Shun The bond & invest in the Gold

The indiscriminate use of monetary policy by the governments to curb the recession, lead unprecedented budget deficits. They have not much option left but to print the money to fill the gaps. The aftermath of this will bring up dormant monster inflation in coming time.

The long term value of paper currency if we talk in economic language is zero. The store of value hence lies in Gold. The other reason that makes Gold as a candidate of investments is in coming inflationary era, the people who are risk averse would not find bond as a safe instrument to invest. So though investment in Gold does not bring us any cash flows, but in gloomy situation when value of paper currency starts depreciating and monster inflation eats out any gain from investments in bond, and sovereign debt crisis is hovering over a region, nothing is more secured investments as Gold.

My take would be shun the bond and invest in Gold even though if it is at historically high level. J

 

Rranjan27@gmail.com

 

Beijing in a sweat as China's economy overheats - Telegraph

Beijing in a sweat as China's economy overheats - Telegraph

China Property Bubble Bursts in Bond Market as Kaisa Drops: Credit Markets - Bloomberg

China Property Bubble Bursts in Bond Market as Kaisa Drops: Credit Markets - Bloomberg

Euro is proving surprisingly popular as a funding currency-------------- Interesting story published in bloomberg

Euro is proving surprisingly popular as a funding currency

May 25, 2010

THE fastest convergence in short-term interest rates in almost a year is making the euro a surprise addition to currencies used to finance investments in higher-yielding assets.

 

"The hot guys are moving into using the euro as a funding currency," said John Taylor, who helps oversee $US7.5 billion ($9 billion) as chairman of the New York-based FX Concepts LLC, manager of the world's largest foreign-exchange hedge fund. "It's not quite as cheap as the yen but it's a lot safer in a crisis, because the worse the world looks the worse the euro looks."

 

Borrowing in euros to finance an investment in the Australian dollar, New Zealand dollar, Brazilian real and Norwegian krone returned 10 per cent in the past six months.

 

The same trade using the US dollar resulted in a 7.5 per cent loss, and a 7.4 per cent decline with the yen.

 

Deteriorating economic prospects in the euro zone have helped push down the cost of short-term borrowing in Europe relative to the US.

 

The London interbank offered rate, or Libor, for three-month loans in euros fell to within about 14 basis points of the dollar rate on May 21, according to the British Bankers Association. Libor for loans in dollars for three months was 0.497 per cent at the end of last week, compared with 0.636 per cent for euros, it said.

 

The European Central Bank's main refinancing rate is 1 per cent.

 

Bloomberg

German Business Confidence Probably Increased to Two-Year High - BusinessWeek

German Business Confidence Probably Increased to Two-Year High - BusinessWeek

NIFTY LONG TERM BEARISH…………

Yes, rightly said by NTT in his book we human tend overestimate our skill, especially in the matter of judgment. Crisis of Greece has been started to affecting our equity market badly. Now in my view Nifty or any Asian market is going to underperform in the long term. The solid reason is, though our underline economy is strong, but at the end of the day demand of our asset class determines their price. And demand not only comes through domestic side, but in the globalized world money chases cheaper assets. The debacle in euro has created many opportunities to smart money, whether in short term speculation or long term investments in the Eurozone. The calculation is simple in euro zone all are weak but not Germany and France. Smart money has spotted the opportunity to invest in their asset class, because now they are cheaper due to huge depreciation of euro. Hot money is working there in two ways in speculation & investments both. Hence we are watching the pull out of FII's money from Indian market. Simply because now they are more risk averse, looking for better opportunity (Read Euro zone) and debacle in china's economy is about to happen. The asset bubble that Chinese has created is in matter of time of will bust whether suddenly or slowly. Long term bear market is set, definitely for about a year. rranjan27@gmail.com

 

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U.S. Stock Slump Is ‘Normal Correction,’ Rogers Says (Update1) - Bloomberg.com

U.S. Stock Slump Is ‘Normal Correction,’ Rogers Says (Update1) - Bloomberg.com

Curb irrational behaviour - Investment - Money - Business - Home - smh.com.au

Curb irrational behaviour - Investment - Money - Business - Home - smh.com.au

Loook at the king of currency

                                             (dollar index against basket of major currency)

Now the confirmation...... nothing is superior then green buck....  Euro debacle helped dollar a lot....
One eyed man is really a King !!!      rranjan27@gmail.com

Alternative asset investment

 

 

 

Investment Analysis:-

Types of real property investments-----

• Raw Land
  
• Apartments
  
• Office Buildings
  
• Warehouses
  
• Community Shopping Centre
  
• Hotels & Motel
  

 

Raw Land

Appreciation is a function of demand and supply. We know while total supply of raw land is limited, but supply of urban land can be increased via addition of roads and utility services to otherwise underdeveloped raw land. Proximity to road and travel pattern directly related to value of the land.

It is passive investment, it does not provide cash flows to land holder & also do not provide depreciation for the tax purpose. Speculator invests in raw land in hopes of short term capital gain. Developer invests for long term operating need for projects.

 

Apartments'

Value determinants are population growth, location, convenience, & prestige of the locality we call it posh area.

Apartment returns are highly leveraged loan to income ratio may be upto 90%. Apartment provides tax depreciation.

In the start up phase of apartment construction there may be significant risk, because future demand can never be known with certainty.

Apartment investments are attractive to whom, who can afford large initial equity outlay. Investors who desire tax shelter are especially attracted to residential rental property investment.

 

To be continued………….

 

 

 

 

 

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Pound and Indian Rupee

 

    This is the 1 year chart of pound sterling with Indian rupee.

http://in.finance.yahoo.com/q/bc?s=GBPINR=X

              
Dear Chris,
Here I have presented the one year chart. Pound has fallen from high of 81rs to near 67rs and it is at the yearly lowest level with respect to Rupee. You might be aware that just today's Economic times headline was Rupee is at the highest level with dollar in last 19 months.


Now, how we can speculate or judge the future currency exchange rate between pound and rupee. At first we have to predict the dollar and rupee exchange rate. It is fact that rupee will appreciate against the dollar, and indeed it has appreciated since my last blog post. The reasons more or less I already discussed in my last posting.
What is the condition between pound and dollar, my friend good news is that pound will continue to depreciate against the dollar and thereby more rapidly to with the rupee, isn't it? J Think Why !


Whole Europe is in mess. A big budget hole and deficit financing will only make situation worse for their currency in near future. And London is in trouble. I will not go into all the details.


But best strategy for you that wait for at least 3 months you will get cheaper pound then what you getting right now and then take decision according to your risk appetite. You can buy half the pound amount 3 months later from now. And remaining amount at the time when you will actually go for the study. Or we can remain in touch always. Hope I helped you in some way.



Ravi Ranjan
rranjan27@gmail.com





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Dollar Dollar……………

Look this is the dollar index today, against basket of major currency. One eyed man is really a King!!!
Now USA can breathe with confidence. Aha.. J Now nothing is more secure asset then dollar itself. So again, there are many takers of US T Bills, absolutely no choice left after Euro debacle and people started to speculate over pound sterling too. We are going to feed once again USA economy so that our economy survives. What a wonderful supremacy enjoy the USA!!! Bye Bye Gold…..




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Among blinds, one eyed person is the king….

Good morning everyone,

The world of finance is really a thrilling & super dynamic. Things might appear simple but sadly it is not. Here expect the unexpected. When whole world has an eye on dollar now suddenly shifted on Euro. Thanks to Greece. Suddenly the weak dollar started to gain strength. Among the blind, "one eyed man is the king". That's what happening with the dollar, as I am writing this, news is just coming that dollar started to recede as Europe promised to help Greece. If we look to the world of finance through the frame of so called financial journalist who is in the business of telling the reason finding story of every event, it seems utterly simple. Things are much more complex and randomness factor is great.

The role of one eyed king cannot be ruled out, by simply on the news of extending helping hand by Europe to the Greece. Now the question where is the safe haven of investment. Gold is already at the high. But why we invest in gold though we know very well that we are not going to any future cash flow? Strange!!! The simplest explanation is in the gloomy situation, when risk aversion is very high we do invest in gold. Bubble in gold has been already created and I don't think that rationally we have scope of appreciation in gold. Hence the option again left with the dollar only after recent euro debacle.

World will feed again USA by parking money with US T Bills. And that will help the USA economy indirectly to come out of woods sooner than expected. Hopefully other countries too, will come out soon. J rranjan27@gmail.com

RBI in Dilemma………….

Friends, I was out of blogging due to some personal reasons, inherited laziness ..etc.. J

 

In meanwhile I am about to complete the fantastic & challenging to read book "The Black Swan". So taking lesson from the book, I restrained myself to make a prediction rather I will talk more about consequences of an event. J

Now monetary policy is due on 29^th Jan. Banks are saying that there will not be any change. But there is a case to tighten the monetary policy, FIIs are pumping money not only in equities but too in debt market in a big way. The reason is simple enough they are getting higher interest rate here plus by appreciating rupee will help them to make money too. So there is already plenty of liquidity in the system. There is going to be tough job for RBI what to do. CRR hike will suck out money from the system, but that in turn will raise the further interest rate that will not be a good news for the corporate world. As I am drafting this, NIFTY is already down 70 odd points. But no choice for RBI, neither for FIIs they are going to stay here no choices for them either.

At this juncture where inflation is all time high, economy is just recovering, plenty of money in the system and also they have to maintain the growth rate. RBI is in great dilemma but no choices left other than to tighten the monetary policy. rranjan27@gmail.com