India, as many of you may be aware is the world’s largest consumer of gold. With it being perceived as a traditional asset class, the demand for the precious yellow metal is insatiable. Probably capturing on this verity and with festive season round the corner, brokers along with companies in the bullion segment are busy encouraging investors to invest in gold through their online platform.
Recently, Finkurve Bullion Private Ltd. (which is jointly promoted by NCDEX Spot Exchange Ltd., RiddiSiddhi Bullions Ltd. and Finkurve Financial Services Ltd.) introduced its online trading platform - "Bullion India", allowing investors to own small denominations of physical gold and silver at wholesale prices with the option of free storage or door step deliveries (at a nominal cost).
The gold bars / coins offered by "Bullion India" command 99.5% purity and are available in in 1gm, 5gms and 10gms. Likewise silver bars / coins can be bought in denominations such as 10gms, 20gms, 50gms and 100 gms, commanding 99.9% purity. It is noteworthy that these gold and silver bars / coins is purchased from nominated agencies in India and is imported from international banks who are full members of the London Bullion Market Association (LBMA). These bars / coins are refined by those who comply with all the London Good Delivery Rules, and therefore the purity would be indubitable.
Along with the price benefit, "Bullion India" offers facilities such as:
However, in order to buy bullion on "Bullion India", one need to initially deposit funds, and thereafter you can buy, hold, sell and redeem these bars / coins in a simple, easy and a convenient manner. Well, now many of you may be wondering how the company - Finkurve Bullion Private Ltd., earns its revenue. Here’s the catch. 1% of the profit earned by you would be retained by the company, and rest will be transferred to you.
- no storage fee;
- free insurance;
- no account opening charges; and
- no brokerage
We are of the view that, "Bullion India" (an initiative of Finkurve Bullion Pvt Ltd. and RiddiSiddhi Bullions) provides new a channel for investors to transact in bullion. The aforesaid luring facilities such as no storage fee, free insurance, zero account opening charges; could encourage many investors to buy gold and silver in a physical form, with price advantage too being available. Having said that, we think that "Bullion India", may not be able to override the market for Gold Exchange Traded Funds (GETFs) in the medium-term due to host of advantages GETFs offer.
Our view on gold is that, the precious yellow metal gold has stood out as one of the best hedge against the economic turmoil. Thus, smart investors need to stay invested in gold to benefit from its inverse relationship with other asset classes. We think that risk emanating from debt crisis in the Euro zone and political turmoil in the domestic economy too will let the precious yellow metal linger at elevated levels. Going forward, the physical demand for gold is also likely to step up with the festive times of Dusshera, Diwali (in November 2012) and Christmas (along with wedding season as well). It is noteworthy that traditionally, the demand for gold in India (world's top consumer of gold) rises in the last quarter of the calendar year, and this cyclicality could push gold prices further northwards. At Personal FN, we recommend that you should have a minimum of 5%-10% allocation to gold. Invest in gold with a long term perspective with a time horizon of 10 to 20 years.
Our view on silver is that, it is an industrial commodity. Thus the slowdown in the global economy and manufacturing activity will hinder the prices of silver. So given that, we expect to silver to consolidate until the gloomy clouds disappear, and therefore gains may be restricted.