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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » Gold as an Investment in Sri Lanka

Gold as an Investment in Sri Lanka

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1Gold as an Investment in Sri Lanka Empty Gold as an Investment in Sri Lanka Sat Jan 18, 2014 4:08 pm

worthiness


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Kindly forward your comments on following.

a) Current gold market trend in Sri Lanka
b) Profitability as an investment option
c) Which banks offer gold as investment portfolio ( most reliable place)
d) Commodities compete with precious metal
e) Any forecast for the year 2014

Appreciate any reference material.

Thanks

2Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sat Jan 18, 2014 7:47 pm

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
P.S
Sri Lanka has no proven commercially viable gold resources. So if you can afford there's no harm buying one or two (or more) 22k coins per year. Coins can be sold easily than (24k) biscuits.
However we will not see spikes in gold prices soon ( like it used to do couple of years back)

The only link between gold and bank should be a locker.(me thinks)

3Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 12:00 am

Antonym

Antonym
Vice President - Equity Analytics
Vice President - Equity Analytics
I have never been a big fan of gold as an investment.

The current price is US$ 1,254/oz, and forecasts from six big banks indicate an average price of US$ 1,209/oz during 2014...

http://blogs.marketwatch.com/thetell/2014/01/15/how-low-will-gold-go-in-2014-consensus-forecast-says-down-14-5/

http://www.gold.org/

4Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 12:35 am

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
May 2013 - www.gurufocus.com (warren buffets views on gold)

It is hard to imagine that at current gold prices there aren't some serious bargains to be had in this bunch, or perhaps the entire ETF is a good idea.

As I consider some investments in the junior gold mining sector I thought it would be wise to revisit the wisdom of Buffett and his thoughts on gold:

1. “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

2. “The problem with commodities is that you are betting on what someone else would pay for them in six months. The commodity itself isn’t going to do anything for you….it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something that you expect to produce income for you over time.”

3. “Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything."

4. “I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”

5. “The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.”

6. “What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As 'bandwagon' investors join any party, they create their own truth — for a while."

7. “I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that."

Source - www.gurufocus.com

5Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 1:13 am

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Another one posted in our forum on 17/04/2013

http://forum.srilankaequity.com/t27481-warren-buffett-on-gold#160285

@The Alchemist wrote:May 2013 - www.gurufocus.com (warren buffets views on gold)

It is hard to imagine that at current gold prices there aren't some serious bargains to be had in this bunch, or perhaps the entire ETF is a good idea.

As I consider some investments in the junior gold mining sector I thought it would be wise to revisit the wisdom of Buffett and his thoughts on gold:

1. “Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

2. “The problem with commodities is that you are betting on what someone else would pay for them in six months. The commodity itself isn’t going to do anything for you….it is an entirely different game to buy a lump of something and hope that somebody else pays you more for that lump two years from now than it is to buy something that you expect to produce income for you over time.”

3. “Gold is a way of going long on fear, and it has been a pretty good way of going long on fear from time to time. But you really have to hope people become more afraid in a year or two years than they are now. And if they become more afraid you make money, if they become less afraid you lose money, but the gold itself doesn’t produce anything."

4. “I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils (XOM) and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”

5. “The major asset in this category is gold, currently a huge favorite of investors who fear almost all other assets, especially paper money (of whose value, as noted, they are right to be fearful). Gold, however, has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.”

6. “What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As 'bandwagon' investors join any party, they create their own truth — for a while."

7. “I have no views as to where it will be, but the one thing I can tell you is it won’t do anything between now and then except look at you. Whereas, you know, Coca-Cola (KO) will be making money, and I think Wells Fargo (WFC) will be making a lot of money and there will be a lot — and it’s a lot — it’s a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that."

Source - www.gurufocus.com

6Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 2:03 am

Jake Sully

Jake Sully
Manager - Equity Analytics
Manager - Equity Analytics
Now the only way of profiting from gold is to smuggle as much as you can from SL to India which is happening on a mass level nowadays.
One guy I met in the airport told me he is making 1 lakh SL rupees for 20 Pnds.
But carries huge risk unless you have a buddy at customs at both ends.

7Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 5:40 am

rainmaker


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@redbulls In these forums you see a lot of people applying western investment advice to a sri lankan context.

Gold may not be a good investment for an American where inflation is very low and more accurately computed. But for a Lankan each year results in a debasement of around 7% (and that is if you follow the stats).

8Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 6:24 am

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Think you shoudl explain more  about debasement .

Technically Gold prices are governed by world market prices. For sri lankans to gain profit ( unless illegally) world prices have to go up ri or Rs has to devalue right?



@rainmaker wrote:@redbulls In these forums you see a lot of people applying western investment advice to a sri lankan context.

Gold may not be a good investment for an American where inflation is very low and more accurately computed. But for a Lankan each year results in a debasement of around 7% (and that is if you follow the stats).

9Gold as an Investment in Sri Lanka Empty Gold as an investment! Sun Jan 19, 2014 2:12 pm

kukumarx


Manager - Equity Analytics
Manager - Equity Analytics
After reading the posts on this thread, I did the following calculation!

Using the site XE.com

10 years ago, Gold was at US$ 400 an ounce and the dollar at Rs 98/-
Today Gold is at US$ 1250 and the dollar at Rs 130/-

Return in Rupees (CGAR over 10 years) 15.3%

If we look at it in US$ then the rate is 12%

But I think the value in gold is that it will hold its value irrespective of the situation in the country. So even if there is a major economic crisis in the country in which the stock and property market comes down sharply and the rupee devalues, gold will still hold its own.



Last edited by kukumarx on Sun Jan 19, 2014 9:22 pm; edited 1 time in total

10Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 2:54 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
Yeah, if you look at 10 year horizons gold should ive decent returns as you pointed out.

But 99% of the people here are asking about investing in Gold for short term I am sure.



@kukumarx wrote:After reading the posts on this thread, I did the following calculation!

Using the site XE.com

10 years ago, Gold was at US$ 400 an ounce and the dollar at Rs 98/-
Today Gold is at US$ 1250 and the dollar at Rs 130/-

Return in Rupees (CGAR over 10 years) 15.3%

If we look at it in US$ then the rate is Rs  12%

But I think the value in gold is that it will hold its value irrespective of the situation in the country. So even if there is a major economic crisis in the country in which the stock and property market comes down sharply and the rupee devalues, gold will still hold its own.

11Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 4:11 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Compare to gold some of the Bluechips gave more return in Sri Lanka.

Read the following thread, (completly)
http://forum.srilankaequity.com/t28588p25-a-walk-down-memory-lane

12Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 4:13 pm

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
The main thing you need to keep in mind with gold is, it should be done more with your excess money or as a hobby.
dont do it at a stretch.

13Gold as an Investment in Sri Lanka Empty Re: Gold as an Investment in Sri Lanka Sun Jan 19, 2014 6:43 pm

Rapaport

Rapaport
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Gold’s lost lustre takes shine off bank profits
Gold-backed loans are turning bad as the price of the precious metal falls

- See more at: http://www.echelon.lk/home/golds-lost-lustre-takes-shine-off-bank-profits/#sthash.9qywjBlX.dpuf

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