Thursday, 26 December 2013

Prospects of Gold in 2014

The subject of investing in gold evokes varied responses. Proponents of gold say that it is one of the most reliable asset classes during financial crisis and has an intrinsic value of its own. Opponents on the other hand opine that gold has little or no use, and its value is over-hyped. While there are no clear winners in the “gold debate”, it can be said that speculation in gold has always been high, and as we approach the New Year, the discussion has focused on the prospects of gold in 2014. So what does the gold have in store for all of us? We will take a look at what experts have to say about it in the following paragraphs.

Metal analyst Joni Teves wrote in a research note that gold will not perform as well in 2014 as some people might believe it to be. In the fourth quarter of this year, the talk around gold was that it can see levels of $1,325 an ounce in 2014, but now the levels are being pegged at around $1,200 an ounce. Speculating further, the report mentions that the average price of gold might not even reach $1,300 an ounce by 2017. Teves of the opinion that on a macroeconomic level, things seemed to be pretty bright and this optimism in the economy and stock markets might mean that there will be few takers for gold in 2014.

As far as the outlook on gold in 2014 is considered, it can be said that it is not that exciting at the moment. But as we have seen in the past, gold has this tendency of being a safe haven for investors in times of economic catastrophe. So one can never rule gold out as far investing is considered.

Wednesday, 27 November 2013

Why Gold might surge to the $5000 Mark by 2016 - Part 2

Coming back to the quintessential question of gold prices citing a record peak of $5000 mark, it isn’t that clarified as an axiom that the anticipated mark would be reached. Most analysts and finance contrarians look back in time to expect what the future might hold. Currently, the market statistics and finance fundamentals seem to clash and both may predict a different future scene in terms of gold prices. Whatever it is we shall discern the same here.

High Demand of Gold in the Asian Market
One of the highest driving factors in gold prices is a steep rise in the demand of gold from the Asian markets. The first half of 2013 saw an astounding flow of about 800 tons of gold bullion being exported to Asian boundaries. In the meanwhile, the same demand was reversely reflected in the form of ebbed gold holdings in the Western and European markets.  Talking of India, where the government efforts in stopping people from buying more gold, the gold demand stands anywhere around 1,000 tons per annum. Add to that smuggled gold as well. Secondly, China is soon becoming the largest gold consumer in the world, leaving India behind.

Falling numbers of Gold Mines & Repositories
Don’t just presume that all that rising gold demand will be sufficed from the Western gold shares. In fact, most of it will come from China itself, probably. China is itself the world’s largest gold producer, yet it doesn’t float its gold bullion beyond its boundaries. As the stats suggest a rising numbers of shut gold mines in the west; not because the supply has reduced but because the costs of maintaining a gold mine don’t befit gold mining as a viable business at fallen gold prices today. So you better hold onto that gold stakes you have as of now! As goes the law, shortage of supply with a high demand translates into escalated prices.

Inflation is subdued but underlying
Gold is often taken to be an inflation hedge. Post-2008, though inflation is being touted to submerge slowly but steadily, it may not, perhaps, be the case as per some industry experts. The entire inflation saga is spiral and repeated patterns keep reappearing within the market. There has been no dedicated proof expelling the direct relationship of inflation and gold prices, but a hint of which can certainly be seen from the current market trends. For now it seems that inflation is here to stay and so will eventually affect the gold prices as well.
Stay tuned for the next set of factors that will definitely decide the gold prices by 2016.

Wednesday, 30 October 2013

Why Gold might surge to the $5000 Mark by 2016 - Part 1

Talk to a thorough contrarian for five minutes and you will instantly notice the difference in you two’s opinions about the current market scene. Why would that be so? Not because a contrarian likes to contradict popular beliefs and opinions, out of habit or something like that, but because a true investment contrarian always steps back from the circle of influence to actually overview the entire scene, weigh both the sides, establish the probable pros and cons of the current market trends, and then reach to an opinion about the same. They aren’t the ones to follow the bandwagons.

The current lot of financial analysts and investment contrarians has firm beliefs of gold prices soaring up to $5000 mark by 2016. The CEO of McAlvany Fianncial Group, Mr. David McAlvany had muttered the same, back in May this year, about why one shouldn’t take the dip in gold prices (then) lightly and overlook the precious metal. He opines that, looking past the current downsize in inflation, he feels that we are closer to a major inflation scenario than anyone can really appreciate.

He also pointed out that no matter gold might be trading low at the moment (and for the past several months) investors are lacking a hindsight into the future. He means that the fundamentals of the market still remain relevant and binding on the market. When the dreaded time comes, top level segment of populous will have a situation equal to the phrase: A bird in hand is better than two in bush while for the commoners like us, those on the streets would surely get squashed like a bug!
Taking a look back at 2001, gold prices had been as low as $225 an ounce. Within a timeframe of minuscule eight years, they soared to a staggering multiple of four from that in 2001. Gold then traded at $1,100 an ounce. Bet not many contemplated the same back then in 2001. But prices soared, slowly but steadily showing a positive peak every successive year. And this pace is only expected to continue from here on. Taking cues from the 1970’s gold only seems to go much, much soaring from here.

Those who invested in gold, around 1971, did so in $42 an ounce and by the end of the decade, the same gold was traded for an $850 per ounce. Meaning, those who had an early investment in gold were benefitted by almost 2400%! Back then, too, on one probably had conceived this would happen and so are a very few now.

In the next coming part, we shall see why this forecast holds valid to an extent, when we preview and review the factors determining the hike of gold to $5000 by 2016.

Friday, 18 October 2013

Three Tips on Saving for an Emergency Fund

The economic crisis of 2007-08 made a lot of people realize the importance of having a rainy day fund. But even after a good five years after the recession, not many people have worked on improving the state of their finances. Most people are living paycheck to paycheck, and have nothing to fall back on in case things go awry. However, it is never too late to start saving for a secure tomorrow. The below mentioned points will guide you on how to go about saving for a rainy day fund.

Do an Assessment of your Financial Health

Analyzing the state of your finances will give you some clarity on how you manage your money every month, and help you in forming a strategy for your financial planning. You will get some perspective on what percentage of your net monthly income goes towards your liabilities. It will also give you an understanding of your disposable income. Depending upon the amount of ‘free money’ that you have after paying off the creditors, you should plan a strategy to allocate money to the rainy day fund. Most financial experts opine that you should ideally save 10% of your net monthly income every month. Therefore, somebody earning $50,000 per year should be looking at saving around $400 every month. This 10% is exclusive of the amount that you might be funneling into stock market or buying gold bullion. It is important to remember that there is a considerable difference between saving and investing your money. We are not dissuading you from investing; in fact, it is the only way you can grow your capital. However, you should consider investing only when you have the required emergency funds to see you through an economic crisis.

Stick to a Budget

When people are asked what stops them from saving for emergencies, one of the common answers is, “I have so many debts to take care of that I hardly have any money at the end of the month.” However, if financial experts are to be believed, most people can easily save some money, provided they stick to a budget. Most of us end up making impulsive decisions which completely hamper our plans of saving for a rainy day. When we step out in a shopping mall armed with a credit card, the likelihood of unnecessary expenditure increases, which completely offsets the important task of keeping money aside for a savings fund. Again, we want to point out that we are not telling you to live a frugal life. Buying that new car or smartphone, eating out at plush restaurants, taking a vacation – all these are important for every one of us, but these should be done in moderation. Also, indulging in these luxuries should only be done if you have at least six months of your living expenses in savings. Trust me, once you have the security of a rainy day fund in the back of your mind, you will be able to enjoy your life in a better way. Gold Price and Gold Bullion

See if you can Moonlight

If you want to quickly accumulate funds for a rainy day, try taking up an additional job. If you have sufficient time in your hands, a second job might work very well for your financial future. There are a lot of jobs that you can do from the comfort of your home. The internet has opened up a huge market for crowd sourcing industry – an industry where people are employed over the internet for ad hoc assignments. Writing jobs, website designing, data-entry, etc. are some of the common jobs that are helping people compliment their primary source of income. All you need is a personal computer with an internet connection, and you can join the community of online workers. Working hard today can mean that you are able to relax in the future, or probably retire at an early age. So if it works for you, give a part-time job a try.

These were some tips on saving for a rainy day. The economic scenario in many major economies around the world is far from what we can call optimistic. To ensure that we are not entangled in the mire of unending debts or bankruptcy, it is important that we take concrete steps and start saving for our future.

Tuesday, 20 August 2013

Business Environment, Stock Market and Financial Profitability

Financial profitability, environmental sustainability and social equity are the three new pillars that hold an organization in a stable form. These are like base that builds profit for the organization in the long term. This philosophy helps to make strategic financial plans so as to increase the profitability. These factors help to drive the customers, investors and employees to make investments with the firm.

Business environment:The term business environment is composed of two words – business and environment. In order to understand this term, you need to understand it by breaking the two words from the term. The first is business which means any act that keeps a person or group of person engaged in some task which may be done with the motive of gaining profit. The next word environment is the term that is used to refer the surroundings. Surroundings refer to the social, legal, political, economic, and institutional scenario that affects the functioning of the organization. Business environment has two components:

1.      Internal Environment: Internal environment include material, men, management and machinery which are under the control of the business but can bring positive and negative effect on business and its functioning. By bringing changes in the functioning of the business it can affect the profitability of the firm.

2.      External Environment: External factors are those that are beyond the control of business and are role players in proper functioning of the business. These factors include Geo-Physical Factors, Government Factors, Political Factors, Demo-Graphic Factors, Sociology-Cultural Factors, etc.

Financial Profitability: Plans to Increase It

Profitability of a firm depends on various factors and without proper research and taking appropriate action, you cannot expect your desired goal. Strategic planning are therefore made. These plans are made by the business so as to make more profit from the business that are dealing with. Proper acceptance of those strategies would help in short as well as long term financial benefit. The strategy concentrates on certain crucial factors that are responsible for bringing changes into the financial condition of the firm. It shows you a clear vision of the present state of the company and future goal. Once you are aware of the present condition and the final goal, it becomes easier for you to make plans and work accordingly so that you reach your goal on time. Factors like the financial resources available, current practices, policies followed, success rate of policies, competition, etc., are taken into consideration. Keeping all these factors in concern, the company plans its further actions so that it can make out profits.

Strategic planning works on the below mentioned facts

·         Organization’s goal

·         Present resources

·         Usage of resources

·         Competitors in the market

·         Company’s business environment

The primary intension behind developing a strategic plan to reach to a certain goal. The managers of the organization work in the specific fields for proper execution of the plan. Although the factors mentioned above are from different departments of a business, all the managers from different departments need to make a coordinated attempt to fulfill their needs. This includes all the possible business areas like team management needs, staffing, sales, R&D, marketing, finance, accounting, etc. As all these departments work together for business benefit, they all need to work in coordination for proper execution of the plan.

How are these plans useful in financial profitability?

·         Acts as a base to make decisions

·         Assist in monitoring the performance of the firm

·         It shows a clear view of the present company status

·         The findings can be used as a blueprint for further developments

·         It finds the loopholes in the business processes

Making strategic plans is necessary for every business as it helps to find the problems and acts as a factor to be relied upon while making improvements. Financial profitability is greatly dependent on these plans as the sole intention behind all pain is to increase the financial profits. Business environment plays an important role in deciding the revenue generated by a company.

Monday, 12 August 2013

Stock Market Basics Information

There is not much difference to point out between gambling and the functioning of the stock market. The investors put in money in the stocks and just leave it on fate for the company to do well so that the investors gets back profits generated by the company as per the share that they have bought. Although much of analysis is done to predict the future performance of a share, it depends greatly on fate and nothing can be said for sure whether a company will do better or fall down in its business. This makes it similar to gambling.
New investors think stock market nothing more than a gambling place where their investment would either bring huge profit that will make their life or will bring devastating losses. This makes no big difference between a game of roulette and stock market investment. However, this is just a view through the eyes of a newbie in this field and as you get deeper into stock business, you get more experience and understand the nature of market well. Experience helps you manage your money in a better way and possibly, it keeps your hard-earned cash safe as well as helps you obtain enough profit from your investment.
The unexpected and unpredictable behavior of the stock market might threaten a lot many investors from putting in their money in shares. However, understanding the in depth facts regarding it might help you get relieved from the stress and fear that you have regarding stock market investment. Here is some basic information about stock market. A share that an investor buys is actually a share of ownership in the company. When an investor buys a share, he is entitled to a small fraction of the assets of the company and the same fraction of the profits of the company.
Once you buy a share, you possess ownership to a part of every asset that a company possesses including building, trademark and equipment. They also have share in all the profit that the company generates by selling its products but they also have to suffer the losses if the company suffers from loss.  There are two types of shares – preference share and equity share holders. The preference shareholders are paid the dividend before paying to any equity shareholder. They receive dividend at a fixed rate irrespective of what profit the company is generating and even if the company is in loss. However, the equity shareholders receive huge dividend as per company profits but they may need to suffer from losses if case company suffers the same.
One question might arise in your mind that why would a company allow shareholders to buy shares. The reason for this is that the company needs money to cover the startup investment or to expand itself and so it accepts money from people all around the world. They accept shares with a specific face value, which is a price of one share of the company. That is the minimum amount of investment that a person can make in the company. The face values for different companies are different and may vary as per market conditions and their needs.