A few articles related to our Objectives.

In recent months, investors have flocked to gold, helping to drive

up its price to record highs.
Some market watchers have attributed the gold rally merely to
investors seeking a shortterm inflation hedge or a perceived !safe
haven" investment in the face of a slowing global economy,
ongoing global sovereign debt problems and #riday$s downgrade
of %S debt. &old prices, however, have been on the rise for a
decade and I believe there are a few key reasons why.
#irst, high gold prices can$t be blamed on fears of nearterm
inflation. 'hile investors have historically paid a higher premium
for gold when inflation e(pectations are high, inflation
e(pectations have receded since a spring spike. In addition, the last
decade has been characteri)ed by low inflation in most developed
countries.
*ut the rally in gold can be partly e(plained by longerterm
inflation fears tied to deficitrelated spending that would increase
the money supply. 'hen deficits are high, investors rationally
worry about whether the government will ultimately deal with
large deficits by creating a surge in the money supply. +oday, this
appears to be a growing concern among investors and as the %S
fiscal situation remains precarious, this may support gold prices,
even in the absence of any nearterm signs of inflationary pressures
,ising gold prices are also e(plained by another sort of inflation -
inflation as the erosion of the purchasing power of the dollar.
.istorically, the deterioration of the dollar has been a more
important determinant of the performance of gold than traditional
inflation. &old tends to do best when the dollar$s value is eroding
and we have seen a significant pullback in the value of the dollar
versus other currencies over the past / 0 years.
1art of the relationship between gold and the dollar is mechanical.
As gold is valued in dollars, a declining dollar by definition will
lead to higher gold prices. .owever, the relationship between gold
and the dollar also reflects a second dynamic. In those periods
when investors are uncomfortable with any fiat currency, including
the dollar, gold is the natural beneficiary - and increasingly these
days, so is the Swiss #ranc.
So ironically, if we continue to be in an environment where the
#ed helps keep real interest rates low, we$re likely to see an
environment that continues to be supportive of gold and other
commodities.
Investors seeking a shortterm inflation hedge in the face of a
slowing global economy, ongoing global sovereign debt problems.
high gold prices can$t be blamed on fears of nearterm inflation.
'hile investors have historically paid a higher premium for gold
when inflation e(pectations are high, inflation e(pectations have
receded since a spring spike. the deterioration of the dollar has
been a more important determinant of the performance of gold than
traditional inflation. we$ve been in an environment where real rates
have been at historically low levels. 2ow real rates mean the
opportunity cost of owning gold is low.
3ffect on rising gold price on common people
'ith gold prices surging past another record to nearly 45,677 an
ounce, the astonishing rise of the precious metal in financial
markets has thrown up some peculiar sideeffects in the real
world.
1olice warned last week that thieves are targeting Asian women
in east 2ondon for their gold jewellery. In one incident in 8anning
+own, a /7yearold disabled woman in a wheelchair had her
necklace snatched from round her neck.
+he %9$s first gold vending machine opened at 'estfield
Shopping 8entre last month. A 5g coin costs :;7 or a /<7g bar is
:57,/<7.
*etrothed couples in 1akistan are having to delay their weddings,
because the gold price is too high. According to tradition, families
should provide several !tolas" =almost half a troy ounce> as
dowries.
A retired croupier and his wife, ?avid and @aureen Somers, sold
their house in 1oole in /77; and bought gold instead. +he price has
Auadrupled since then from 4;76 per ounce to more than 45,B77
now.
+he jewellery shop owner, *alkrishna Cernekar, the two women
entered the shop on the prete(t of buying a gold chain. 'hile the
chains being shown to them, one of the women diverted the shop
ownerDs attention, while other one picked up the chain.
+he chief e(ecutive of 8ash 8onverters last week signed an
agreement with 2ondon police saying the chain would share
information about any suspicious gold brought into the store.
1olice said there have been reports of some !cash for gold" shops
receiving !bloodstained necklaces".
Inflation and &old
&old, being a highly pri)ed metal whose supply is both limited and
increases slowly, has long been used for money. 1egging money to
gold, known as a gold standard, usually works to keep the money
supply in balance with the goods and services available, thus
keeping prices stable. 'hile inflation rarely occurs with a gold
standard, there is at least one major instance of inflation under a
gold standard and this was the inflation that swept 3urope in the
si(teenth century following the Spanish conAuest of the A)tec and
Inca 3mpires in the Eew 'orld and the subseAuent transport of
boatloads of the massive gold holdings of these empires to 3urope.
Spain didnDt have to convert all of this gold to money. @uch of
flowed directly into the hands of investors who financed the
e(peditions and those who participated in them. *ecause it is
coveted by all due to its value, gold can be e(changed directly in
payment for purchases coining gold as money merely facilitates
e(change which can also be also accomplished by using gold itself.
Another way inflation can result while on a gold standard is
through what is known as fractional reserve banking, which is the
practice of backing paper money with gold but issuing more paper
than there is gold to back it. +his is an ancient practice and can be
practiced by either private banks or governments. 'hen done in
moderation this can work =modern banking systems, including that
of the %nited States, does this using checking accounts and other
financial instruments backed by a smaller supply of official
currency> so long as people have confidence that they can
e(change their gold backed notes for the gold backing it.
+his practice of fractional reserve banking began in ancient times
when people, not wanting to have to carry gold around with them
or leaving it unprotected in their homes, would entrust it to a
merchant who had a secure place to store it. +he merchant would
issue a receipt in e(change for the physical gold and people soon
found that, rather than running to the merchant to withdraw their
gold every time they made a purchase, they could simply pay for
their purchase by handing over their receipt for the gold rather than
the gold itself. %pon discovering that most people simply
e(changed receipts rather than physically claiming the gold,
merchants offering secure gold depository services found they
could increase their revenue by loaning out the gold and changing
interest =thus earning interest on the gold they held in addition to
the fees they charged to the owners of the gold for its safekeeping>.
In most cases the loans consisted of a receipt for the amount
borrowed rather than physically handing over the gold. Of course,
if this lending became e(cessive people would become concerned
and begin e(changing their receipts for gold. 1anics would often
ensue whereby everyone rushed over to withdraw their gold and
when the merchant was unable to honor all of the receipts, the
holders of nonredeemable receipts would be left with worthless
pieces of paper. 'ith the rise of banking, panics like these became
known as a run on the bank. %ntil modern times when
governments stopped backing their money with gold they found
themselves in the same position when they tried to issue more
currency than there was gold to back it. As citi)ens and foreigners
began to lose faith in the currency they would begin converting
their paper money to gold thereby reducing the governmentDs gold
holdings and peopleDs faith in the currency.
.ow to Interpret the ,ise in &old 1rices
- The Lucrative Derivative Report
&old has been one of the best performing assets over the last year,
as prices have skyrocketed to record levels. It seems as though we
are talking about a new record in prices nearly every week, and the
trend appears set to continue going forward.
So how can we interpret the rise in gold pricesF +here are two
issues to discuss here. +he first is, why is it that investors want to
buy gold, and the second is, what is the impact of rising gold prices
on the rest of the economy. +he two issues are obviously linked,
but letDs discuss each one in turn.
Investors buy gold primarily as a safe haven. &old is known to
perform well when the rest of the economy is in a poor state, and
thus investors buy gold to protect themselves financially. +hus, we
see gold prices rise whenever there is uncertainty about economic
prospects or in financial markets. #or e(ample, both the American
and 3uropean debt crises have led to increases in demand for gold.
,eviewG
Hes truly gold rates are skyrocketing and will cross the ,s
I777Jgm mark shortly and will affect mainly people who want to
buy gold specially during marriage seasons as it has become a
custom for the brides to carry gold as though grooms life is
dependent on gold rather than the person getting married to. +he
situation is so bad. +he real wealth is the people and children we
have around us rather than the material but the world cares for
none and are mad in buying gold only to leave behind after their
death and miss the real treasures of life with their kith and kin. Hes
it$s very difficult to buy gold for common peoples now a days as
daily the gold rate is going higher and higher. And in marriages it$s
compulsory for girls to carry some gold to her husband house, as it
has become a culture in India.
If this culture is removed then it will be lot of help for common
man to do the marriage of his daughter.
K+oday, the market rate of gold is over ,s /B,;77 per 57 gm, so it
is much more lucrative for criminals to snatch a gold chain and
flee. A total of ;;< cases of chainsnatching were registered in
/755 with a detection rate of nearly /5L. In comparison, only ;5M
cases were registered in /757 but the detection rate was a low NL.
'hy the rates are rising at such a high rate is difficult to predictF
+here may be various reasons for it. One such reason is the rise in
the value of the gold in the international market due to the
countries who have large reserves of gold with them. +hey tend to
increase the prices when they see that the demand for gold has
increased due to festive season or shortage of supply from the
other countries.
1rices of gold also rise when the dealers increase their profit
margins and the branded companies in order to compete also does
the same.