Canada has NO Gold but a Mountain of Debt… Things Will End Badly

While other central banks have been busy increasing their gold reserves, Canada sold off all its gold reserves in 2016. The Bank of Canada ranks last globally out of 100 major central banks.

There is precedence in a central bank selling off its gold, and it didn’t work out very well. In 1999, when the price of gold was low at $282.40 an ounce, the United Kingdom sold half of its gold reserves, worth approximately $6.5 billion. The sale raised $3.5 billion. By 2007, the price of gold had risen to $675.00 an ounce, and the UK had lost more than £2 billion. This financial disaster, known as Brown’s Bottom, did not work out well. And Canada appears to be following in its footsteps.

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With many uncertainties globally, Canada’s gold sale could have serious consequences.

In this age of fiat currency, many people forget that gold is actually money, and has never stopped from functioning as a reliable store of value. Gold is a relatively liquid currency and one of the most highly traded.

According to Canada’s senior Finance Department economist Morneau, the reason for the gold sale was the cost involved in storing the gold and the fact that gold offers a poor return. That seems like strange logic since gold has outperformed the S&P 500 since 2000. The price of gold went from $35.00 an ounce in 1967 to over $1,300 today.

Can the ideal equity portfolio beat inflation substantially?

Central banks have been big buyers of gold since 2010. The prime buyers have been Russia and China, but most other central banks have scrambled to follow suit.

On the other hand, Canada has now joined developing countries such as Angola, Belize and Tonga that have no gold reserves at all.

Is Canada headed for disaster?

Canada’s current reserve position of $10,412 billion in the IMF entitles it to 2.26 percent of votes within the organization. It has reduced its reserve position by $1.2 billion. With the sale of gold, Canada is greatly reducing its voting power in the IMF.

Is Canada’s financial power gradually diminishing along with its gold reserves? It seems to have created a mysterious scenario of “ … and then, there were none.”

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Following the sale of its of gold, Canada’s market debt has surpassed $1 trillion in a historic milestone.

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This debt is mostly due to the uncontrolled borrowing made possible by the Bank of Canada’s easy lending policies. Canada has a current debt ceiling of $1.168 trillion, and it is anticipated that Parliament will have to increase that ceiling in the near future. According to the government, it has the power to borrow to refinance its massive debt. But borrowing will only serve to increase the already existing mountain of debt further. Canada has become one the leaders in global debt, and its solution appears to be to continue adding to it with new borrowing. Canada household debt now equals 101 percent of its GDP.

Canada is not situated in a good financial place. Any shift in the global economic wind would leave Canada in a very precarious position.

Ironically, Canada’s record debt comes at a time when economic growth is at 3% (2017) which was the highest in six years and many economists expect this to continue.

Gold Vs Equity Return ( Image and Video )

That optimism, however, is misleading. Canada’s economic growth comes at a time when its total deficit spending has increased to beyond $18 billion. Outstanding corporate credit reached a historic high of $803 billion in 2017.

In addition, Canada is facing a mortgage bubble, with homeowners who bought lavish houses on easy credit now finding themselves unable to afford increased interest rates on their mortgages or being unable to sell a house they can no longer afford.

Canada’s financial policies has been a puzzle to many. While other countries are amassing gold, it has deliberately sold off all its gold reserves, while other countries are attempting to reduce massive debts, Canada appears to plan on increasing its own.

Countries that have historically valued gold have been or have strived to be global powers. The mere ownership of gold has always been a sign of authority. Canada, on the other hand… is flying solo, and might be heading for a crash.

 

Source : Gold Telegraph

Gold Vs Equity Return ( Image and Video )

If you had invested Rs. 1 lakh in gold in 1979 then today its worth is Rs. 30.26 lakh…. while on the other hand, if you would have invested the same amount Of Rs.1 Lakh in equity then today its worth of Rs. 3.1 cr…..

gold

Top 10 largest gold reserves by country

Equity vs Gold ( Video )

Nifty 50 Journey to 10,000 level

gold vs equity

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Can the ideal equity portfolio beat inflation substantially?

With every passing year, inflation tends to erode the purchasing power of your money. However,by staying invested in equity for a longer period of time; you could beat inflation.

Let’s assume that your equity portfolio has delivered 10%,of which, inflation will consume 7%;leaving you with only 3% which would be your inflation-adjusted return. At the onset, it seemed lucrative but when you adjusted it against the inflation, it was nominal. This is how inflation impinges on your investments in the long run. Equity as an asset class has outdone the inflation in the past, for instance, Sensex has delivered 16.06% CAGR in the last 38 years, beating inflation by 8.09%.

INFLATION1Source : MOSF

The above chart depicts that if you had invested Rs.100 in the year 1979 in to 3 different a venues i.e. Fixed Deposit, Gold and Sensex, today the Value of Rs.100 after adjusting for inflation would have remained almost at the same level in FD,would have merely been just above double in Gold, but in Sensex,it would have been almost 15 times.

Worst Retirement Mistakes and Remedies to improve them

YOU COULD also beat inflation through investing directly in equity, provided you have the time and expertise to study the stock/company before you buy and monitor them periodically or simply leave it to an expert by investing in Mutual Funds.

DISCLAIMER

Past Performance is Not Indicative of Future Results.

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Sovereign Gold Bonds to open for subscription from Monday

The seventh tranche of Sovereign Gold Bonds (SGBs) will be open for subscription from February 27 under which, securities worth up to 500 grams of gold could be bought by the public. This would be the last offering for the current fiscal.

The Government of India in consultation with the RBI has decided to issue Sovereign Gold Bonds 2016-17-Series IV, applications for which will be accepted from February 27 to March 3. These bonds will be issued to eligible applicants as on March 17, 2017.

Launched in November 2015, the SBG scheme is an alternative mode of investment to physical gold. The scheme provides investors a choice to diversify their portfolio without actually buying the physical gold. Six tranches of the SGB have already been issued by the Government.

The government gathered Rs 3,060 crore from five tranches.

GOLD

The scheme at a glance

  • Issuance and sales channel: The bonds are issued by Reserve Bank of India on behalf of the Government. These Bonds are sold through scheduled commercial banks (excluding RRBs), SHCIL offices, designated Post Offices and recognized stock exchanges, NSE and BSE.
  • Tenor: The tenor of the bonds will be for a period of 8 years with exit option from 5th year to be exercised on the interest payment dates.
  • Mode of payment: The payment for the bonds will be through cash payment (up to a maximum of Rs 20,000) or demand draft or cheque or electronic banking.
  • Maximum limit: The maximum amount subscribed by an entity will not be more than 500 grams per person per fiscal year. A self- declaration to this effect will be obtained. In a case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.

Top 10 largest gold reserves by country

  • Taxation: The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long-term capital gains arising to any person on a transfer of bond.

The investors of the scheme will be compensated at a fixed rate of 2.50 per cent per annum payable half yearly on the nominal value of an investment.

The bonds can also be used as collateral for loans. The loan-to-value ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.

The Price of a bond will be fixed on the basis of a simple average of closing price of gold of 999 purity as published by the India Bullion and Jewelers Association Limited for the week (Monday to Friday) prior to the subscription period. The issue price of the Gold Bonds will be Rs 50 per gram less than the nominal value.

The Gold Bonds will be tradable on stock exchanges from a date to be notified by the RBI.

KARVY Private Wealth Report 2016

Key Points

  • In contrast to the previous year when wealth in physical assets had declined and those in financial assets had grown by 19% i.e. total wealth held by individuals in India has grown by 8.5% to Rs 304.2 lakh crore and individuals wealth in financial assets grew by 10.32%.
  • Due to ‘Jan Dhan Yojna’ which was initiated by the government of India, have seen a huge growth on account of the government by small savings and savings bank deposits.
  • Due to demonetization it is expected to slow down the GDP growth rate for a short time being in the coming year 2017 but it may regain its speed from the financial year 2018.
  • The Real Estate sector is expected to see a price correction in the urban markets, leading to an increase in demand within the people.

India: A vivid place among emerging markets

India’s GDP growth rate is 7.6% in 2015-16 which was 7.2% in the previous year 2014-15 and will go in increasing faster and due to this; India comes under one of the fastest growing economies in the world.The recent demonitisation exercise is expected to impact GDP growth in the short term,with the number averaging at 6-6.5%.

Foreign exchange reserves stood at around $360 billion.

Individual Wealth in Financial Assets

Bank Fixed Deposits

The total individual wealth in bank fixed deposits has grown almost 10.58% to whopping Rs 35.12 lakh crore as of financial year 2016.

Corporate Fixed Deposits

Individual wealth in corporate FDs fell further by almost 49% y-o-y to Rs 15,356.47 crore in financial year 2016.

NBFC Deposits

Total individual wealth in Non-banking financial company’s deposits grew at a reasonable 21.26% y-o-y in financial year 2016.

Equity

Total individual wealth in direct equities declined 13.84% to Rs 29.6 lakh crore.

How a 172 lakh crore cookie is spilt up

Insurance

Total individual wealth in the asset class grew 7.6% to reach Rs 25.48 lakh crore in financial year 2016.

Provident Funds

Total individual wealth in provident funds grew by a whopping 24.57% y-o-y, to Rs 11.51 lakh crore in financial year 2016.

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Public Provident Funds

The total individual wealth in PPFs with banks grew almost 19% y-o-y to Rs 3, 07,495 crore.

NRI Deposits

As at the end of financial year 2016, the total individual wealth in NRI deposits grew by almost 15% to Rs 8.26 lakh crore.

Small savings

Overall individual wealth parked in small savings schemes surged almost 14% in financial year 2016 to Rs 6.58 lakh crore.

Mutual funds

The wealth held by individual investors in mutual funds grew by almost 13% to Rs 6.23 lakh crore.

Pension Funds

Wealth in pension schemes grew by 24% to Rs 3.92 lakh crore in the financial year 2016.

  • National Pension Scheme – Individual wealth in the NPS grew almost 47% y-o-y to Rs 1.18 lakh crore in financial year 2016.

A WAY OF SUCCESS FULL FINANCIAL PLANNING

 Alternative Assets

Total investments in alternate assets rose by 84.70% to Rs 77,503 Crore in financial year 2016.

High-yield Debt

Individual wealth in this asset class has risen by 43.52% y-o-y in financial year 2016 to Rs 20,425 crore.

Infrastructure Funds

Total individual wealth is estimated to be approximately Rs 457.71 Crore at the end of financial year 2016 nearly up 113% y-o-y.

Gold

Total individual wealth in gold is estimated to be Rs 65.9 lakh crore ,up 15% from financial year 2015.

Diamond

Individual wealth held in diamonds grew by just 0.5% to Rs 8.02 lakh crore.

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BEWARE! ANOTHER FINANCIAL CATASTROPHE IS READY TO HIT GLOBAL ECONOMY

Remember year 2008s Lehman brother’s subprime crises that traumatize financial institutions, trembled global economy and capital markets across the world. Since then global economy is witnessing periodically hits one after another by way of grace, Spain, Italy’s, European crises, last one i.e. Brexit.

Now it’s time of Germany’s one of the largest bank investment Deutsche bank. No surprise! Reasons are the same  old issues as major corporate frauds, financial mess, over exposure to risk assets, lack of transparency, lust of number one, unhealthy completion .It seems that we are not ready to learn any lessons from the others mistake. At one time Deutsche bank was mixed up in 72 trillion $ of derivatives financial instruments about a quarter of total global derivatives exposure, which is  as on today brought it down to 42trillion $ (only).

Deutsche bank several Vice presidents are being interrogated by Interpol for various corporate fraud.

DEUTSCHE BANK

In any business debt ratio beyond certain admissible level is not acceptable. Deutsche bank very smartly (?) converted debt by using currency swap method.

This issue became more dangerously visible when it’s US subsidiary failed to clear the US stress test & in the investigation US authorities found deutsche guilty of miss selling mortgage back securities. US authorities offered 14 billion $ settlement with minimum amount of fine but deutsche bank CEO not only express his inability to make its payment but anywhere near to that amount due to liquidity crunch.

Wait not all over yet. Three major banks are in trouble Deutsche is just one of them & this is for sure that if it sinks it could take many more banks with it.

Selected Bank fines and settelments

Now the problem is that bank is severally  under-capitalize, should infuse capital. Their capital requirement is 254 % of the market capitalization. But the question is how it will happen? Banks financial derivatives investment appears sound which include interest component along with the principal. Whereas practically some of them are not recoverable. Some of them have cap on loss making circumstances. So the options are very limited.

Turnaround of Deutsche bank is also very limited due to its single arm business as investment banker business with such profitable potentiality. Management is looking several other cost cutting options from staff downsizing to closing operations in some countries including some home branches. Its share is also plummeted heavily & lingering low to its 33 years.

Even if deutsche bank sale its UK & China base insurance business will generate not more than 5 billion $.Sale of equity is also not the option one can consider due to fall in share prices in the market. European Union central bank’s rules are stringent even if Germany wants to bail out package.

Deutsche Bank's Share price

Deutsche bank’s failure will be a major embracement for the Germany & its political leaders who gives lectures to other financially stressed European Union member countries. Though initially German authorities denied any government support but they will not allow to fail & will do all possible efforts to save such major bank. But major concern is of its quantum of financial mess.

More important to see all these developments in the back drop of euro zone developments. Already euro zone economy of the euro zone countries, their banks are in crises, Brexit is imminent. Migration in European countries from war zone countries is already affecting the economy of the member countries including Germany besides their euro zone financial crises.  In such situation failure of any such major bank leads to financial earth quick with its magnitude 5 times more than Lehman brothers problem.

EMI VS SIP ( Be controlled or take control )

But one thing is for sure Germany & Europe  cannot allow to collapse that not only could lead to free fall of global banking but could lead to the entire European Union collapse.

Such major financial catastrophe always results in upsurge of precious metals such as gold, silver due to its safe & secure investment. It is estimated that gold can go up to 1500 to 2000 $ per ounce minimum and silver not less then 50 to 75 $ per kg.

In the given circumstances Indian investors neither required to press panic button immediately nor ignore or buy time with wait & watch approach. Instead of it, should adopt balance approach & start using much neglected strategy SWP i.e. systematic withdrawal plan effectively. Start booking profit of fairly appreciated investments & investing in stocks with strong fundamental background, or schemes with diverse portfolio with investment in blue chip companies.

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Top 10 largest gold reserves by country

1. United States

Coming as a surprise to no one, the United States is the third largest producer of gold and the single largest holder of gold reserves in the world. The only larger gold reserve in a single organization is the G6, of which many nations reside in the top ten individually. The United States gold reserve percentage is 72.7 percent, with the physical stockpile reaching 8,133.5 tonnes. This number has fallen in the last half-century from the all-time high of over 20,000 tonnes.

2. Germany

As the second largest holder of gold reserves in the world, Germany has been selling gold in small amounts over the last several years. However, the country recently announced its intentions to purchase gold from physical reserves in both Paris and New York. The current German gold total is 3,381 tonnes, making up 67.1 percent of the country’s forex reserves.

3. Italy

Italy has seen its share of economic problems in the last decade, and its high gold reserve percentage is a symptom of the larger problem. Italy’s forex reserve ratio sits at 65 percent, with the country holding slightly more gold than France. Italy holds 2,451.8 tonnes of gold in reserve.

4. France

France is the first country on this list to break 2,000 tonnes of gold in reserve. The country currently holds 2,451.8 tonnes. The country has recently sold over 500 tonnes, but has no plans to continue these sales in the coming years. France has a high reserve percentage in gold investment, reaching 62.1 percent.

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5. China

China is the world’s number one producer of gold, and yet very little of that gold is held in reserve for the country. Instead, most of it is sold and the profit reinvested in the Chinese markets. In the coming years, however, China looks to be expanding its need for gold, to increase its forex percentage above the current 1.6 percent. China currently holds 1,708.5 tonnes of gold in reserve.

6. Russia

Russia is the fourth largest producer of gold in the world, and has been building up its own reserves since 2006 in order to diversify. After a domestic purchase in 2012 of around 75 tonnes, the Russian gold reserve total reaches just shy of 1352.2 tonnes. This investment brings the forex reserve percentage up to 13.1 percent.

7. Switzerland

Prior to 1997, Switzerland was steadily building its gold reserves. In 1997, the decision was made to sell some of those reserves to bolster the Swiss currency and diversify the forex reserves. The forex reserve percentage in Switzerland is currently 13.1 percent, with the country being the lowest on this list to hold over 1,000 tonnes; the total currently announced as 1,040.1 tonnes.

8. Japan

The small but powerful nation of Japan had been steadily increasing its reserves of gold since the 1960s. That reserve grew until the year 2011, when the country began to sell some of its reserves in order to calm the investors and stimulate the economy in the wake of the tsunami and the following Fukushima nuclear disaster. Japan’s reserves hover around 2.2 percent, with the official total reaching 765.2 tonnes.

9. Netherlands

Over the last decade and a half, Netherlands has been selling off some tonnes of gold to reduce its reserve. Less gold sold than the country wanted, and in recent years, this desire to sell has been reduced. Netherlands holds 55.8 percent of its forex reserve in gold, which currently totals 612.5 tonnes.

10. India

India rarely invests much in gold, as the country operates under a belief that buying gold leads to a deficit. The country currently holds 557.7 tonnes of gold, making up 5.6 percent of the country’s total forex reserve.

Gold at 3-month low after US data, eyes biggest weekly drop since 2013

Gold crashed to fresh three-month lows on Friday amid a surging dollar, as a robust U.S. jobs report augmented hawkish arguments for a December interest rate hike by the Federal Reserve.

A rate hike is considered bearish for gold, which struggles to compete with high-yield bearing assets.

MCX GOLD closing Price on Friday is Rs. 25523/-

However, markets have been pricing it according to the higher probability of a rate increase in December 2015, and thus the dollar has correspondingly gained. Higher interest rates should cause money to flow in the US, thus giving a push to the greenback. But a rising US dollar would likely cause dollar-denominated assets like gold and silver to fall as they are now more expensive for the foreign buyers.

SPDR-Gold-Shares-GLD-Fund-Flow-2015-11-05

On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $ 1,084.60 and $ 1,109.70 an ounce before settling at $ 1,088.00, down 16.20 or 1.47% on the session. Gold has fallen nearly 8% since the start of trading on Oct. 28, the first of its current eight-session losing streak. At one point on Friday, gold fell to its lowest level since Aug. 7. The precious metal is nearing its six-and a half year low from July when it plunged below $ 1,080 an ounce during a 10-day skid.

On Friday , the U.S. Department of Labor said in its October national employment report that nonfarm payrolls surged by 271,000 last month, significantly above expectations for a consensus gain of 190,000. The sharp gains marked the largest increase in U.S. nonfarm jobs since last December. Private payrolls also soared by 268,000 in October, above forecasts of a 174,000 increase.

gold-and-dollar

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, shot up more than 1.25% to an intraday high of 99.47. The index soared to its highest level since mid-April.

The Fed’s first rate hike in nearly a decade is viewed as bullish for the dollar, as investors abroad pile into the greenback in an effort to capitalize on higher yields. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.


Silver for December delivery fell 0.278 or 1.88% to 14.705 an ounce.

Copper for December delivery lost 0.013 or 0.56% to 2.242 a pound.

RBI fixes gold bonds issue price

Reserve Bank of India (RBI) has fixed the public issue price at Rs 2,684 per gram for the sovereign gold bonds, for which applications will be accepted from November 5 to 20.

The gold bond scheme will offer investors an interest rate of 2.75 per cent and a choice to buy bonds worth 2 grams of gold, up to a maximum of 500 grams. “The issue price of the sovereign gold bond for this tranche has been fixed at Rs 2,684 per gram of gold.

gold-bond

“The rate has been fixed on the basis of simple average of closing price for gold of 999 purity of the previous week (October 26-30, 2015) published by the India Bullion and Jewellers Association Ltd (IBJA).

Gold Monetisation, Bond Schemes

“The tenor of the bond will be for a period of eight years with exit option from 5th year to be exercised on the interest payment dates.
The interest earned on gold bonds would be taxable, and capital gains tax shall be levied as in case of physical gold. The bonds can be bought by resident Indian entities including individuals, HUFs, trusts, universities and charitable institutions.

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