Gold is the bubble which can burst anytime.

No wonder! Gold is shining pretty well these days and it has substantial reasons to shine. The downgrade of the US' sovereign debt by Standard and Poor's to AA+ has given another very reason to this precious metal to show its radiance.

Until and unless the global economic instability continues, the buying euphoria among the investors wouldn't die. They are over-optimistic about the gold outlook. But, before you convert your all investments to gold, don't forget that it is trading at its all-time highs, it's a bubble which can burst one fine day. Find out why:

Speculative activities: Speculators purchase gold purely on the hope of selling at a higher price at some point of time. Ben Graham, the mentor of Warren Buffet has referred the term 'speculation' as the “greater fool” theory. That implies; “I know I am a fool to pay such a high price for an asset but I know that a greater fool will come along and pay me an even higher price.”

Speculators are risk takers, they've extra surplus to invest and bear the risk. They are quick at moving something up but are also quick at moving something down.

No supply constraint: World Gold Council statistics say, annual gold production levels from major producers are meeting up the requirement so supply constraints are not an issue, it's just the global economic slowdown driving prices high.

No dividends or interest: Gold doesn't pay any dividend or interest on investment like stocks or bonds. It's just the store of value and you can gain only if you sell it at a higher price.

Inflation: Emerging economies like India and China are the world's largest consumers of gold, but India and China are going through inflationary pressures. Government have kept interest rates high to curb stubborn inflation. Due to high interest rates, the cost living is hurting earners, savers and seniors alike, because their incomes aren't growing. If prices are too high they wouldn't be able to buy gold.

Recent inflation figures say it is still quite high than government's comfort zone so interest rates might rise again. Earners will face contraction phase further which might kill demand for gold in coming future. So if demand shrinks, prices may fall in near future.

Bottom Line: Though it is one of the hottest investments over the course and if you are the one who has missed out the rally train, you can invest now. But do not overload your portfolio only with the gold. It should comprise of your portfolio but not more than 15-20%.

You can gradually add gold in bits and pieces in your portfolio and if you feel any downward pressure to occur on gold, you can start diversifying your investments to other assets.

No upside on equities; don't enter India now: Julius Baer

In an interview on CNBC-TV18, V Anantha Nageswaran, Senior Economic Advisor to Julius Baer talks about the current global scenario after a near crisis was averted with the passing of the US debt agreement.

Below is a verbatim transcript of his interview with CNBC-TV18’s Udayan Mukherjee and Sonia Shenoy. For complete details watch the accompanying video.

Q: Are you feeling bearish about global equities or do you think we have had a lot of pain and we are ripe for some kind of a bounce?

A: The bounce was expected after the so called debt ceiling increase but is hasn’t happened. Therefore, I am not particularly positive on equities. I am negative on equities. The world has to deal with both structural issues which have not been addressed since 2008 and a cyclical slowdown, both, in the West and East due to inflation concerns and tightening that has happened so far. Overall, the backdrop for equities does not look good.

Q: The US markets have already wiped off all of their yearly gains. Do you anticipate some more of a cut in the global markets?

A: I think so. The fact is the US has now a deal which imposes a short-term fiscal retrenchment which probably is something the country does not need. In the eurozone you have two big counties, Italy and Spain are seeing their bond yields rise. In Asia, you still have inflation concerns.

If by some chance these western countries eventually adopt reflationary policies by an additional round of monetary easing, it is going to complicate the inflation challenge for Asia. So whichever way you slice the argument, I don’t see an upside for equities. In fact I see quite a bit of downside in the second half.

Q: How much lower do you think the Indian market can go?

A: In terms of Sensex, we have always managed to hold the head above 18,000. Therefore, I believe that the market hasn’t really become a value play yet. I would wait to enter into the Indian market

India may see worst growth since credit crisis: Chetan Ahya

India's economy may be headed for a sharper slowdown than most are expecting, and could see its worst growth rate since the depths of the credit crisis, according to economists at Morgan Stanley.

"Clear signs of slowdown have emerged over the last 3-4 months," Chetan Ahya, an economist at the bank said in a report. Morgan Stanley cut its growth forecast for the fiscal year ending March 2012 to 7.2% from 7.7%. That's far below the government`s forecast for growth of 8.2% for the current fiscal year.

"We believe a combination of factors - including persistently high inflation, higher cost of capital, cut in fiscal spending to GDP, weak global capital markets environment and slow pace of investment - will cause a further slowdown in growth," the report said.

Other economists are also warning of a slowdown. Credit Suisse see India`s growth rate easing to 7.5% for the next 2 years, with more risks to the downside.

"Significant pockets of vulnerability do exist in the Indian economy, with real estate, big-ticket consumer durables and capital goods set for a particularly tough eighteen months or so," the bank said in a report.

The latest sign of a slowdown came on Monday, with data showing factory expansion was at its weakest in 20 months in July. That's on top of a moderation in car and retail sales as well as construction and investment spending in July.

India's economy was able to hold up relatively well during the economic crisis thanks to monetary and fiscal stimulus, but that stimulus has come back to bite the economy in the form of high inflation, say analysts.

"Persistently higher inflation is eroding consumer purchasing power," Morgan Stanley's Ahya wrote.

India`s inflation measured by the wholesale price index (WPI) - remains elevated at 9.4%. Little wonder, the central bank has been forced to hike interest rates, despite slowing growth. The monetary tightening will be accompanied by more fiscal tightening, according to Morgan Stanley, which says the government will be forced to cut back on spending to meet its fiscal deficit target of 4.7% of GDP.

Taken together, Morgan Stanley believes India's equity market - already the worst performing in Asia this year, could fall further.

"With slowdown in overall growth, we believe investment sentiment could remain weak over the next two quarters."

Copyright 2011 cnbc.com

The bear market is starting: Marc Faber

The bear market is on its way back, economist and contrarian investor Marc Faber, the editor and publisher of The Gloom Boom and Doom Report told CNBC Tuesday.

"The bear market is starting. When you compare equities to bonds and cash I don`t think equities are very positive," Faber said in an interview.

The SandP 500 (INDEX: .spx) has risen steadily since hitting its lowest point of the previous decade in March 2009.

Markets have been more turbulent in recent months as debt crises in both the US and the euro zone threatened to damage growth there.

"The Treasury market is telling you that the economy is in recession," said Faber. "So if the bond market is telling you that the economies of the Western world are weakening, but at the same time the stock market is still relatively high, I think the stock market is vulnerable."

He added his voice to those criticizing politicians in the US and elsewhere over the current problems.

"The politicians are all useless individuals. Nobody is reducing the problems in the US or Europe, just putting on a band aid and postponing the problems endlessly," he said.

"Some analysts think that there`s a chance economic data will surprise on the upside but I think, if anything, it will be on the downside," Faber added.

He believes that some companies will start to disappoint in the second half of this year.

China Bigger Risk

Second-quarter results so far have been a mixed bag, with major European banks such as BNP Paribas and Barclays announcing disappointing results on Tuesday, while earlier in the weekMotorola and engineering giant EADS performed better than expected.

The most recent plan for US debt, which the Senate will vote on Tuesday afternoon, involves more than $1 trillion of spending cuts and a hard-won raising of the debt ceiling.

Faber argues that China disappointing "is a much bigger risk for the global economy than the US because the US is no longer a major commodities buyer".

He believes that the impact of a decline in Chinese growth on the oil price could be critical for major commodities producers like Canada, Australia and the Middle East.

"If commodity prices are falling, then commodity producers will buy fewer goods from China," he pointed out. "This is something that the world central bankers can`t deal with."

Food price inflation is more of a problem in emerging markets than in the developed world as food is typically a much bigger part of annual spend in poorer countries, Faber pointed out, arguing that this could lead to worse than expected growth in China.

Faber, who describes himself as "ultra-bearish", said that he thinks that precious metals are the best place to be at the moment.

Despite worries about major euro zone economies including Italy, he is relatively bullish on the survival of the euro.

"What surprises me more is actually the strength of the euro and that it has not collapsed yet," he said

He believes that peripheral economies which drag down the euro will eventually be "chucked out" of the single currency.

"I would have chucked out Greece three years ago, straight away, and it would have been much cheaper," Faber said.

Gold`s (Exchange: xau=) position as a safe haven will continue to keep prices close to their recent historical highs, Faber believes. He said that he would buy gold if it falls below USD 150 per ounce again.

Copyright 2011 cnbc.com

Signs of a double-dip have emerged: Meredith Whitney

Analyst Meredith Whitney said she's seeing signs of a double-dip as cities and towns continue to get squeezed by cuts in federal funding.

This is certain to get worse as Congress and President Obama try to work out a deal on the debt ceiling, she said.

"I never envisioned we would come to this point where Congress couldn`t agree on raising the debt ceiling or we`d be in this dire situation politically," the head of Meredith Whitney Advisory Group told CNBC Monday.

"Our GDP number on Friday was an indication that states and local governments, which make up 12% of GDP, are really pulling back," she added. "We're certainly in a double dip on housing," which is putting "enormous pressure on the economy."

The states most tied to housing have had to cut social programs and raise taxes, which, in turn, pushes home values down even further, she said. Those states with "clean" balance sheets in areas she calls "the emerging markets of the United States" attract more business, have more tax surpluses and don`t have to raise taxes.

Some states are in bad shape because they relied so heavily on federal stimulus money, which ran out at the end of June, she said. Forty-six states have passed balanced budgets that include big cuts.

"This affects the macro environment, this affects employment, this affects spending, this affects every corporation within the United States because so many corporations are reliant on contracts from state and local governments," Whitney said. "So this [debt crisis] situation in DC exacerbates it, but the states are in a bad situation even without the situation in DC.

Another reason she is predicting a double-dip is layoffs, citing 50,000 jobs cut just on Wall Street, with thousands more by nonfinancial firms including Merck.

"All industries will [cut staff] and then it will get really bad when the state and local governments really start to impact the corporations" when they are forced to cut back on issuing contracts, she said.

Whitney, who predicted a wave of municipal defaults earlier this year worth upwards of USD 100 billion, stood by her predictions.

Her call on defaults "is playing out exactly as I thought it would," she said, but she stressed that "muni bond defaults are just a product of overspending and overleveraging the system. The call is so much bigger than what happens in the municipal bond world."

Copyright 2011 cnbc.com

Stop wasting food, feed a billion needy

When your mother asked you to clean your plate so that no child goes hungry, she was right. It is still the easiest way to increase the world’s food supply by a third in these expensive times. In theory, that is. In reality, some kinds of wastage are harder to stop than others. ET helps you join the dots. One kind of loss is familiar. It happens on millions of small farms in the world’s poorer nations. Farm produce is lost after the harvest during storage and transportation.

Rats and insects eat into crops while heat and humidity make them rot. For farmers, each kilo lost is also income loss. But they watch helplessly as lack of scale and lack of funds put preventive measures beyond their reach. In India, such loss takes away 3% of cereal supply. Ministry of Food Processing says fruits and vegetables worth . 55,000 crore are wasted annually due to heat and poor handling. On the flipside, our small budgets make us thrifty food consumers. A family only buy enough for a week or sometimes even for that day. There are recipes for each part of a vegetable.

We eat leftovers, re-use , recycle and give away extra to the maid. Conspicuous waste is mostly at wedding and festival feasts. Entire distribution chains have developed for handling waste. Cooking oil is a classic example. India’s better hotels change their frying oil frequently. The used oil is systematically collected, cleaned and sold to smaller restaurants, cafeterias and canteens. Secondhand oil from these kitchens is bought by the neighbourhood halwa . Their residue is sold to roadside dhabas and vendors. Not a drop is wasted. In China, 3 million tonnes 'ditch oil' collected from restaurants and even trash heaps is consumed annually , according to one investigative report.

This extreme food recycling is illegal and hazardous for health. But you get the picture. A different kind of waste occurs in developed countries. Rich countries produce 900 kg food for each person, two times more than the poorest regions. Little is lost postharvest . But 40% of this food is wasted in the kitchen and supermarket . Retailers reject any fresh produce that doesn’t look just so. Consumers over-stock their fridge, tempted by "Buy three, pay two" type promotions . Oversized ready-to-eat meals make it tough to finish a portion .

A UK government agency survey says British households throw away 8 million tonnes of food and drink every year, 60% of which could have been eaten. The sheer size of the problem is startling. FAO this month estimated consumers in rich countries waste almost as much food (222 million tonnes) as the entire net food production of sub-Saharan Africa. Each consumer in Europe and North America throws away 95-115 kg a year. Consumers in sub-Saharan Africa and South and Southeast Asia each throw away only 6-11 kg a year. Herein lies the challenge. Postharvest loss is easier to tackle because both farmers and governments are keen on a solution. The necessary technology, management and financing are all available .

Waste in rich nations is cultural and goes deeper. Until consumers realize the enormity of their actions , food will continue to get trashed. Few governments have the political will to take on such a touchy subject. Awareness about recycling, composting, portion size and the carbon footprint of wasted food is spreading. As the battle with obesity shows, food habits are tough to dislodge. Compared to consumers in developed nations, we may feel smug for now. But with rising incomes, Indian consumers could well acquire equally wasteful habits.

Modern retailers, for instance, know we first eat with our eyes. Fruits and vegetables on supermarket shelves are much better looking than those sold by the roadside hawker. Great care is taken to reject “off spec” produce that is wholesome otherwise . If retailers don’t adopt a zero waste policy, over time urban fruit and vegetable shortages could worsen. Food loss and waste are a major squandering of precious resources , including water, land, energy , labour and capital.

Experts say we need 70% more food in the next 40 years. But food in dustbins shows consumer demand in developed countries may be exaggerated . By saving the one billion tonnes that is lost each year, producers and consumers can take some pressure off agriculture. And perhaps also feed the world's one billion hungry people. Cleaning up your plate is sound economic sense. Mother did know best.

Nidhi Nath Srinivas

THE ECONOMIC TIMES

टेक्निकल क्लासरूम

तकनीकी विश्लेषण क्या है?

तकनीकी विश्लेषण का मतलब होता है शेयर के भाव के चार्ट्स की समीक्षा करके भविष्य के उतार-चढ़ाव की जानकारी पता करना। यह समझना जरूरी है कि तकनीकी विश्लेषण पूरी तरह से शेयर की कीमतों पर आधारित होता है। कंपनी की मूलभूत जानकारियों, जैसे मुनाफा, बिक्री, कर्ज, का इस्तेमाल तकनीकी विश्लेषण में नहीं किया जाता है। साथ ही, विश्लेषण करते समय माना जाता है कि बाजार से जुड़ी और दूसरी सभी जानकारी उपलब्ध हैं और उनका इस्तेमाल शेयर का चार्ट बनाते वक्त किया गया है।

तकनीकी विश्लेषण का मुख्य सिद्धांत है कि शेयर बाजार पूरी तरह से पारदर्शीय है और बाजार के सभी प्रतिभागी कुशल हैं। बिना किसी ठोस कारण के शेयरों की खरीद-फरोख्त तकनीकी विश्लेषण सिद्धांतों के खिलाफ है। फंडामेंटल विश्लेषण के मुकाबले तकनीकी विश्लेषण में ज्यादा लचीलापन है। फंडामेंटल विश्लेषण शेयरों के उतार-चढ़ाव को जानने के लिए तिमाही नतीजों, आय पर गाइडेंस और कंपनी नीतियों में बदलाव पर निर्भर करता है।


अगर ये माना जाए कि फंडामेंटल विश्लेषण ही शेयरों के उतार-चढ़ाव की सही तौर पर बता सकता है, तो ऐसे में शेयरों की कीमतों में साल में 4-5 बार ही बदलाव दिखना चाहिए। लेकिन, ऐसा नहीं होता है। शेयरों के भाव रोजाना बढ़ते-घटते हैं। इस उतार-चढ़ाव के बारे में तकनीकी विश्लेषण से ही पता किया जा सकता है।

रिलेटिव स्ट्रेंथ कंपैरेटिव क्या है?

तकनीकी विश्लेषण से हम किसी भी शेयर की रिलेटिव स्ट्रेंथ कंपैरेटिव (आरएससी) पता लगा सकते हैं। रिलेटिव स्ट्रेंथ कंपैरेटिव का मतलब है शेयर के उतार-चढ़ाव की किसी सूचकांक, दूसरी कंपनी के शेयर या फिर सेक्टर से तुलना कर सकते हैं।

किसी शेयर के पिछले प्रदर्शन को जानने के लिए आरएससी का इस्तेमाल किया जा सकता है। आरएससी के नतीजों से आप जान पाएंगे कि शेयर में निवेश करना फायदेमंद रहेगा या नहीं।

जिन शेयरों में सूचकांकों से ज्यादा उतार-चढ़ाव दिखता है जरूरी नहीं है कि शेयर किसी एक दिशा में कारोबार करे। जिन शेयर का आरएससी कोअफिशन्ट ज्यादा होता है, वो शेयर सूचकांक से ज्यादा चढ़ते हैं। लेकिन, सूचकांकों के मुकाबले इन शेयरों में धीमी गिरावट दिखती है।

ऐसे शेयरों में निवेश करने से ज्यादा से ज्यादा मुनाफा कमाया जा सकता है।

कंटिन्यूएशन और रिवर्सल पैटर्न क्या होते हैं?

कंटिन्यूएशन पैटर्न की मदद से बढ़त वाले शेयरों के बारे में पता चलता है और शेयर की आगामी कीमत बताई जा सकती है। वहीं, रिवर्सल पैटर्न से कमजोरी वाले शेयरों के बारे में पता जा सकता है और उनकी कीमत का अंदाजा लगाया जा सकता है।

रिवर्सल पैटर्न से पता चल सकता है कि शेयर बाजार में तेजी जारी रहेगी या फिर गिरावट का सिलसिला शुरू होने वाला है।


चैनल, सूचकांक और ट्रेंडलाइंस कंटिन्यूएशन पैटर्न का हिस्सा होते हैं। रिवर्सल पैटर्न में आयलैंड रिवर्सल, मूविंग एवरेज क्रॉसओवर और हेड-शोल्डर फॉर्मेशन (शेयरों के वॉल्यूम में उतार-चढ़ाव का पैटर्न) शामिल होते हैं।

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