerably, falling from a high of $110 to $78. "Shouldn’t all this accommodative policy by the Fed, ECB, SNB, BoE and BOJ be sending commodities to the moon?”

Lower commodity prices should be a signal to central banks that they are not doing enough.There is a hefty disinflation trend developing and given the amount of debt in the system—and the weakness of global aggregate demand—any signs of significant disinflation should be cause for grave concern. We cannot mix a lot of debt with a lot of deflation—that will be the end of us.

How Gold Demand Remains Resilient

Demand for gold was relatively resilient in the first quarter of 2012, with global demand falling 5 percent on a year-over-year basis, says the World Gold Council. Marcus Grubb, managing director of investment, calls this slight quarter decline in demand “noise in the context of 22 percent rise” in the price of gold compared to first quarter of 2011. Also, gold demand was very strong in the first three months of last year.


Gold faced a complex quarter, as you can see by looking at jewelry demand by country. There was a significant rise in demand for jewelry from Russia, Egypt, Indonesia, Taiwan, and China, according to the World Gold Council (WGC) compared to the first quarter of 2011.

Demand from Russia, which increased 28 percent compared to the same time last year, not only reflects stock building, but WGC says consumers had the wind behind their backs, with “historically low inflation, GDP growth, improving consumer confidence and real wage growth.”

The WGC says that Taiwanese jewelry demand was driven by “a strong wedding season, Chinese New Year gifting and gifts for babies born so far during this auspicious Year of the Dragon.” Indonesia’s increase also most likely reflects Chinese New Year, as retailers replenished supply after a strong buying season.

And, for the second quarter in a row, overall Chinese demand was higher than Indian demand, confirming China as the world’s largest gold market, says Mr. Grubb. China’s demand in the first quarter hit a record, bucking “the global trend by surging 10 percent to reach a new quarterly high” equating to 255 tons, according to the WGC.

Strong jewelry demand was offset by several other countries, including India, which was  negatively affected by imposed taxes and jewelers’ strikes. This caused an “unsettling quarter” for the country, says the WGC, which has historically seen strong jewelry demand over past quarters.

The higher price of gold likely caused a temporary setback in demand in countries such as South Korea, Saudi Arabia and Turkey. The WGC says South Korean consumers substituted silver and lower-carat gold as a result of increased prices.

What’s important to note is that during the past few years of the bull market for gold, we’ve seen continued resiliency in jewelry demand, remaining around 50 percent of total demand, says the WGC.

Gold supply remains modest, as mine production and recycled gold supplies increased 5 percent on a year-over-year basis. Mine production alone increased only 2 percent over the previous year, says the WGC, which follows the trend over the past four years. Mr. Grubb says he sees the trend continuing that older mines in South Africa are declining in production, and the higher-than-average production is coming from China, West Africa, Turkey and parts of Asia.

Overall, Mr. Grubb believes a high level of recycling is required as mine production only meets 2,800 tons of demand. Total demand for gold in 2011 reached 4,500 tons! The only way to balance the supply with the demand: keep an elevated gold price.

Major Bottom in Precious Metals Could Occur This Week

Normally catching a bottom is not difficult. Bottoms tend to occur instantly while market tops form during a process. Yet, I’ve found that bottoms of long-term significance do not occur instantly. Like tops, they take time to develop. For example, think about late 2008 to early 2009. Commodities hit their price low in December but the bottoming process began in October and wasn’t complete until May. Emerging markets hit their low in November but the process began in October and ended in March. Returning to the present, I see that Gold and Silver look set to retest their late December lows. My work lead me to argue that the metals will successfully retest their lows and soon emerge from what in the future will be considered a major bottom in-line with 2008, 2005 and 2001.

I began with a daily chart of Gold which shows its daily closing prices and a volatility indicator. The percentage figure refers to the percent bullish reading from the daily sentiment index. As I noted recently, each bottom in Gold (except 2008) has come during a period of low and declining volatility. Volatility is currently at a 9-month low while only 7% of traders are bullish on Gold.

Next, let’s take a look at the current Commitment of Traders Report (COT) for Gold which shows the commercial short position and open interest at the bottom. The current commercial short position has reached a 3-year low while open interest recently touched a two and a half year low.

Moving to Silver, I see the metal is nearing significant support at $27. Silver closed at $28.93 and has a bit of room to fall before testing $27 and the 600-day moving average, which has been an important pivot point since late 2008. The current daily sentiment index is 16%. I think, with another day or two of weakness in Silver, the daily sentiment index would decline to single digits. I also want to note that $26 is the 50% retracement of the entire bull market.

Silver, unlike Gold, has seen more interest recently as open interest has increased since late last year. However, open interest would have to rise 40% to reach the old high. Commercial traders are net short 17.9K contracts, which is a within a whisker of the 10-year low which was reached at the end of last December. 

Consider these emerging fundamentals with technical analysis. Technicals always lead fundamentals and markets tend to look six to nine months into the future. I am not predicting imminent action from the Fed or imminent money printing from the ECB. However, I am noting the emerging positive developments which will drive precious metals higher into 2013. Policy from the east is shifting towards easy. Europe will have to embark on some major money printing likely by the end of the summer. Finally, continued weakness in US data along with the strength in US Bonds and the US Dollar will facilitate the environment for the next round of Fed action.

I anticipate a bottom this month to be followed by a higher low in July or August. The fundamentals should become more clear by the end of the summer and would drive the precious metals complex much higher during the seasonally strong period. Remember, major bottoms take some time to develop. I believe a bottom is at hand and that is why last week I began to scale into some positions.