The document discusses gold as an investment in India. It states that gold is the most favored investment instrument in India as it provides steady returns, liquidity, and satisfaction to buyers. It also diversifies investment portfolios. The document then discusses various ways to invest in gold, including physical gold and paper gold like gold ETFs, funds, and e-gold. It provides details on the features and performance of these paper gold instruments. The document concludes by discussing historical gold import data in India and factors that could influence future gold prices.

1. GOLD MARKET
Submitted to : Mr. Himal Parikh
Submitted by : Prashant Maharshi

2. GOLD
MOST-FAVORED INVESTMENT INSTRUMENT IN INDIA
UNIQUE ASSET CLASS THAT COMBINES STEADY
RETURNS, LIQUIDITY AND AN EMOTIONAL
SATISFACTION OF BUYERS
HAS A STRONG DIVERSIFYING EFFECT ON A PORTFOLIO

3. PERFORMANCE OF GOLD

4. WAYS OF INVESTING IN GOLD
 Physical gold purchase
 Gold Coins
 Gold Bars
 Jewellery
 PAPER GOLD
 Gold ETFs
 Gold FUND OF FUND (FOF)
 E-Gold

5. GOLD-ETFs
 Offered by Mutual Fund.
 Regulated by SEBI.
 held electronically in the Demat form.

6. FEATURES
 99.5% pure.
 Transparent pricing as it is trading on bourses.
 Has high liquidity.
 No wealth tax.
 Sold at stock exchange at prevailing market price.

7. AUM GOLD-ETFs
 AUM of gold ETFs shot up from Rs 3,765 Crore to Rs
9,202 Crore.
 rise of 144% in 9 months between March-December
2011.
 In last 1 year alone, AUM has risen 153%.

8. AUM PERFORMANCE
GOLD ETFs AUM MARCH 2011 (Cr) AUM MARCH 2012 (Cr) CHANGE
Goldman Bees NA 2,960.51 -
SBI Gets 178.62 987.69 809.07
Reliance Gold 434.38 2,650.57 2216.19
Kotak Gold 257.98 1,026.58 768.6
UTI Gold 497.64 655.72 158.08
Quantam 27.37 48.24 20.87
Religare Gold 42.84 57.13 14.29
Source: amfi

9. RETURN ON GOLD-ETFs
RETURN ON INVESTMENT
GOLD ETFs
1 YEAR 3 YEAR 5 YEAR 10 YEAR
Goldman Bees 29.9 23.8 24.7 -
SBI Gets 30.7 - - -
Reliance Gold 30.4 23.8 - -
Kotak Gold 30.6 23.7 - -
UTI Gold 30.6 23.8 24.8 -
Quantam 30.6 23.8 - -
Religare Gold 30.6 - - -
Source: Capital4.com

10. YEARLY TRADED VALUE OF GOLD-ETFs
YEARS TOTAL TRADED VALUE(Rs) Y-O-Y GROWTH (%)
2008-09 1,172 -
2009-10 1,842 57
2010-11 4,047 121
2011-12 11,532 183
Source : NSE

11. GOLD-FOF
 Offered by Mutual Fund.
 Regulated by SEBI.
 Holed by Mutual Fund Units.
 1.5% expense ratio allowed.

12. FEATURES
 Purity is high.
 Pricing is transparent and standardized.
 Can be redeemed directly with the MF at day end NAV
with exit load if applicable.
 No wealth tax.
 No transaction charge.
 High liquidity.

13. E-GOLD
 Offered by National spot exchange.
 Holed by Demat Account.

14. FEATURE
 99.9% PURITY.
 Pricing is Transparent as it is traded on the
exchange.
 Better liquidity.
 Bourses responsible for security.

15. WHY PAPER GOLD BETTER?
 Paper gold are highly liquid, one can buy or sell
paper gold very fast.
 Price of the paper gold is completely transparent.
 Profits from Gold ETFs and Gold fund are treated as
long-term capital gains and are taxed at lower rate, if
holding period exceeds 1 year.
 Paper gold can be bought in small dominations.
 Paper Gold can be easily converted into physical gold
by rematerialisation. Investors can convert their E-
Gold into bars of 99.5% purity.

16. GOLD LOANS
 Gold loan is loan against Gold.
 most convenient way to receive cash in no time from
any NBFC or Bank
 consist of minimal documentation & no processing
time.

17. WHY RBI INTERFARED?
 Gold lending non banking financial companies were
lending with loan-to value ratio of 75-80%.
 Gold market in India Rs 3 trillion.
 Rs 50000 crore is with each NFBC and commercial
bank
 Rs 2 trillion is with unorganized market which is
primarily run by private money lenders.

18. RBI WATCH
 NBFC can’t grant loan above 60% of the value of gold.
 Interest rate and growth rate on gold loans to come
down.
 NBFC that have gold loans of more than 50% of their
total financial assets have to maintain Teir-1 capital ratio
of 12% from April 2014.
 Banks need to reduce their regulatory exposure to a
single co to 7.5% of their capital fund of their current
10%.

19. IMPACT ON NBFC
 Since the effect of new norms operating on gold loan
segment likely to face a huge challenge.
 Interest rates have to be brought down taking a severe hit
on margin.
 SKS microfinance ltd, which initially plan to offer gold
loan business from 200 branches is now planning to go
slow.
 SKS offering gold loan at 27 branches and has a Rs 24
crore book.

20.  Manappuram finance ltd and Muthoot finance ltd that had
70-100% business growth in past few years, On 25 April,
Manappuram finance rose by 0.17% to Rs 29.8 and muthoot
finance fell 0.89% to Rs 122.35 on BSE.
 Since new norm came into effect in March, Manappuram has
fallen to 34.22% and muthoot finance has dropped 24.82% on
BSE and due to which BSE dropped 2.56%.
 Loan-to-value of gold loan firms 73-75%.
 They registered annual growth of 55% in FY 2012 after 100%
growth in FY 2011.

21. HISTORICAL DATA OF IMPORTS
YEAR IMPORTS (Billion $) CHANGE (Billion $) CHANGE (%)
2007-08 15 - -
2008-09 22 7 46.67
2009-10 30 8 36.36
2010-11 33 3 10
2011-12 58 25 75.75
Source: Article

22. WHERE GOLD IS HEADED?
 When one started to believe that Euro zone crisis is under control
the biggest worry sprouts up that it may spread to other nations.
Recently US have lost its AAA tag and investors are losing its faith
in fiat currency and getting into gold.
 Central bank has also started buying Gold for diversification
purpose.
 Shimmering tension in west Asia and US-Iran stand-off over Iran’s
plan to develop nuclear technology are also fueling the spurt in Gold
prices. Price of Gold has strong correlation with crude oil prices.
 The undertone in gold is still very bullish and one can expect a gain
of 15-20% from current level in one year.

23.  There has been 12% gain in dollars which has
cushioned the price of gold in India.
 Demand for gold in China is picking up, which
overtook India as the biggest consumer of gold in
October- December 2011.
 World Gold Council estimates that china will unseat
India as the biggest gold market in 2012.

24. WHY INVEST IN GOLD?
 Gold is considered as a hedge against investment.
 Gold is an efficient store of value during uncertainty
as value of gold cannot be manipulated by monetary
policies of the nation or a government.
 Gold has little correlation with other asset classes,
such as equity and debt, which help diversify
portfolio.

25. INVESTORS REASON TO INVEST IN GOLD
 Investment option
 As when the market is volatile investor tends to
move from risky assets to the assets like gold. Gold is
traded on a ddollar-denominated basis. In the time
of crisis, capital often flow out of emerging market
this strengthen the dollar against emerging market
currency. The hike in gold price is due to increase in
international gold price or by appreciation of the
dollar against rupees.

26.  Inflation-Hedge
 When economy is doing well inflation tend to
increase due to increase in demand, income and
consumption which lead to increase in cost of goods
and services and due to increase in income people
buy more car house etc which lead to increase in
price f the fuel, metals etc.
 Even at the time of inflation purchasing power of the
gold remain more or less constant as it does not
generate income stream.

27. Thank You