Is This Gold Miner A Buy?

(click to enlarge) (Source: Yahoo Finance) Background Despite the noise and negativity surrounding the gold sector, I believe the outlook for gold investments is very positive and a variety of factors support long-term gold prices: Large gold discoveries are increasingly scarce. Major discoveries have been virtually non-existent, especially after 2004: (Source: Metals Economics CIBC) Gold demand will likely be driven by the middle classes in India and China, where jewelry is a display of coveted economic success and economic upward mobility. Central banks hold gold as a reserve asset. Gold is a safe harbor investment.

Consumers shift to unorganized retailers to buy gold jewellery

A day earlier, gold futures shrugged off a a slow start for the week to finish higher, while copper futures were punished by disappointing data out of China. Read: China exports drop unexpectedly, create deficit. High-grade copper for May delivery (HGK4) bounced back partially from Monday’s decline to gain less than a cent, or 0.4%, to $3.04 a pound. Elsewhere, April platinum (PLJ4) rose $7.70, or 0.5%, to $1,484.90 an ounce, while June palladium (PAM4) rose $1.60, or 0.2%, to $778.45 an ounce.

UPDATE: Gold finds support http://www.prweb.com/releases/the-elevation-group/aspire-magazine-feature/prweb10433128.htm on safe-haven buying

Titans management, however, says it has not noticed a shift in buying patterns, adding that smaller unorganized shops are more susceptible to the volatility in the gold market. The supply side is not impacting demand; its the weak consumer sentiment, said Sandeep Kulhalli , vice-president, marketing and retail, jewellery division, Titan, adding that a slowdown in demand due to weak economic conditions has impacted all jewellery companies. These restrictions have impacted the organized retailers much more than the unorganized channels, Said Kulhalli. For more modern firms, the procurement through official channels has caused a differentiation not only with local jewellers, but also with other international jewellery retailers, according to Vikram Raizada , executive director and chief executive officer, Tara Jewels Ltd , leading to a loss in sales from non-resident Indians as well, who are a significant part of the business. In the grey market, the jewellery will be sold at Rs.30,338 per 10 gram and in the organized showroom, with value-added tax (VAT) and all taxes (including octroi), it will be Rs.31,120 per 10 gram, said Kumar Jain, governing board of director, at lobby group All India Gems and Jewellery Trade Federation, while explaining that the price of gold is generally lower in small jewellery shops because the quality and sourcing is not guaranteed. The lower base price of gold, along with lower making charges, by visit this site smaller shops could also be swinging demand away from organized firms.

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