BC GOLD
Saved by @SAnngeri

Why Gold could be 'The' asset to focus on and how to play it?

In 2021, gold hasn't done much. Its down 6% YTD. It was up a clean 20% in 2020.

What could be in store ahead. A thread 🧵 explaining drivers and way ahead.

 There are 4 factors that are key to watch

1. Massive financial debasement across the world

2. Negative Real Interest rates

3. Gold's unique diversification edge

4. Incremental demand Vs limited supply
Financial debasement
US Fed's balance sheet has doubled from $4.2 trn to $8.4trn since COVID began. Similarly ECB, BOJ, BOE and EM central banks have embarked on massive monetary stimulus.

This was used to finance Govt deficit. This monetization/debasement is bullish for Gold.
Negative real rates
Gold prices follow moves in interest rates. Real interest rates are the nominal level of interest rates minus the inflation rate. Negative real rates erode the value of money. Gold being a store of value benefits from this...
Real rates are the most negative that they have been. Even junk bond yields have turned negative adjusted for inflation.
Gold moves inline with moves in real rates. With inflation still above normal trend and central banks likely to keep rates low, Gold is likely to benefit.
Gold's unique diversification edge
Gold does well when other markets aren't. In fact historically when equity markets fall or undergo consolidation, Gold performs very well.

This is because Gold prices move on the basis of incremental demand...
Given where equities are both in terms of performance (14th Yr of Nasdaq's +ve YTD) and valuations (S&P500 21X Fwd PE), Gold provides a natural hedge.

It has a unique track record as well. See image.
Demand/Supply
Gold mining output shrunk in 2019 & 2020. It is likely to shrink in 2021 as well. Gold reserves with global Gold miners are also falling since they peaked in 2013.

Gold's supply is limited and exploration is also slow paced. What moves gold is then demand.
Three demand drivers
1. Jewelry / consumption demand
2. Central Banks
3. Investment demand (ETFs)

COVID caused all the three drivers to shrink. Now all three are coming back. India's festive seasons demand is back to 100tons and growing. CBs are buying Gold again.
The investment demand for Gold is a combination of impact of real rates, performance of equity markets and price momentum for Gold.

Since supply is limited and other two demand drivers also nearly static, investment demand is the biggest driver. And this is the key.
Gold has been in a long, triangle type consolidation. This is likely to see a breakout above $1850 and a follow through could add momentum to gold prices. See image.
Another big driver for Gold is the trend in US Dollar. This year the US Dollar has risen, anti-consensus, by about 4%. Gold performers well even in a rising Dollar environment when real rates are negative and catches momentum when USD rise slows or reverses.
How to play this?
1. First it to play this move through a Gold ETFs or Sovereign Gold Bonds. Both are ideal instrument.

2. When Gold moves are structural it helps to play them through Gold mining shares or Gold mining equities.
Gold equities offer a higher beta to gold. In bull markets this beta can expand and in bear markets it is detrimental. Its cuts both ways. In structural gold bull markets, it makes sense to have exposure to Gold mining equities. $1 move in gold is 1.7X in gold mining shares.
In conclusion
a. We are likely in or entering a structural uptrend in Gold
b. Momentum and performance may gain traction ahead
c. Way to participate in either trough tradition gold bullion or ETFs/SGBs or through Gold mining equities.
One fund which plays this theme is DSP World Gold Fund.
Check details here - https://t.co/n3XouF6vFb

and here - https://t.co/FhpfSt6VRZ

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Why & how does rising Crude Oil hurt India?

A short thread 🧵

India is the 3rd largest consumer of Oil at 5.35 million barrels per day (MBPD) behind US (21.2mbpd) and China (15.1mbpd)

India imports nearly 85% of its total Crude oil consumption every year.

India's own production has been below 700,000 barrels per day for a long time.

India imports oil in the following share as per FY 21 numbers:

Iran 17%,
Saudi Arabia 16%,
UAE 14%,
USA 9%,
Qatar 8%,
Others 38%

India import share for Oil from Russia is under 2%, an insignificant number.

India imports about 290 Million tones of Oil in a year.

Assuming that Oil prices are at $75 (last year),
India's oil import bill is ~ $165bn

India exports refined petroleum products as well. At $75 oil price those exports would amount to $58bn

=Oil trade deficit of $105bn

Oil at:
$100, India's oil trade deficit (imports - exports) would be ~ $140bn

For every $10 rise in Crude Oil from say $100, India's oil trade deficit will rise by ~$15bn

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Why and when the markets stopped caring about the Russia-Ukraine conflict? A short thread🧵

The news coming in from Ukraine remains concerning with huge losses and humanitarian crisis.

But for the last 10 days the markets seems to 'Not Care' and react to the news.

Read why

Markets become very jittery if they can sense a large financial panic because of an external event.

One gauge to measure what the market is pricing-in is the funding stress indicator.

For instance, the FRA-OIS spread in US measures the funding stress in interbank markets.

The FRA-OIS spread, which measures the gap between the U.S three-month forward rate agreement and the overnight index swap rate, is an indicator similar to the TED Spread.

TED spread gained a large analyst following during the global financial crisis in 2008.

The FRA/OIS spread expanded from under 5bps to 38bps since Russia Ukraine crisis began.

The same spread had jumped to 80 from 10 during the COVID crisis scare before US Fed and other central banks stepped in.

Take a look at the graph.

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Equity, bonds and currency markets are most sensitive to problems in interbank markets. Why?

Because interbank markets runs financial markets to a very degree. From margin payment in f&o segment, to short term credit, to credit for economy ....
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Headline is a click bait, but nos are good.
Housing sales surge 113% in top 7 cities even as prices rise; massive 300% spike in Hyderabad

https://t.co/NODfkp3BxA
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The real estate market in India expanded at a CAGR of ~10% from $50bn to $120bn between 2008-17.

It's estimated to expand at a CAGR of 17.7% to $1tn by 2030. It will added $820bn in 10 years from $180bn in 2020.

Will throw a number of opportunities along the way.
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Ethanol blending as a concept has roots in 1826. In 1876 a more evolved use began. Nicolaus Otto, the inventor of the modern 4-cycle IC engine, used ethanol to power an early engine

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It's still a sunrise sector🙄
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When Ganesha was married before Kartikeya, he left in anger to Kraunch mountain. Shiva and Parvati also followed him there.


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बालक - यही तो मैं भी जानना चाहता हूँ ।

तब नारद ने आँखें बन्द कर ध्यान लगाया ।


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