Career Search

Thursday, January 24, 2013

Silver Gold Ratio

It recovered to 72 in 2009, but then dropped again until autumn 2010. After that, silver zoomed off again on the back of rising gold prices and ultimately peaked at an SGR near 32 in April 2011.


Today, the SGR ratio is again moving between 45 and 60. Currently, the ratio is hovering around 53, Scotiabank data shows. So how does one play this? The ratio favours silver. To reach the peak SGR of 45, silver has to rise fast even if gold remains static. Since gold prices are rising, the gap with silver is widening. This means silver still has plenty of room to jump and outpace gold's increase. Traders who swear by the ratio are, therefore, buying silver and selling gold because they believe silver will give them higher returns than the yellow metal, for now.


It is a bold move. Because going by the present demand and supply, there is no reason to expect silver to rake it in. Within India, there is no demand for silver jewellery and the market is dull, says bullion trader Prithviraj Kothari, president, Bombay Bullion Association. In the international market, there is no news of mine supply disruption to ignite the market while silver's industrial users are still in doldrums, says Lakshmi Iyer, head (fixed income and products) at Kotak Mutual Fund.


But technical traders love being contrarian. In their view, the ratio shows silver is cheap, relative to gold, which makes it a steal. With gold currently at the $1770 level, silver should be rightfully at $39 instead of the present $34.


If gold touches $2000, as is widely predicted, then silver should hit $44. How long will this gamble take to succeed is anyone's guess. It usually takes three to six months for the ratio to correct itself.
 

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

 

 

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

 

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

 

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

 

These Application Forms can be used for buying regular mutual funds also

 

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan  Invest Online
  2. HDFC TaxSaver   Invest Online
  3. DSP BlackRock Tax Saver Fund   Invest Online
  4. Reliance Tax Saver (ELSS) Fund   Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund  Invest Online
  7. SBI Magnum Tax Gain Scheme 1993   Invest Online
  8. Sundaram Tax Saver   Invest Online
  9. Edelweiss ELSS Invest Online

 

No comments: