Sensex

Sunday, August 29, 2010

**[investwise]** The Nonsense Recovery (100829)

 


"Eventually, investors are going to realize that the discussion of a "recovery" is nonsense. The economy can never recover the pace and frenzy of the bubble years – and so much the better. It has to move on to something new. The big question is: What will this new economy look like?...

http://www.stock-investing-software.com/commentary/articles.html?next=14842

Ian

This week's "Tools of the Trade": http://snipr.com/tools-of-the-trade

Explicit NON-commercial advisory: Spot-on, advantageous FREE information, products and/or services presented weekly.
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This week's "Tools" topic: What you don't know about how money is created in the United States - and how it is killing the global economy - WILL hurt you. It does NOT have to be this way. This week's FREE "Tools" awakens you via a video. Watch it, then watch it AGAIN! Send it to your trading friends (and others!)

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INVESTMENTS IN INDIA
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Ruchi Soya - Board recommends Dividend
Ruchi Soya Industries Ltd has informed BSE that the Board of Directors of the Company at its meeting held on August 28, 2010, inter alia, has considered the following:
1. The Board has recommended a dividend of 25% (Re. 0.50 per equity share of face value of Rs. 2/-) on Equity Share Capital of Rs. 62.20 Crores. ...

Karur KCP - Board to consider Dividend
Karur KCP Packkagings Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on September 02, 2010, inter alia, to consider the following:
1. To recommend dividend; ...

Rama Pulp - Board to consider Dividend
Rama Pulp & Papers Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on August 31, 2010, to transact the following business:
1. To consider, adopt and publish audited financial results Of the company for financial year ended March 31, 2010. ...

Murli Inds - Board to consider Dividend
Murli Industries Ltd has informed BSE that a Meeting of the Board of Directors of the Company will be held on September 02, 2010, inter alia, to consider the following items:-
1. To approve the Audited balance sheet and profit and loss account for the financial year ended March 31, 2010. ...

Metrochem Inds - Board recommends Dividend
Metrochem Industries Ltd has informed BSE that the Board of Directors of the Company at its meeting held on August 28, 2010, inter alia, has recommended for equity dividend of Rs. 2 per share (20% Tax Free).

Amar Remedies - Board recommends Dividend
Amar Remedies Ltd has informed BSE that the Board of Directors of the Company at its meeting held on August 28, 2010, inter alia, has recommended Dividend @ 10% (Rs. 1 per share) on fully paid Equity Shares of Rs. 10 each of the Company for the financial year ended June 30, 2010.

Pantaloon Retl - Board recommends Dividend
Pantaloon Retail (India) Ltd has informed BSE that the Board of Directors of the Company at its meeting held on August 28, 2010, inter alia, took the following decisions:
1. A dividend of 0.01% per compulsorily convertible preference shares, has been recommended by the Board of Directors. ...

Source:bseindia.com

**[investwise]** Jack Adamo: Will India's Gold Buying Season Bring Back The Shine To Bullion?

 

After a two month drop, the dollar has been stronger for the second week in a row and stocks were concomitantly weaker, as were commodities. Gold bucked the trend, rising modestly.


With earnings season largely behind us, I had a chance this week to focus on the big picture. I want to talk mostly about gold today, but first I want to give you some context. If a picture is worth a thousand words, this one is a Rembrandt, worth millions.




(chart courtesy of Stockcharts.com)


This is a chart of the U.S. Dollar over the last five years. Also displayed (as a red, dotted line) is the S&P 500. Notice how the two prices move opposite of each other much of the time. It is an expression of the fact that as the dollar weakens, assets priced in dollars, like stocks and commodities, rise in dollar terms. Neither the dollar nor the stocks index has made any net progress in the last five years.


Now let's look at another million-dollar chart:



(chart courtesy of StockCharts.com)



This is a 5-year chart of gold with its 50- and 200-day moving averages. It is the epitome of a true bull market. Aside from the autumn of 2008, when no one knew what to do with any asset except sell it, gold has not dropped below its long-term uptrend for more than a few days. Also note that its peak-to-trough drop during the crisis was only 30%. The S&P 500 dipped 57% during that period.


What is also interesting is that very few gold stocks outperformed the bullion for those five years. In the past, bull markets in gold have seen the gold mining shares soar above the price of the metal, based on the assumption that the miners were leveraged to the price of gold, since some costs were fixed and variable costs wouldn't rise proportionate to the rise in the metal. That assumption has been generally true in the past, but the soaring rise in energy prices from 2003 through 2007 thwarted that expectation. Energy is the second-largest input cost for miners, next to labor. At times the rise in that cost outpaced the rise in gold's price, compressing profit margins.


Investing is essentially a search for truth and perspective. Personally, I find the latter the more difficult to maintain. It is too easy to get caught up in everyday matters and lose sight of the bigger picture. With the market as volatile as it has been in the last few years, this is doubly true. The above chart goes a long way to refocusing attention on what counts. There is an ongoing bull market in gold and despite the inevitable corrections, we should continue to exploit it to the fullest.

What are the risks? This is not only a reasonable question, but an essential one for all investing. After all, even the strongest bull markets eventually die, and when they do, the beginning of it looks pretty similar to another correction. If we are now going into a deflationary spiral, as some reasonably and articulately argue, won't gold fall too?


I've thought about this a lot. Before I discuss my conclusions, let's look at some more charts.



(chart courtesy of StockCharts.com)



The heavy black line is gold price over the last five years. The dotted red line is the CRB Index that tracks overall commodity prices. Note how from 2005 through 2008, gold moved in approximate step with other commodities. The rate of change (angle) wasn't always the same, but the general direction was. Now notice how in the blue box separating the last two years, the relationship has broken down significantly. At first it was just in a few spots, but this year, the two prices have gone their separate ways, with gold continuing to rise, while the CRB has been flat to down. Let's take a closer look:




(chart courtesy of Stockcharts.com)



In the two year chart, it's easy to see that except for the three areas in gray, when both prices moved in step, they've decoupled. We first see it clearly in February of '09 where we get one of those eye-shaped bulges as the red and black lines move counter to each other.


Again, black is gold, red is the CRB. Then around August '09, you see a gradual divergence where the two move in the same direction, but the CRB's rate of growth is slowing. Next, after a brief period of approximate proportional growth, the two paths diverge rapidly, with overall commodities staying flat to slightly down, while gold continues to rise noticeably.


All the above charts serve to put in perspective what has been going on, despite the day-to-day gyrations that distract us. Two observations are now clear: Although stocks have lost money over the last ten years, gold has remained in a strong bull market; gold is decoupling not only from the stock market, but from commodities as well. It is rising in the face of a weaker stock market and weaker commodities.


Let's add one more observation to that list. Gold is now rising even in the face of a stronger dollar.



(chart courtesy of Stockcharts.com)



Gold is the black line; the U.S. Dollar is the red one. You can see we're still getting some of those "eye" formations where one curve goes in the opposite direction of the other, but since February, the two lines move more in step than out, although gold is the stronger of the two.


This is undoubtedly due at least in part to the fact that we're heading into the strong holiday season for gold, but there may be another factor: Gold may now act–not only as a long-term hedge against a weakening dollar–but as a hedge against all risky assets.


Succinctly, gold and the dollar are both havens for investors who are risk-averse. Gold is the stronger of the two since it serves as a haven for those who are also wary of the risk of owning dollars, given government monetary and fiscal policies.


All this may indicate that global systemic risk is now coming to the fore, as well it should. The currencies and economies of all the developed nations are being called into question. With debt high and growth sub-par, every country wants to export its way back to health.


To do that, they want their currencies to be soft. Only Germany rejects this mindset, preferring to maintain fiscal and monetary discipline and earn its exports by making good products efficiently. Germany still remembers the Weimar Republic.


Here are the conclusions I draw from the above:

• Gold remains in a true long-term bull market that should be exploited.
• Commodities, overall, are showing whiffs of deflation, perhaps presaging another recession.
• The stock market is still very iffy, promising, at most, very slow growth with high volatility for many years to come.


So what should investors buy now? Although I think BVN is still a buy at prices near $40, I prefer bullion for now, either ETFS Physical Swiss Gold Shares (SGOL) or SPDR Gold Shares (GLD). I like SGOL a little better because the bullion is stored in Switzerland.


I like the bullion better because I'm a little leery of the stock market right now and the gold mining stocks have tended to be more in tune with the overall market than they have with the price of gold, which has bucked all negative trends.


Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

__._,_.___
Recent Activity:
*****************************************
http://in.groups.yahoo.com/group/investwise/

INVESTMENTS IN INDIA
We are low-risk, long-term investors. 

Stocks, mutual funds and the entire investment gamut.  Only financing/investment avenues in India will be discussed. 

For any assistance, questions or improvement ideas, contact investwise-owner@yahoogroups.co.in

****************************************************************

NEW! ==== Check our LINKS and FILES sections for a world of information. REGULARLY UPDATED.

NEW! ==== Check "Tracklist" in Links and Files sections for Investment Ideas.

****************************************************************
.

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