F A B technique in Gold investing.


Wishing you all a very happy new year.

Feature Advantage Benefit
Whenever you buy a product, you will have to understand the features they have and the advantages it brings and the benefit the user gets
All advertisements in the TV/ Media will always talk about this technique.
The widely advertised toothpaste Ads use this very effectively. Be it a paste or a brush you can see this. Let us take an example.
You see the ad where one talks about salt  in tooth paste.
Though this is not common salt, they are Sodium Flouride and Stannous flouride.
The advantages of having these salts in the tooth paste are that
It protects Gums, Prevents formation of Tartar and Protects teeth
Fresh mouth, no bad breath, clean teeth.
This FAB technique can be used in investing also.
In investing, apart from FAB, you also need to understand the risk involved in investing.
Each investing idea can be filtered through the FAB technique and checked for suitability of the investors.
Let us discuss one of the Asset , Gold.
Gold is primarily an asset class which is used as a hedge against inflation.
Secondly, this is the reference point for international trade. In the earlier days, this was the universal currency. However over the decades, US dollar has without doubt gained supremacy for international trade.
Whenever there is weakness in US dollar, Gold gains in value.
Many people buy Gold for investment, Some to flaunt their wealth and sometimes is used to show ones social status. Gold in such cases is combined with Gems and Diamonds,
Gold can be purchased in any one of the following ways
1; Gold bar
2. Gold coin
3. Gold jewellery
4. Gold Mutual funds
5. Gold ETF
6. E Gold through commodity exchange
7. Sovereign Gold bonds issued by the Government of India.
While the first three on in physical form, the others are in electronic form. Given below is a comparative FAB details of the above mode of investing in Gold.
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Should one invest in Gold?
Generally Indian markets and Gold have a negative correlation.  +1 on correlation indiex indicates that it is positively correlated and -1 negatively correlated. ( Which means, when sensex goes up, Gold goes down)
However in the last 8 years the correlation has been close to zero. This means both have remained close the zero correlation but in percentage terms. Gold has given a 300% returns compared to Sensex which is 120%
Also the USD and Gold have a negative correlation as seen and the correlation has come down in the last four, five years. See the chart. Blue line is Gold and the orange line is USD
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It is good to have have Gold in one’s investment portfolio and ideal to have around 10 % of the total investment as GOLD.
As the geo political risks across the globe increases, Gold will be a hedge and it is therefore useful.
Also when India was in deep financial crisis, in 1991, We did pledge gold with IMF
Use the FAB technique and choose the option which you think suits you.
For any clarifications do contact me.
Thanks & regards

Are you obsessed with Gold?

Gold, as all of us know, the most preferred purchase everyone makes at the first given opportunity. We have many reasons to buy Gold and in my opinion it can be grouped in any one of the four.

G —– Growth of your money , savings & investment in value over a period of time.
This also gives your Glamour and a status in the society. At least it is perceived so.

O. — Own it. More than that possess it. Ornament- Use it an ornament and wear it. Flaunt it.

L — Leverage with Loans. At times of emergency right from the poor to the rich, this is an asset class one gets loan against securitisation of this asset easily. NO additional security is required.

D. Dispose this when you don’t need this asset and encash this.

There would be very few families who do not own GOLD, In our eagerness and enthusiasm we make emotional decisions and purchases of GOLD and Not a rational one.

Pause for a moment.

If you had purchased Gold in 2010, the rate of Gold in INR per gram was 1780 and today it is 2484 and Congratulate yourself. You have got a return of 40% in 5 years which is an absolute return and If you had bought this 10 years back, when it was around 600, you have got yourself a 300% return.

There are many Jewellery companies and Trading companies which deal in precious metals more importantly Gold. To name a few

. Ganesh Jewellery

Titan Industries

Tribhovandas Bhimji Zaveri or TBZ as it is popularly know.

Rajesh Exports.   These are listed in the stock exchanges for over five years. Other companies like Thangamayil Jewellery, PC Jewellers etc have recently listed in the stock exchanges.

If only one had changed their obsession from Gold to companies which are selling jewellery or trading, one would have made more money.

Look at this,

Titan – From 4 Jan 2005 when it was trading at 9.80 today it is trading at 353 and you have got 3800% ie 38 times return

You have got 350% return in the last five years from jan 2010 when it was 76.

Similarly Rajesh exports has gone from 10 to 242 in the last 10 years and 92 to 242– 170% return

Thangamayil Jewellery from 62 to 195 in five years.

From the above if you had bought companies of jewellers or traders in precious metals, you have gained much more than buying GOLD.

These shares,

Grow in value

You own the company to the extent of shares you have

You can get loan against shares

Dispose and get the payment in three working days.

Think of options and better ways to create wealth. Do send in your views and do contact me.



Smart way to buy Gold


Almost every one want to possess Gold and the thirst for Gold is growing day by day.  There are 6 ways you can buy Gold

In physical form

a.  Jewellery

b. Coins

c. Bars

and in Dematerialised form

a. Through Mutual funds

b. Exchange traded fund and

c. E gold – through commodity exchange.

There are basically two reasons for buying Gold.

a. To buy jewellery and wear the same . This is a personal satisfaction and this not be equated in monetary terms.

b. As an investment mode, to accumulate in Gold, to create a wealth for future and as an asset class, part of asset allocation.

Many a times, poeple justify that they are buying Gold as jewellery and also as an investment.


Possession of Gold in physical forms, comes with associated risks

– loss

– burglary and theft and sometimes murder.

– storage / safety.


In spite of this, people want to possess the Gold in physical form and I want to suggest an option of buying Gold in physical form and also making the best use of it.

Once you buy gold in physical form, there is appreciation only by way of appreciation in price per gram and the investment does not  get any interest or income.

Things could  change in the future and the Indian government is coming out some interesting scheme on this .  Most likely by Jan 2015. Click on the link given below.

This scheme allows people to deposit the gold they have with them in the designated authorities. say ( banks )

The gold you deposit will be verified for purity and credited in your account.

This deposit will earn a yearly interest. Till now there is no scheme where you get interest.

The interest will not be paid in cash or in rupees  but will be paid in gold. The interest will be converted to grams of gold. When you redeem, you will get the gold you deposited with the interest you earned in grams of Gold.

You are therefore, increasing your possession of Gold every year, otherwise, it was only lying idle.

However when you buy Gold, understand how you can get the best.

If you are buying jewellery for wearing there is no suggestion as explained it is a personal issue of enjoyment and satisfaction.

If you combine with investment object,  buy it either as



Reason :  When you buy as jewellery to pay making charges and wastage charges. The making charges and wastage charges in jewellery put together can vary from 8 to 25% or more depending upon the design of the jewellery.  (10% wastage and 15% making charges)

You pay making charges and wastage in COIN and to some extent in Bars. These are far lower than the jewellery.

IF the intention is grow your investment by getting interest and income using the scheme mentioned above, reduce the wastage content and making charges.

Since the investment are accounted as gold as a measure of its purity, buy Gold with least of wastage and making charges.


Hence when you want to buy Gold, Prefer to buy as Coin or Bar, unless you want to wear and flaunt your jewellery.


I enclose the article about the scheme, which the government is likely to launch soon.




Happy reading.

Open Gold Accounts Soon & Earn Your Returns in Gold
YOUR VERY OWN GOLD MINE: If the gold monetisation scheme is approved, gold deposit will be treated like fixed deposits & interest earned on it won’t be paid in rupees but in gold
Come January and you may earn gold for gold, if banks approve a gold monetisation scheme proposed by the bullion industry.According to the scheme, gold deposit will be treated just like a fixed deposit and the interest earned on it will be paid not in rupees but in gold.“A `gold account’ will have to be opened with the bank by the retail customer. The gold can then be deposited for a maximum tenure of three years and the rate of interest will be tentative depending upon the prevailing interest scenario. When mature, the interest is paid not in rupees but in gold and the investor has more gold in the account,“ Rajesh Khosla, managing director, MMTC PAMP India, said explaining the scheme.

MMTC PAMP India is a joint venture between MMTC (a government of India undertaking) and PAMP Switzeland (a bullion brand), a privately-owned precious metals processing facility.

Giving an example, Khosla said, “If one deposits 35 gm of gold, he can get back 36.5 gm on maturity.“

Banks can lend this gold to jewellers or deposit it with the Reserve Bank of India, that will free rupee liquidity which in turn will have an impact on the earnings, Khosla said.

The idea behind the scheme is to liquidate a portion of the estimated 25,000 tonne of gold lying idle in the Indian households and increase the availability of the yellow metal in the market.The gold account will help mitigate the fear of a ballooning current account deficit owing to high gold imports.

The bullion industry has already made a presentation on the scheme to leading banks in the country. “We are waiting for their response. Based on their feedback, we will fine tune the scheme further. If all goes well, we are hopeful to launch the scheme during the first quarter of 2015. It all depends on the intention of the stakeholders that include refiners, jewellers and bullion dealers,“ Khosla said.

According to the scheme, a gold account holder can place as little as 20 gm of gold with the bank. The sche-me is expected to address more than 90% of gold consumers in India, who do not possess more than 500 gm of gold.

Bullion industry executives said RBI is convinced that this is the way forward, although its contention has always been the consumer guarantee on the purity of gold. This is where MMTC-PAMP can come to help as it has India’s first accredited refinery with a capacity of 150 tonne. There are around 250 approved hallmarking units in India. MMTC-PAMP India is also developing an advanced software for the scheme, which is expected to be ready by October.

Review of Gold schemes offered last year

This is a review for the KFJ Gold bond scheme launched in April 2013. The one year rate of gold was Rs 2399.


Instead of buying this bond and had you invested in FD @ 10%, your money would be worth, 2719 considering a period of 15 months. Todays Gold rate in chennai is 2628.

You would have gained additional 4% and your money was relatively. safe.

Let us evaluate this after some more period.


With the interest rates likely to be increased soon, in US, the Indian equity market and currency looking up, Acche DIN for Gold will have to wait for a little longer.



Is this the right time to buy Gold

On the Auspicious day of Akshaya Trithiya, there was increased demand of Gold as people wanted to buy jewellery and coins to accumulate Gold.  But is this the right time to invest in Gold.  Let us understand few things.

a.  In spite of people thronging the shops to own the yellow metal, the price of gold was around 1% lower on the day. This is different from the earlier trends, when the price was higher on the akshaya trithiya day.  This indicates that the bearish trend in Gold has set in.

b.  Government has brought in regulations that no financial institution especially banks, should give loan on gold coins more than 50 gm to any individual.  Therefore, your underlying assumption that the coins can be pledged in terms of need to create the liquidity you wanted, turns more difficult and may not fulfill your cash needs.

c. US is removing the stimulus it had offered to the economy. Which means the markets will have to stabilise on their own. With the markets improving, the gold prices are set to fall. Please note that the last five years saw an appreciable gold run, thanks to the stimulus offered by the government, which made people flock for gold assets for the fear of depreciating dollar, instead of equity as an asset class.

d. In the last 18 years, ( in 1994, one gm of gold in India was 500 and now it is 2500 per gm) the appreciation of gold is around 9.75% per annum on a cumulative basis. This is far lower than the FD interests which were above 10% in the last 18 years.

e. When it is giving a moderate return, why invest in this asset class when there are other classes which can yield better returns.

g. More importantly, there is no chain snatching and hence injury, mental agony, running behind the police

h. No lockers required, no fee on lockers which have increase over 100% in the last 5 years

i. No insurance required for gold ornaments and coin

Why lose peace over a piece of Gold. Relax and rejoice

For details  do contact me


Gold – KFJ scheme

Now about the KFJ bond of gold scheme
Highlights of the scheme
Min investments  – 8 gms.
Min period –   12 months to 60 months.
Price per gm of gold varies with period of investing. Todays rate for 1 gm of gold for 12 month bond period is 2554 and for 60 months it is 1799.
You can terminate the scheme earlier than the lock in period. However the price would be different from the what you paid.
Let us say you pay 1799 per gram for a 5 year bond and terminate after 2 years. After 2 years if the price of gold is 3000, you will have to pay the price of 3000. However if you stay invested you can get the at the committed rate of 1799.
You can get in jewellery, coins or cash
IF jewellery, wastage and making charges will be as applicable and  if you want cash at the end of the term, you will get at a discount of 4% ie. you will get only 96% in cash.
If in the event the gold prices were to come down, you dont have a choice. Will it come down??? Will it go UP???
What goes up has to come down.  Also there is no credit rating on companies like this.
THere is no balance sheet available. We do not know what are the assets and liabilities of this company.
Assuming investors buy 100 kg of gold in this bond scheme and 1 lac grams and if the gold prices were to go to 5000 per gm, will KFJ be in a position to return gold worth, 50 crore to the investors. Will there balance sheet permit.
Think it over.
There is No such thing as free lunch.