1. April 2011, Volume: 17
Sensex 19602.23 Nifty 5884.70 Dollar 44.36 Gold 21760 Silver 65675 Crude Oil ($) 123.70
Investeurs Chronicles
INSIDE
 Cover Story –All that
Glitters is GOLD
 Open Forum – BRICS in
search of cement
 Outlook –Copper
 News Chronicles
 In Focus – India fifth most
powerful nation
Investeurs Consulting P. Limited
S‐16, U.G.F, Green Park Ext. New Delhi‐110016, www.investeurs.com

2.
Think over this simple question: if given a choice of spending good money  Gold Bullion- Refiners produce gold bars from one
and bad money, what will you spend and what will from a part of your gram to 400ozs.
saving?
 Gold coins- Easy to keep and transport and closely
Any sane person would opt for spending bad money as soon as possible! match the price of Gold with a small premium. Most
popular are one oze coins.
Now, let’s superimpose this simple question on present global economic
condition. Economies around the world are in turmoil, some opting for  Numismatic coins. - Older coins which fit the
quantitative easing without much success and others combating resultant description of collectibles have a premium to the value
difficulties of this easing. This has led to an undercurrent of volatility in of gold included in the coin.
currency market. In such a system where paper currency is showing signs of
being dangerously expanded in supply, people, obviously will elect to hold  Gold certificates. - A certificate which represents
on to gold-good money and spend paper currency- bad money! ownership of gold bullion held by a financial institution
for convenient and safe storage. There is a fee for
Gold Investment market storage and insurance.
Gold investment worldwide has grown dramatically in the last half a decade,
but compared with the total stock of financial assets,  Gold futures and options. - A futures contract traded
gold bullion investment is still just a tiny proportion. Nevertheless, gold on one of the futures exchanges. This method is
investment market has been growing over last five years. generally leveraged and options provide price
movement much more than that of gold itself. It can be
Sales of gold jewelry across Asia are surging as the local economies boom used to sell short and can be used to benefit from a
and private investment grows, with India being the largest consumer in the drop in the price of gold.
international market. For long, gold buyers in Asia were prevented from
owning gold bullion. Hence, most popular type of gold investment used to
be gold jewelry which created asset class, "investment jewelry" in the gold
industry.

3. Identifiable investment demand, now, consists of bars, coins, and investment
 Gold Mining stocks. - Stock ownership of a company
in exchange-traded funds and similar products. This market grew by 5.5% in
traded on one of the exchanges. The price movement
2010 to 1,514 tones on the back of rising coin and bar demand. Although
is dependent not only upon the price of gold, but also
ETF inflows saw a drop in their level, primarily due to base case effect of
upon the future of the corporation and management.
extremely high levels of buying seen in 2009, yet, the total buying
It's price movement is almost always more than the
sentiments outweighed this decline.
movement of gold itself. Market Vectors Gold Miners
(Please refer to adjoining table for different types of gold investments.)
ETF (GDX) is one way to invest in stocks.
Advantages of investing in gold  Jewelry. - Representing the largest consumption of
gold each year, jewelry is a major method of savings
The obvious question which comes to mind is what makes gold such a pricey
in developing economies.
commodity? Does it find such an extensive application to command such
price? This encourages some experts to pretend gold is vital for dentistry
 Exchange Traded Funds (ETF)- Perhaps the safest
and electronics. It isn't. The fact is that gold is hardly useful at all in
method of buying and owning gold by buying shares
industry. A tiny amount finds some use as false teeth because of its
in a fund based solely on the existing market price of
inertness, and some is used in electronics because of its non-corrosive
gold. No leverage or storage problems.
nature and excellent conductivity.
But currently well over 95% of the world's gold is held as a wealth store -  Gold Mutual funds. - A relatively safe method of
either in bullion vaults or as jewelry and this happens to be the biggest buying and owning gold stocks allows the owner to
utility of gold: store of value! Its great use is as a money proxy when diversify among many stocks and allows the investing
artificial forms of money are not being properly restricted in supply. In such decisions to be made by a professional. Prices move
times gold's un-expandable supply causes it to be a much more reliable store faster and further in both directions than the price of
of purchasing power than currency. Infact, gold is not merely retention of gold
purchasing power, but a multiplication of it. Hence, gold scores impressively
on the following points:

4. Cover Story All that glitters is GOLD
1 Risk
2 4
Capital appreciation Convenience
Gold does not carry much risk as
With the emergence of Golf ETFs
Historically, gold has been the
hardly any deflation is visible in the the convenience to hold gold for
perfect hedge for inflation. Though
real sense. The real risk with buying the short term has increased many
real estate and shares beat gold
gold is in the opportunity cost of folds. Instead of holding cash for
squarely on the capital appreciation
investing in other avenues that can the short term, one can today make
front, yet, in the short run gold is a
actually give higher returns. investments in Gold ETFs.
very strong bet, compared to shares
which are highly volatile. The idea
for gold investment will be to use it
at times when the markets are Liquidity
3
falling and when the inflation is
Gold scores the highest in terms of
very high.
liquidity, compared to all other
investments. At anytime of the day
and any day gold could literally be
converted to cash.
Conclusion
Financial innovation has become a buzz word in last few years but Lehman brothers collapse and the years
subsequent to it have seen complex world of financial innovations bite back. These instruments thrive in
the opaque, off-balance-sheet environment of modern financial engineering while gold investments remain
simple and transparent.
Nevertheless when their time is up paper currencies will pour into circulation as people look to buy hard
assets, until banknotes end up simply as a heating fuel. Therein lies the highlight of gold: unlike paper
currency, gold disappears temporarily, and retains its value over the very long term.
Every few years, and when circumstances are right, gold returns!

5. Open Forum
India adds the much-needed vowel to a group of consonants in search of a meaning. Even then BRICS would still be a noun in search of an adjective.
It started as a marketing gimmick of a Goldman Sachs executive seeking business in emerging markets – Brazil, Russia, India and China (BRIC). Indians
were flattered, the Chinese were initially supercilious (how can anyone bracket China with these other three wannabes?) but it is the Russians who first
grabbed the idea, feeling bruised after their Yeltsin-era wooing of the West began to get spurned during Putin’s more assertive reign. Caught between
preening about its membership of G-8, the rich man’s club, and its desire to keep a foothold in Asia (Russia sought and secured an invitation to the East
Asian Summit), Russia founded BRICS (the S added by South Africa).
India’s initial response to BRICS was lukewarm partly because India was more focused on IBSA, that other noun without an adjective, and the emerging
East Asian Summit (EAS). If India was dealing with the other two great democracies of the developing world, Brazil and South Africa, in IBSA, and was
dealing with China in EAS, then why another summit whose only purpose it seemed was to help Russia deal with its schizophrenic existence between the
West and the Rest?
So why has India warmed up to BRICS? If the fundamental objective of Indian foreign policy is to secure a global and regional environment and key
bilateral relationships that would be conducive to the sustainability and stability of the Indian growth process, then BRICS offers one more platform.
While Prime Minister Manmohan Singh himself said famously that all summitry is tourism at public expense, it helps India to be widely engaged both as
insurance and as a means of in fact building a ‘multi-polar’ or ‘polycentric’ world that it seeks.
Prime Minister Singh told the Sanya Summit: “The challenge before us is to harness the vast potential that exists among us. We are rich in resources,
material and human. We are strengthened by the complementarities of our resource endowments. We share the vision of inclusive growth and prosperity
in the world. We stand for a rule-based, stable and predictable global order. We respect each other’s political systems and stages of development. We
value diversity and plurality. Our priority is the rapid socio-economic transformation of our people and those of the developing world. Our cooperation is
neither directed against nor at the expense of anyone.”
But China’s commitment to respecting “diversity and plurality” is still in doubt and China has not yet won Indian trust on the question of whether it
respects the territorial integrity and sovereignty of all nations and whether it stands for “a rule-based, stable and predictable global order.”
That BRICS is more a way station than a summit, is proved by the fact that most of the 23 ‘action points’ adopted through the Sanya Declaration are all
about more meetings! More than two-thirds of the 32 paragraphs of the Sanya Declaration can be lifted from many similar declarations of the alphabet
soup of plurilateral groupings and summits that have now become commonplace in the emerging multi-polar world.

6. Open Forum
The one good purpose that BRICS can still serve is to exert pressure on the West not to block the ‘Rise of the Rest’, as Alice Amsden put it in her classic
book bearing this name on the rise of ‘emerging economies’. Amsden’s ‘rest’ included, apart from China, Brazil, India and South Africa, South Korea,
Malaysia, Indonesia, Turkey and a few others, but most of them meet at the G-20 Summit anyway, so why BRICS?
Two recent developments seem to have dominated the Sanya Summit – the events in West Asia and North Africa (WANA), the economic consequences
of ‘quantitative easing’ by the US and the poor quality of global economic management by the US and EU. The Rest are worried about the way in which
the West has intervened both militarily in WANA and economically through QE2 and the mismanagement in Europe.
While these are legitimate concerns, and India ought to be concerned since global economic stability and regional political stability in WANA are vital to
India’s own national security and economic growth, it is not at all clear whether India would benefit more from standing with the protestors, Russia and
China, or working with the managers, US and EU.
India’s initial response to the popular uprisings in WANA balanced Indian economic and strategic interests with support for the democratic sentiments
of the people and for the strengthening of plural and secular political systems in the region. India showed that its foreign policy was not driven by self-
interest alone, nor by the 20th century clichés about sovereignty, but by its commitment to the building of a more plural, liberal and secular global
society.
That stance, which defines Indian foreign policy not just in terms of national interest and economic necessity, but also a moral imperative is new
direction that Prime Minister Manmohan Singh has sought to provide. This should not get diluted by an urge to cling to old doctrines, howsoever
comforting they may be in times of uncertainty and stress.
Finally, at a time when rising energy and food prices are threatening Indian economic growth, it is not clear if the BRICS have a shared agenda for
prosperity. India and China do, but Russia is a beneficiary of high energy prices and Brazil both a cause and beneficiary of high food prices.
The real world summit of consequence these days is the G-20 and at G-20 India’s individual personality, as an open economy and an open society, as a
plural democracy pursuing inclusive growth, should shine, rather than get subsumed under groupings of convenience with no character.
Source: http://www.business-standard.com/india/news/sanjaya-baru-brics-in-searchcement/432558/

7. Outlook on Copper
The commodities market seems to have regained a life of its own as evidenced by a very
Outlook
strong correlation between anything that happened on the macroeconomic front and
commodity prices in the past two years. Copper followed same sentiment.
Call Rates as on 21st April 2011  4.75%- 6.25%
Previous year was very positive for copper. In fact, by the end of the year copper Commodities
managed to rally even during times when all other commodities were losing strength. Aluminum (1 kgs) 118.05
This trend has changed recently as copper joined slump of metals and other assets. Copper (1 Kg) 416.60
Copper prices on the London Metal Exchange touched a record high of $10, 000/ ton in Zinc (1 kg) 102.80
the Asian trade on 3rd Feb, 2011. And then, prices of copper was down after Goldman Steel L(1000kg) 30400.00
Sachs warned that commodities prices will see significant declines in the short term, as As on 21 st April 2011
well as warning from Japan’s finance minister that his country could end up taking a
larger hit than first believed from damage caused by the earthquake and tsunami that Forex
hit northern Japan last month. Forward Rates against INR as on 21st April, 2011
Spot Rate 1 mth 3 mth 6 mth
US 44.37 44.65 45.22 46.07
Another concern for copper prices is rising inflation in China, which happens to be a
Euro 64.92 65.24 65.96 66.99
major consumer of the metal. It is likely inflation was up as much as 5.4% in China in Sterling 73.47 73.91 74.79 76.08
Yen 54.12 54.47 55.18 56.27
March over the same period last year and if the reported figures turn out to be accurate, Swiss 50.23 50.56 51.22 52.2
it could lead to more monetary policy tightening that could hurt further hurt demand Franc
Source: Hindu BusinessLine
for copper in the Asian nation. Libor Rates as on 21st April, 2011
Libor % 1 mth 3 mth 6 mth 12 mth
Inventories of copper in warehouses monitored by the London metal Exchange added
US 0.21 0.27 0.43 0.76
875 tons during the session to their highest levels since last June, while gains in US Euro 1.13 1.31 1.61 2.08
producer prices in March also hurt prices. Sterling 0.62 0.81 1.11 1.59
Yen 0.14 0.19 0.34 0.56
As a result of all these factors exerting pressure on copper price, metal may drop as low Swiss Franc 0.13 0.18 0.26 0.56
Forward Cover % as on April 8, 2011
as $8500 a ton in the short term.
1 mth 3 mth 6 mth
US 7.68% 7.77% 7.77%
And little change is expected by the end of the year. Price of copper is expected to be
Euro 6.00% 6.50% 6.47%
around $9400 by December 31. Sterling 7.29% 7.29% 7.20%
Yen 7.87% 7.94% 8.06%
Swiss Franc 7.99% 7.99% 7.95%
Source: Hindu BusinessLine

8. Sterlite to invest Rs 2,500 cr in Tuticorin
News Chronicles
The 12th Plan would aim at 4% growth in fears higher defaults after the rates go up in
copper plant
agriculture sector and 11-12% increase in later year.
Sterlite
Industries India Ltd (SIIL) will be
manufacturing sector to step up overall growth
doubling capacity at its copper-smelting plant South Africa: Sarb has tough call on high CPI
rate in the next Plan. The Planning Commission
here, with an investment of around Rs 2,500 Inflation was higher than expected in March
has prepared the Approach Paper to the 12th
crore. The company is hoping to complete the while retail sales growth for February slowed,
Plan wherein the major thrust of the next five
expansion by 2013. The Tuticorin facility, suggesting the central bank will have to time
year Plan would be 'Faster, More Inclusive and
ninth largest smelter in the world and largest any interest rate tightening carefully so as not
Sustainable Development'.
integrated copper road producer in Asia, to strangle growth. The South African Reserve
currently has a capacity of 400,000 tonnes per Exports post highest ever growth in 2010-11 Bank (Sarb) ended its monetary loosening
annum.. The company was also proposing a India’s merchandise exports reached $246 cycle in January, leaving the repo rate steady
water desalination plant with an investment of billion, registering a growth of 37.5 per cent again at 5.5% in March after reducing it by 650
around Rs 90 crore. while imports topped $350.3 billion, up 21.5 per basis points between December 2008 and
cent year-on-year during financial year 2010-11. December 2010.
Henkel AG set to sell off stake to Jyothy
While the recovery had been happening at a
German firm Henkel AG will sell its entire Russia: Corporate Earnings Up
sluggish rate in developed economies, bulk of
stake in Henkel India to Jyothy Laboratories, Combined pre-tax earnings at medium
the growth came from newer markets. The
maker of Ujala fabric whitener, in a rare and large enterprises soared 37.6 percent
government had set a target of achieving exports
instance of a local firm buying out an in January-February 2011 to 1.262 trillion
worth $200 billion in the last financial year. It
international brand in India. According to rubles ($45 billion), from 916.7 billion rubles
had also set an ambitious goal of realizing $450
sources Henkel AG's board last week approved in the same period of last year, the State
billion in export of goods by 2014.
the sale of its 50.97% stake in its Indian arm Statistics Service said. Companies working
to Jyothy. The negotiated price is speculated SBI blinks, withdraws teaser loans in the natural resources sector had combined
to be 50% cheaper than what Jyothy paid Barely a fortnight after Pratip Chaudhuri took profits rising 90.6 percent in January-February
Tamil Nadu Petro Products for its 14.9% stake charge as the chairman, SBI has decided to to 291.8 billion rubles. The utilities sector
in Henkel India. withdraw one of the most controversial, yet made 98.3 billion rubles, down 26.3 percent,
popular, products in the Indian banking sector and the manufacturing sector 309.4 billion
Plan panel targets 9-9.5% economic growth
in recent times. The teaser loan scheme will be rubles, up 66.4 percent from a year
in 2012-17
withdrawn from May 1. The scheme charges a previously.
The Planning Commission is aiming an
lower rate in the initial years. Teaser loans
economic growth rate of 9-9.5% for the 12th Brazil Signals More Interest Rate Increases at
account for a third of SBI’s home loan portfolio.
Five Year Plan (2012-17), up from 8.1% a ‘Softer’ Pace
The RBI has been against such schemes as it
expected for the current plan Brazil’s central bank signaled it may keep

9. raising borrowing costs for a longer period of time than many
In Focus
economists had expected after slowing the pace of rate India fifth most powerful nation
increases yesterday. The bank’s seven-member board said in a
statement that an adjustment of monetary conditions for a
“sufficiently long period” is the “most adequate” strategy to
guarantee inflation returns to its 4.5 percent target in 2012.
Chile Launches First Quick-Charging Station For Electric Cars
Chile inaugurated the first quick-charging station
for electric cars in Latin America on 20th April. The Andean
nation joins the ranks of Japan, which has 600 charging
stations, and Belgium, Portugal, the United Kingdom, Hong
Kong, the U.S., Sweden and Spain, which have another 41
stations divided among them.
Thailand: Export growth above 30%
Thai exports continued to grow at an impressive rate above 30%
in March, pushing first-quarter growth to 28.26% year-on-year,
India is the fifth most powerful country in the world. NSI 2010 placed
supported by a strong rise in farm exports, according to
India fifth in the hierarchy of top 50 nations identified on the basis of
Commerce Minister Porntiva Nakasai.Export value reached a
their GDP.
monthly record of US$21.26 billion, up 30.9% year-on-year.
Assessment based on defence capability, economic strength, effective
The country imported $19.47 billion worth of goods in March,
population, technological capability and energy security of top 50
up 28.4% year-on-year. Growth was seen in all sectors including
countries.
a 17.5% rise of raw materials and semi-finished products, 34.6%
5th most powerful country in all, 3rd in terms of population, 4th on
in capital products and 46% in fuels, reflecting high global oil
defence capabilities, 7th on economic strength, 33rd on energy security,
prices. This resulted in a trade surplus of $1.79 billion in the
34th on technology. US on top, followed by China, Japan & Russia India is
month.
trailed by S Korea, Norway, Germany, France & UK.