All the physical gold in existence is worth somewhat more than $1 trillion US dollars while the value of all the publicly traded gold companies in the world is less than $100 billion US dollars. When the fundamentals ultimately encourage a strong flow of capital towards gold and gold equities, the trillions upon trillions worth of paper money could propel both to unfathomably high levels.
Conclusion:
The dollar is in an irreversible death spiral, crude oil prices have topped +$100/barrel, and the stability of societies around the world are becoming more and more fragile by the day as political and religious factions continue to furiously battle. These fundamentals are compounded by an approaching recession triggered by the housing and credit crisis building in the United States. So Foreign investors are going to think twice about putting their money into US stocks especially with the dollar entrenched in a long term bear market.
As Gold and silver are also commodities and when paper markets and governments are performing well, precious metals like gold and silver go back to their status as commodities. What we are seeing now, however, because of the lower dollar and investor flows because of safe haven type of purchasing, everyone looking to precious metals, and investors are moving into the precious metals to protect their hard-earned savings. So gold is becoming money again.
I think gold prices may move from $1000 to $2000 (i.e. around Rs13000 to Rs.22000) an ounce in a matter of six to eight months, depending on how the issues with the dollar pan out from here.
Findings
• In India MCX is trading in bullion market.
• Goldsmiths get their raw material from wholesale dealers.
• They fix the prices on daily trading bases.
• Hence there is positive correlation between both market traders can easily predict the future prices of the commodities and hedge their positions.
• Correlation between spot gold price and dollar rate is 0.2048
& probable error is 0.1659. So it would not be concluded that both spot gold prices and dollar rates are highly correlated or not.
• Most of the respondents are interested in investing in equity (i.e. 49%) when compared to the other investment alternatives because they feel investing in equity will provide more returns to them.
• Now commodity future market is not new to the investors as almost 82% of respondents are aware about commodity future market out of them only 16% have actually invested.
• 67% of Investors have not invested as they have a perception that it is risky and they even do not have much knowledge about trading mechanism.
• The investors who have not yet invested in the commodity future market, out of them 61% of the investors are interested to invest in the coming future. The investors expect that the brokers should provide them the genuine information regarding the market. Also they want moderate brokerage and good services from the brokers.
• For gold price fluctuation main reasons are
• Dollar depreciation / appreciation
• World distress
• Increase in money supply
• Inflation
SUGGESTIONS
Both Spot Gold & Future Gold Markets are positively correlated the traders have knowledge about the commodity demand and supply and their price fluctuations. So Karvy can approach these traders and they can easily convince them so these people are the targeted customers for Karvy.
More Awareness program has to be conducted by Karvy consultants so that already aware investor takes the challenge to invest in this commodity future market. Because since this was new to the market and also risky but gives good return. so it can be done through by giving advertisements in local channels, News papers, by sending E-mail to present customers etc
From survey it is found that most of the potential customers are concerned about the genuine information and moderate brokerage so Karvy can look upon this. If it can give good information and charge moderate brokerage it will help to attract more and more customers.
As correlation between spot gold rate and dollar rate is not high, investor can hedge their risk by investing in gold future and dollar.
So they get benefit of diversification.
The best opportunities for investors to protect themselves against the coming financial reckoning are with precious metals and mining stocks.
CONCLUSION
Capital market is already matured and reached at high level, every investor interested to invest but not in commodity Future Market due to lack of awareness. As per Data analysis most of the investors do not have much idea of commodity market in Belgaum they are required to be given awareness training and knowledge with the help of workshops and seminars, as investors are willing to know more about commodity market i.e. 61% of the respondents are willing to invest in the market The Karvy Consultancy and other Brokers should take major steps to give fare knowledge about the commodity market and its operations to the public. Compared to Capital market Commodity market is less risky (minimum margin, easy to hold, no manipulation &
fraud), maximum profitability. Commodity market is in growing stage.
As in my study it is found that, there exists a high degree of positive correlation between Spot Commodity Market and Commodity Future Market. If an amount of small change in the spot gold market prices has the direct impact on the future prices of gold in commodity market. So Traders can take more advantage of this. Because they can predict the future prices, depending upon the present demand and Supply in the spot market. As they also get benefits of diversification, means in case of uncertainty in gold market they can invest in dollar i.e.
forex market. It helps to all such as Individual investors and gold traders.
There is a maximum hours of trading that is from 10am to 11.55 pm. It is better for working class people to deal at evening.