Post on 17-Aug-2014
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Everybody Loves Gold?April 15 2013
Deepak Singhwww.stateofthemarket.net
www.stateofthemarket.net
Opening Remarks
Myth: You can never lose money on Gold
Belief:
Gold has been such a rewarding investment in
last 10 years that everyone holds this
belief
Indian households have bought some US$90 bn of
gold in the last three years…..Goldman Sachs
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Here comes the shock
Dramatic Decline in Gold prices in 2013 from 1700 to now 1400
Gold now at 1410
Gold: The Bearish Era
Between 1980 and 2001Forgotten Period
Gold lost 60% of value during this period
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Gold Bearish Era: 1980-2001
Gold peaked around 700-780 in 1980-1981 and then bottomed around 250-260 by 2000…..20 long years
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Gold Super Bearish Phase: 1996-2001
It was the best economic expansion
period in US
Gold broke down below 200 week ma and
stayed below it for 5 years
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Gold: At turning point in 2001-2002?
Dramatic Breakout above 200 week ma
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Gold never looked back since then
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But now the Trend Broken
Gold Breaks down below 200 week ma
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What does it mean?
Logic:
When any asset becomes trendless…it’s less
rewarding to hold as an investment asset
Gold is set to become trendless
Gold is no more safe haven. It's is going to be very volatile on a day-to-day basis, but there will be no trend on longer-term basis….George Soros
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What does this mean for India?
Can we go back to normal period?
Will demand reduce to pre-crazy levels to sub
1% of GDP from current 2.8% of GDP?
The answer is it depends how Gold
performs from here on.
The craze for Gold shot up dramatically in last 3-4 years
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What if demand for Gold reduces?
What difference will it make for India?
As per some calculation:
It will free up $200 bn worth of cash flows over next 3-4 years to other
productive sectors of the economy.
Will it happen
?
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Thank You
• Disclaimer - The state of the market presentation is Deepak's perspective on the market. The presentation is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this presentation you agree to make no trade relying in whole or in part on the comments of the writers
• Chartsource: Chartalert.com
• You can send me feedback at 2deepaksingh@gmail.com• Twitter handle: smarket