This presentation was originally prepared to very briefly summarize the situation of the Gold on the date of preparing this. This was to inform retail investors about the situation in those days and make them understand about the complex matter in an easy to comprehend way. However, baring some economic & political confusions / complexities of those days, most part of this presentation makes sense for any given point of time. The fundamentals and concepts explained are timeless. One or the other economical and political issues keep coming back now and then and people may be surrounded by same commotion. In those times one can look back at this presentation to remind oneself about the fundamentals.

1. Hornmerchant
TM
+91 88 84 00 99 88www. Hornmerchant.com
© Hornmerchant Wealth Solutions LLP
GOLD: Summary of today’s Situation
The no. of factors on each side is just listing of them and the sizes of the boxes do not really indicate their weightage.
In fact, they are dynamic and interdependent.
Dollar Appreciation
IndianGovt. Policies to discourage
import, reduce Current Account Deficit
Fear of Cyprus selling Gold
Signs of growth in US Economy
Cyprus default
Long Term Fundamentals
Euro zone economic
uncertainties
Possible pause of US growth
recovery
Monetary easing by Govt’s
and Central Banks
Solid Factors having impact (Reasonable)
Perceptions having impact (Not-so-reasonable)
Factors which can not be estimated, expected;
may or may not have impact – small to big
23/04/2013
Consumer Perceptions,
Sentiments
Vague and ambiguous
analysis, interpretation
Reports etc

2. Hornmerchant
TM
+91 88 84 00 99 88www. Hornmerchant.com
© Hornmerchant Wealth Solutions LLP
Avg.PriceUSD
1968 2013Years
Lessons to learn for a retail investor:
• A Commodity: Gold is also a commodity and like any other commodity it is subject to ups and downs. Past
few years’ unidirectional sharp movement of Gold price makes it hard to digest the fact of steep fall.
Today’s population at large (Aged 50 and below) have not ‘realized’ or ‘noticed’ such a fall (as today’s) in
their life time. They have seen Gold Price being flattish for long and then great bull run in last decade.
This fall has given the opportunity to think. This is the time to think how much and what for we need Gold.
But certainly Gold has demonstrated it’s ‘timelessness’ for thousands of years, starting from very first
civilization. And that makes it undisputed ingredient of one’s asset portfolio.

3. Hornmerchant
TM
+91 88 84 00 99 88www. Hornmerchant.com
© Hornmerchant Wealth Solutions LLP
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Indian Consumer Price Index (World
Bank)
Cost Inflation Index (CBDT, Income
Tax Dept, Govt of India)
Gold Price Growth in India (World
Gold Council)
100
1981 2012Years
• Gold Standard: Historically Gold was ‘hedge against inflation’; i.e, in long term it always maintained its “Value” to
be equivalent to a given day’s worth and did so beyond geographic borders; that was the basis for GOLD
STANDARD (monetary system). However, after majority of the countries de-linked currency from Gold backing,
Gold’s growth is not in sync with inflation. Especially last decade’s growth of Gold is unprecedented. Several
reasons (of course very truly) may be attributed to it including the worst recession of the century.
Gold glitters more when everything
else is not. So, the question is
whether Gold is poised for great
correction after great bull run? Is it so,
if the global economy returns on
definite growth path?
Well, Gold is very seasoned asset and
it has seen and sustained so many of
such impacts. It has vast history and
future and it will maintain it’s “Gold
Standard”. But in our life span how we
can make most of it?
Read on…

4. Hornmerchant
TM
+91 88 84 00 99 88www. Hornmerchant.com
© Hornmerchant Wealth Solutions LLP
Lessons to learn for a retail investor:
• Long Term Scenario: In long term, gold price will have to increase for the following reasons / facts
 Though most of the countries are no more having Gold backed currency (‘Gold Standard’),
Governments and Central Banks of many countries maintain far bigger reserves of Gold than
consumers and retail investors
 Increasing demand (increasing population and hence per capita consumption)
 Decreasing production (Reduction in the no. of Gold mines or their production capacity)
 Increasing cost of mining and other operations
 If, now stronger currencies (EURO especially) and economies (Ex: Cyprus and other Euro zone
nations) tend to become weaker (‘less reliable’) Gold will get big push
• Short Term Scenario: As evident, Gold is in the decline mode. Few say it has stabilized now. But we think, as
on today, it is too short a period after fall to conclude so. So whether the worst is behind us? Well, we don’t
know. Certainly gold has already taken a big hit. But that doesn’t mean all the things are already priced in by
now (So that we can buy it now in large quantities and hold it for selling when it goes back to its peak level).
In any type of market, we believe in catching the trend and not the peaks and troughs. Catching the trend is
more practical than extremes. That means, in any market, it is very unlikely to successfully ‘Buy’ when a given
commodity / security is completely bottomed out and ‘Sell’ when it has reached its peak. You have to be very
‘Lucky’ for that to happen. But it is much easier to invest in systematically in the declining trend and
systematically selling in increasing trend (towards saturation point).
Hence we believe, in next 6-8 months it is advisable to have regular purchase / investment in gold.
If you already have an SIP in a Gold Fund or buying gold regularly in small quantities, it is better to increase
the SIP / regular purchase amount by 50%-100%.

5. Hornmerchant
TM
+91 88 84 00 99 88www. Hornmerchant.com
© Hornmerchant Wealth Solutions LLP
Lessons to learn for a retail investor:
• Think before you purchase / invest in Gold: Why?, How Much? and How? (While Sufficiently Considering
Typical Indian Requirements)
Immediate Consumption
Why: Daily Usage
How Much: Men - 20 g to 40 g ; Women – 40 g to 80 g
How: Buy Jewellery
Why: Occasional Usage (Marriage, Parties etc)
How Much: Men - 20 g to 40 g ; Women – 100 g to 300 g
How: Buy Jewellery. However, mostly these ornaments are most of the times not purchased at once. Most women will have a ‘wish
list’ of these ornaments and they will be purchased one by one over a period of time.
So, it is advisable to accumulate for this purpose in a systematic way through Gold Accumulation Schemes (Physical Pure Gold).
Future Consumption
Why: Child’s Marriage
How Much: As per your requirements
How: Systematic Gold Accumulation (Physical Pure Gold)
Investments
Why: Investment
How Much: As per asset allocation; total allocation to Gold as asset class, including ‘Consumable’ gold (as above) should not exceed
25% of your total investments / assets
How: Gold MF, ETF, E-Gold