In March '08, in a similar post, I had advised a portfolio composition consisting of:
15% in gold: Buy at declines or invest in Gold ETF.
25% in fixed deposits
10% in government bonds or schemes like PPF etc.
10% in ULIP
Stocks
- Power generation, transmission (NTPC, BHEL, ICSA) : 5%
- Infrastructure: 5%
---- Ship-building (ABG Shipyard, Bharati Shipyard)
---- Diversified construction (L&T)
- Pharmaceuticals (Nectar LifeSciences, Ranbaxy, Dr.Reddy’s Labs ): 5%
- Mining (GMDC, NMDC): 10%
- Oil & Gas (Reliance, GAIL, ONGC): 10%
- Communications (Airtel, RComm): 5%
The price of gold in March '08 was around 12,500 rupees per 10 gram. Today it is around 15,800 i.e. an appreciation of 26%.
In the current volatile market conditions, my portfolio would be:
15% in gold: Buy at declines.
10% in silver: Avoid buying now. Wait for silver to dip by 15-20% and then accumulate
15% in fixed deposits
15% in schemes like PPF
Stocks - Avoid buying now. Buy at declines
- Power generation, transmission (NTPC, ICSA, Rural Electrification) : 5%
- Mining (GMDC, NMDC): 10%
- Gas (GAIL, Infraprastha Gas): 10%
- IT (Infosys, TCS): 5%
- Engineering (BHEL, L&T, Patel Engineering): 10%
- Infrastructure: 5%
Friday, October 9, 2009
Tuesday, October 6, 2009
Gold jewellery buyers to get 22 KT gold rates on SMS
From the Economic Times
Gold jewellery buyers can now instantly receive the latest 22 KT (carat) gold rate for Hallmarked jewellery by SMS.
As part of a new initiative to bring transparency in the jewellery trade in the country, the All India Gems and Jewellery Trade Federations (GJF) today announced that by sending an SMS 'Goldrate' to 575758, gold jewellery buyers can instantly receive the latest 22 KT gold rate for Hallmarked jewellery by SMS.
GJF's Chairman, C Vinod Hayagriv said consumers all over the country would be able to get the latest 22 KT gold rate for hallmarked jewellery instantly.
The rate would be recommendatory in nature but it would make buying jewellery easier than ever before,according to the federation.
This rate would be the recommended 22 KT hallmarked gold rate by GJF and it expects most of the country to follow the same in the interest of consumers.
The All India Gems & Jewellery Trade Federation is a national trade federation for the promotion and growth of trade in gems and jewellery across India.
Gold jewellery buyers can now instantly receive the latest 22 KT (carat) gold rate for Hallmarked jewellery by SMS.
As part of a new initiative to bring transparency in the jewellery trade in the country, the All India Gems and Jewellery Trade Federations (GJF) today announced that by sending an SMS 'Goldrate' to 575758, gold jewellery buyers can instantly receive the latest 22 KT gold rate for Hallmarked jewellery by SMS.
GJF's Chairman, C Vinod Hayagriv said consumers all over the country would be able to get the latest 22 KT gold rate for hallmarked jewellery instantly.
The rate would be recommendatory in nature but it would make buying jewellery easier than ever before,according to the federation.
This rate would be the recommended 22 KT hallmarked gold rate by GJF and it expects most of the country to follow the same in the interest of consumers.
The All India Gems & Jewellery Trade Federation is a national trade federation for the promotion and growth of trade in gems and jewellery across India.
Demise of the dollar
An article in Britain's Independent newspaper on Tuesday rightly attracted a lot of market attention with its provocative heading "The demise of the dollar". While subsequent and almost co-ordinated denials from numerous capitals have taken the steam out of the story, the dollar's role is again under scrutiny.
While the geopolitical realities of the Middle East would arguably rule out the re-pricing of oil in non-dollar currencies at this time, that may change in the future.
Alarmist conclusions that the dollar is on a swift road to ruin are wide of the mark. The road will be long and at its end the dollar will not be ruined, but it will be less important. The dollar remains, however, on the back foot as the story resonated with a market that was already looking for an excuse to unload the greenback. Sovereign reserve managers, working for future generations, will have taken note. These stories add to the uncertainty of holding vast sums of dollars in trust.
Complete story here
While the geopolitical realities of the Middle East would arguably rule out the re-pricing of oil in non-dollar currencies at this time, that may change in the future.
Alarmist conclusions that the dollar is on a swift road to ruin are wide of the mark. The road will be long and at its end the dollar will not be ruined, but it will be less important. The dollar remains, however, on the back foot as the story resonated with a market that was already looking for an excuse to unload the greenback. Sovereign reserve managers, working for future generations, will have taken note. These stories add to the uncertainty of holding vast sums of dollars in trust.
Complete story here
GAIL to buy spot LNG from end-Oct/Nov
As recommended in my earlier blog on GAIL, I still think it is a value pick. At the time of writing this, it is trading at 365.10 on the BSE with a volume of 18,24,093 shares in a day.
The article from the Economic Times given below strengthens my view of investing in GAIL. Put it on your watch list and accumulate on declines.
Gas transporter GAIL (India) will start importing liquefied natural gas every month from end-October or November to meet growing local
demand for the cleaner fuel, Chairman B.C. Tripathi said on Tuesday.
India is emerging as a key LNG market in Asia when traditional buyers like Japan and China are cutting purchases. Spot buying by Japan was dwindling with nuclear reactors back in action, while China's August LNG imports fell 30 percent as peak summer demand drew to an end.
"We need gas," Tripathi told Reuters in an interview. "All depends on availability and who gives at what price."
He said GAIL, which had previously imported two LNG cargoes in 2006 from Algeria on its own, could again either directly buy the gas or purchase from Petronet LNG Ltd and Hazira LNG Ltd that have LNG terminals in the western state of Gujarat.
Petronet has a 10 million tonne terminal at Dahej while Hazira, in which Royal Dutch Shell and Total hold stakes, has a capacity for 3.6 million tonnes a year.
GAIL supplies 11 million cubic metres a day (mmscmd) of LNG from Dahej to Indian firms. It along with state firms Indian Oil Corp and Bharat Petroleum Corp have the marketing right for LNG regassified at Petronet's terminal.
Gas supplies from Reliance Industries -operated fields in Krishna Godavari basin, off India's east coast, were expected to curb LNG demand but gas flows are not in full swing.
Reliance Executive Director P.M.S. Prasad said last month his firm was producing about 60 percent of its 60 mmscmd capacity as the government has selected customers for only 40 mmscmd.
"There is still demand in market," said Tripathi, who took over as head in August. "Currently it is 140 mmscmd and market can easily absorb another 10-15 mmscmd gas."
He said many industries such as steel plants were waiting for allocation.
REVENUE SOURCE
"With our imports going up I will earn some marketing margins too," Tripathi said.
GAIL currently transports a total of 85 mmscmd of gas but it is not allowed to earn marketing margins on 50 mmscmd that is produced from fields awarded to state firms on nomination basis.
For the 35 mmscmd GAIL charges marketing margin varying from 12-17 cents per million British thermal units.
The transporter has sought government permission for charging marketing margins to cover some of its debt and investment on market development, Tripathi said last week.
GAIL is currently executing projects worth 300 billion rupees ($6.2 billion) to almost double its transmission capacity to 300 mmscmd from current 155 mmscmd.
"Some of our pipelines will be completed in December and then the demand for gas will further rise," he said.
The article from the Economic Times given below strengthens my view of investing in GAIL. Put it on your watch list and accumulate on declines.
Gas transporter GAIL (India) will start importing liquefied natural gas every month from end-October or November to meet growing local
demand for the cleaner fuel, Chairman B.C. Tripathi said on Tuesday.
India is emerging as a key LNG market in Asia when traditional buyers like Japan and China are cutting purchases. Spot buying by Japan was dwindling with nuclear reactors back in action, while China's August LNG imports fell 30 percent as peak summer demand drew to an end.
"We need gas," Tripathi told Reuters in an interview. "All depends on availability and who gives at what price."
He said GAIL, which had previously imported two LNG cargoes in 2006 from Algeria on its own, could again either directly buy the gas or purchase from Petronet LNG Ltd and Hazira LNG Ltd that have LNG terminals in the western state of Gujarat.
Petronet has a 10 million tonne terminal at Dahej while Hazira, in which Royal Dutch Shell and Total hold stakes, has a capacity for 3.6 million tonnes a year.
GAIL supplies 11 million cubic metres a day (mmscmd) of LNG from Dahej to Indian firms. It along with state firms Indian Oil Corp and Bharat Petroleum Corp have the marketing right for LNG regassified at Petronet's terminal.
Gas supplies from Reliance Industries -operated fields in Krishna Godavari basin, off India's east coast, were expected to curb LNG demand but gas flows are not in full swing.
Reliance Executive Director P.M.S. Prasad said last month his firm was producing about 60 percent of its 60 mmscmd capacity as the government has selected customers for only 40 mmscmd.
"There is still demand in market," said Tripathi, who took over as head in August. "Currently it is 140 mmscmd and market can easily absorb another 10-15 mmscmd gas."
He said many industries such as steel plants were waiting for allocation.
REVENUE SOURCE
"With our imports going up I will earn some marketing margins too," Tripathi said.
GAIL currently transports a total of 85 mmscmd of gas but it is not allowed to earn marketing margins on 50 mmscmd that is produced from fields awarded to state firms on nomination basis.
For the 35 mmscmd GAIL charges marketing margin varying from 12-17 cents per million British thermal units.
The transporter has sought government permission for charging marketing margins to cover some of its debt and investment on market development, Tripathi said last week.
GAIL is currently executing projects worth 300 billion rupees ($6.2 billion) to almost double its transmission capacity to 300 mmscmd from current 155 mmscmd.
"Some of our pipelines will be completed in December and then the demand for gas will further rise," he said.
Sunday, October 4, 2009
Amid Surging Gold Prices, Silver Quietly Shines
All that glitters is not gold.
Though the yellow metal has captured much of the limelight amid its recent run past $1,000 an ounce, silver has quietly enjoyed its own bull market. The metal is up about 47% so far this year, recently topping $17 an ounce, though it has since slipped to about $16.65.
Silver is caught between two worlds. It's a precious metal accumulated by investors and central banks as a quasi-currency. And it's an industrial metal with an increasing number of applications in health care, electronics and even food and clothing, where silver's antibacterial properties are taking hold.
The question for investors: Which side of silver carries more weight? That answer will help determine where prices head from here.
Silver is mainly recovered as a by-product of lead, zinc, copper and gold mining. For the past few years, demand for silver has exceeded new supplies.
Central governments, in selling off their silver inventories, have helped fill the imbalance, says Brad Kopp, director of investor relations at Silver Wheaton Corp., which owns the rights to silver production at certain mines.
The financial crisis, however, has equalized supply and demand. The use of silver in industrial applications slipped to 447 million ounces in 2008, down from nearly 454 million ounces the year before, according to the Silver Institute, a non-profit association. GFMS Ltd., a London-based precious-metals consulting firm, says fabrication demand in 2009 is weaker still and will mark a multiyear low.
Industrial demand is expected to rebound next year as the global economy recovers. Moreover, new applications are emerging that could further increase demand for silver. Nanotechnologies incorporating silver in antimicrobial coatings for medical devices are gaining ground, as is the use of silver in photovoltaic cells in the solar-power industry; a rechargeable silver-zinc battery is also on the way. Under development is a wood preservative made from silver that could replace the long-popular chromated copper arsenate that's under attack in many parts of the world.
Whether these new technologies will increase the amount of silver used by industry—and, ultimately, a spike in silver prices is hard to judge, though, "because over time alternatives are developed that allow production to switch to a cheaper metal," says Neil Meader, research director at GFMS. Additionally, some applications, even if they're widespread, don't necessarily require a vast amount of silver. "Anything with 'nano' in it, for example, doesn't use very much silver at all," says John Reade, a metals analyst at UBS Securities in London.
All of that means silver's precious-metal characteristics are driving prices at the moment. With inflation anxiety mounting, and with the health of the U.S. dollar in question, investors and speculators have been buying silver coins, bullion and exchange-traded funds to hedge against the possibility of a plunging greenback and broadly rising prices for goods and services caused by U.S. fiscal woes and the federal government's spending and stimulus plans. So far this year investors have sunk nearly $826 million into the iShares Silver Trust ETF, according to Lipper FMI. That's close to equaling the $911 million pumped into that ETF in all of 2008.
Meanwhile, silver-centric stocks like Silver Wheaton have nearly doubled this year as investors seek a leveraged play on the silver market. As silver prices rise, share prices for mining-related companies respond faster because of the large sum of ounces a company controls.
But if investor demand wanes for whatever reason, says GFMS's Mr. Meader, "silver prices retreat because industrial demand won't grow fast enough to match the loss of the investor."
Moreover, prices likely retreat at a pace faster than gold because silver "is a smaller, much-more volatile market," says Brian Hicks, co-manager of U.S. Global Investors' Global Resources Fund.
For the time being, then, silver remains more precious than industrial. And if the two forces propelling the metal's rising price—fear of inflation and a weakening dollar—reverse course, says UBS's Mr. Reade, "silver falls maybe into the single digits again."
Original article by Jeff D.Opdyke, from the The Wall Street Journal
Though the yellow metal has captured much of the limelight amid its recent run past $1,000 an ounce, silver has quietly enjoyed its own bull market. The metal is up about 47% so far this year, recently topping $17 an ounce, though it has since slipped to about $16.65.
Silver is caught between two worlds. It's a precious metal accumulated by investors and central banks as a quasi-currency. And it's an industrial metal with an increasing number of applications in health care, electronics and even food and clothing, where silver's antibacterial properties are taking hold.
The question for investors: Which side of silver carries more weight? That answer will help determine where prices head from here.
Silver is mainly recovered as a by-product of lead, zinc, copper and gold mining. For the past few years, demand for silver has exceeded new supplies.
Central governments, in selling off their silver inventories, have helped fill the imbalance, says Brad Kopp, director of investor relations at Silver Wheaton Corp., which owns the rights to silver production at certain mines.
The financial crisis, however, has equalized supply and demand. The use of silver in industrial applications slipped to 447 million ounces in 2008, down from nearly 454 million ounces the year before, according to the Silver Institute, a non-profit association. GFMS Ltd., a London-based precious-metals consulting firm, says fabrication demand in 2009 is weaker still and will mark a multiyear low.
Industrial demand is expected to rebound next year as the global economy recovers. Moreover, new applications are emerging that could further increase demand for silver. Nanotechnologies incorporating silver in antimicrobial coatings for medical devices are gaining ground, as is the use of silver in photovoltaic cells in the solar-power industry; a rechargeable silver-zinc battery is also on the way. Under development is a wood preservative made from silver that could replace the long-popular chromated copper arsenate that's under attack in many parts of the world.
Whether these new technologies will increase the amount of silver used by industry—and, ultimately, a spike in silver prices is hard to judge, though, "because over time alternatives are developed that allow production to switch to a cheaper metal," says Neil Meader, research director at GFMS. Additionally, some applications, even if they're widespread, don't necessarily require a vast amount of silver. "Anything with 'nano' in it, for example, doesn't use very much silver at all," says John Reade, a metals analyst at UBS Securities in London.
All of that means silver's precious-metal characteristics are driving prices at the moment. With inflation anxiety mounting, and with the health of the U.S. dollar in question, investors and speculators have been buying silver coins, bullion and exchange-traded funds to hedge against the possibility of a plunging greenback and broadly rising prices for goods and services caused by U.S. fiscal woes and the federal government's spending and stimulus plans. So far this year investors have sunk nearly $826 million into the iShares Silver Trust ETF, according to Lipper FMI. That's close to equaling the $911 million pumped into that ETF in all of 2008.
Meanwhile, silver-centric stocks like Silver Wheaton have nearly doubled this year as investors seek a leveraged play on the silver market. As silver prices rise, share prices for mining-related companies respond faster because of the large sum of ounces a company controls.
But if investor demand wanes for whatever reason, says GFMS's Mr. Meader, "silver prices retreat because industrial demand won't grow fast enough to match the loss of the investor."
Moreover, prices likely retreat at a pace faster than gold because silver "is a smaller, much-more volatile market," says Brian Hicks, co-manager of U.S. Global Investors' Global Resources Fund.
For the time being, then, silver remains more precious than industrial. And if the two forces propelling the metal's rising price—fear of inflation and a weakening dollar—reverse course, says UBS's Mr. Reade, "silver falls maybe into the single digits again."
Original article by Jeff D.Opdyke, from the The Wall Street Journal
Cautiousness, uncertainty to prevail in markets this week
Dalal Street is likely to witness some uncertainty this week, as investors are expected to trade cautiously at higher levels and take guidance from IT major Infosys Technologies, which is scheduled to announce its second quarter results this Friday.
Analysts believe the market sentiment would remain positive but investors may exercise caution ahead of the second quarter results of corporate India, starting with Infosys Technologies.
"The market is expected to trade cautiously ahead of the earnings season and the second quarter results of IT giant Infosys Technologies on October 9, may decide the market movement," SMC Global vice-president Rajesh Jain said.
Stock market across the world are trading under pressure at higher levels and at this point of time some consolidation is expected coupled with selling pressure.
Complete article at Economic Times
Analysts believe the market sentiment would remain positive but investors may exercise caution ahead of the second quarter results of corporate India, starting with Infosys Technologies.
"The market is expected to trade cautiously ahead of the earnings season and the second quarter results of IT giant Infosys Technologies on October 9, may decide the market movement," SMC Global vice-president Rajesh Jain said.
Stock market across the world are trading under pressure at higher levels and at this point of time some consolidation is expected coupled with selling pressure.
Complete article at Economic Times
Saturday, October 3, 2009
Gold mining to boom with new mining law in India
Somewhat old news but still of interest
A new legislation on mining is soon going to be in place as India plans to implement the same which is aimed to help increase the mining sector’s contribution to its economy.
The new laws will play a major part in doubling the amount contributed by the mining industry, which includes gold mining firms – to a minimum of four percent in five years’ time. They will be devised to help cut delays in the granting of permits and eventually attract investment from abroad.
India is the largest importer of the yellow metal in the world after China and consumption of gold will always be high in this country due to its traditions and customs and age old relationship with the yellow metal. And although the import side for gold is strong, India has neglected its mining capacities. If tapped well, India could have a lot of Gold mining potential.
India is estimated to have 20,000 tonnes of gold and diamond reserves spread over several states. The Indian government has asked Geological Survey of India (GSI) to explore additional reserves of gold and diamonds in Andhra Pradesh, Karnataka, Madhya Pradesh, West Bengal, Rajasthan, Bihar and Chhattisgarh.
India has been the top importer of gold for several years and the Indian government is concerned over its over-dependence on imports for its bullion needs.
The concern increased during the recession time when prices of gold shot up beyond $1,000 per ounce in the international markets. Moreover, gold has become the safest have available for investors at present.
The government has given GSI three years to explore the possibilities to tap the gold reserves. Now, India is estimated to have 14,000 tonnes of gold and diamond reserves which should be accelerated by 20,000 tonnes in next three years.
The government has also accorded the public sector company Hindustan Copper Ltd to diversify into gold and diamond mining in collaboration with leading foreign companies through setting up of joint ventures.
The overseas firms that are in talks with the government for gold and mining exploration include Indogold, Anglo-American Gold Mining, Monarach Gold Mining, De Beers India Ltd, ACC Rio Tinto Exploration Ltd and BHP Minerals.
The Indian government is taking all initiatives to channelise efforts in unearthing high value minerals like gold and diamonds. India imports Rs 65000 crore worth gold per annum as against Rs 75000 crore of diamond imports.
India currently produces hardly 0.4% of its gold consumption despite having 9% of global gold reserves under the country’s land mass.
Full article at commodityonline.com
A new legislation on mining is soon going to be in place as India plans to implement the same which is aimed to help increase the mining sector’s contribution to its economy.
The new laws will play a major part in doubling the amount contributed by the mining industry, which includes gold mining firms – to a minimum of four percent in five years’ time. They will be devised to help cut delays in the granting of permits and eventually attract investment from abroad.
India is the largest importer of the yellow metal in the world after China and consumption of gold will always be high in this country due to its traditions and customs and age old relationship with the yellow metal. And although the import side for gold is strong, India has neglected its mining capacities. If tapped well, India could have a lot of Gold mining potential.
India is estimated to have 20,000 tonnes of gold and diamond reserves spread over several states. The Indian government has asked Geological Survey of India (GSI) to explore additional reserves of gold and diamonds in Andhra Pradesh, Karnataka, Madhya Pradesh, West Bengal, Rajasthan, Bihar and Chhattisgarh.
India has been the top importer of gold for several years and the Indian government is concerned over its over-dependence on imports for its bullion needs.
The concern increased during the recession time when prices of gold shot up beyond $1,000 per ounce in the international markets. Moreover, gold has become the safest have available for investors at present.
The government has given GSI three years to explore the possibilities to tap the gold reserves. Now, India is estimated to have 14,000 tonnes of gold and diamond reserves which should be accelerated by 20,000 tonnes in next three years.
The government has also accorded the public sector company Hindustan Copper Ltd to diversify into gold and diamond mining in collaboration with leading foreign companies through setting up of joint ventures.
The overseas firms that are in talks with the government for gold and mining exploration include Indogold, Anglo-American Gold Mining, Monarach Gold Mining, De Beers India Ltd, ACC Rio Tinto Exploration Ltd and BHP Minerals.
The Indian government is taking all initiatives to channelise efforts in unearthing high value minerals like gold and diamonds. India imports Rs 65000 crore worth gold per annum as against Rs 75000 crore of diamond imports.
India currently produces hardly 0.4% of its gold consumption despite having 9% of global gold reserves under the country’s land mass.
Full article at commodityonline.com
Pakistan turns exporter of gold as prices soar
Soaring prices of gold have upset the bullion markets in Pakistan to the extent that even at the peak of wedding season there is virtually no buying of gold jewellery.
The price of gold crossed its highest mark in history by reaching Rs 31,300 per tola (11.6 gm) a fortnight ago. When the price of gold reached this level, people completely stopped buying and came in for selling. Due to increased rates, Pakistan is exporting instead of importing gold.
The yellow metal saw a sudden surge in prices at the start of this month during which the price rose about Rs 2,000 per tola. This abrupt upward rush occurred due to bulk buying of gold by India from the international markets.
India, which is one of the largest exporters and importers of gold, reportedly did the buying for the upcoming Diwali season.
Gold brokers say in the last one year gold has seen a vast increase in price in Pakistan. Last Ramazan gold stood at Rs 22,500 while this Ramazan its price rose to the unimaginable Rs 31,300, marking a 33 per cent increase.
Full article at NDTV Profit
The price of gold crossed its highest mark in history by reaching Rs 31,300 per tola (11.6 gm) a fortnight ago. When the price of gold reached this level, people completely stopped buying and came in for selling. Due to increased rates, Pakistan is exporting instead of importing gold.
The yellow metal saw a sudden surge in prices at the start of this month during which the price rose about Rs 2,000 per tola. This abrupt upward rush occurred due to bulk buying of gold by India from the international markets.
India, which is one of the largest exporters and importers of gold, reportedly did the buying for the upcoming Diwali season.
Gold brokers say in the last one year gold has seen a vast increase in price in Pakistan. Last Ramazan gold stood at Rs 22,500 while this Ramazan its price rose to the unimaginable Rs 31,300, marking a 33 per cent increase.
Full article at NDTV Profit
Impact of proposed Direct Tax Code on EPF/PPF
In response to a question of the impact of the proposed new Direct Tax Code to EPF/PPF and stocks and it's impact on gold prices, I have reproduced certain sections from a article which had come in the Deccan Herald.
Money saved in specified instruments like PPF and PF for getting tax exemption will become taxable when they are withdrawn later. These investments, when accrued, were earlier exempted from tax. The Tax Code says that under the Exempt Exempt Tax (EET) system all withdrawals will attract tax because the amount withdrawn will be treated as part of the income for that year.But in the Tax Code it is unclear if the employee’s contribution to PF and PPF will be taxed at the time of withdrawal.
The proposed Tax Code has sought to make major changes in wealth tax calculations and rates. The threshold limit for wealth tax will be raised to Rs 50 crore from the present Rs 30 lakh and the tax rate was reduced from 1 per cent to 0.25 per cent. But, in a smart move, to expand the scope of taxation the Tax Code included financial assets like shares, corporate bonds, fixed deposits, etc in wealth tax. The valuation of these assets will be done at cost or at market price, whichever is lower. In case of capital gains tax too, the Tax Code proposed some sweeping changes. It has done away with the present system of short-term and long-term capital gain tax, and replaced it with a uniform structure and gains will be taxed at the marginal tax rate as applicable to the tax payer. The implications of these changes are clear: The period of holding has no bearing on the tax payable and bigger investors will be taxed at higher rates than the smaller ones.
Complete article here
What are the implications of these on gold prices? Gold is even today considered as part of wealth and wealth tax is applicable as per current limits. While the tax on share profits would mean people moving a bit away from stocks, it might not lead them to invest in gold. Gold is traditionally seen as a hedge against inflation and not as an asset class which gives high returns.
Some more news on gold and wealth tax which might be of interest is available here
Money saved in specified instruments like PPF and PF for getting tax exemption will become taxable when they are withdrawn later. These investments, when accrued, were earlier exempted from tax. The Tax Code says that under the Exempt Exempt Tax (EET) system all withdrawals will attract tax because the amount withdrawn will be treated as part of the income for that year.But in the Tax Code it is unclear if the employee’s contribution to PF and PPF will be taxed at the time of withdrawal.
The proposed Tax Code has sought to make major changes in wealth tax calculations and rates. The threshold limit for wealth tax will be raised to Rs 50 crore from the present Rs 30 lakh and the tax rate was reduced from 1 per cent to 0.25 per cent. But, in a smart move, to expand the scope of taxation the Tax Code included financial assets like shares, corporate bonds, fixed deposits, etc in wealth tax. The valuation of these assets will be done at cost or at market price, whichever is lower. In case of capital gains tax too, the Tax Code proposed some sweeping changes. It has done away with the present system of short-term and long-term capital gain tax, and replaced it with a uniform structure and gains will be taxed at the marginal tax rate as applicable to the tax payer. The implications of these changes are clear: The period of holding has no bearing on the tax payable and bigger investors will be taxed at higher rates than the smaller ones.
Complete article here
What are the implications of these on gold prices? Gold is even today considered as part of wealth and wealth tax is applicable as per current limits. While the tax on share profits would mean people moving a bit away from stocks, it might not lead them to invest in gold. Gold is traditionally seen as a hedge against inflation and not as an asset class which gives high returns.
Some more news on gold and wealth tax which might be of interest is available here
World Bank could run out of money 'within 12 months'
The World Bank is close to running out of money, its president, Robert Zoellick, has disclosed. The Bank, whose job it is to support low-income countries, has had to hand out so much cash in the wake of the financial crisis that its resources could run dry within 12 months.
Complete article available at Telegraph.co.uk
Complete article available at Telegraph.co.uk
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