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Indian Gold Buyer's Should Sit Tight With Cash - Gold Price Is Bound To Nosedive By 20 -25% By Feb 2017

The GoI Demonetization Drive through discontinuation of 86% total currency bills in the form 500 & 1000 notes to curb or eradicate Black Money hoarding, Gold hoarding, Corruption and Terror funding. Indians prefer Gold over any other assets. Post Demonetization Drive, Gold price started trading in black market where Black Money hoarders tried to buy Gold but coordinated raids by government agencies forced both Gold Sellers and buyers to go underground.

Concurrently, on the basis of Intelligence inputs from different department of government, GoI enforced Gold holding limit to keep the Black Money hoarders as well as jewelers involved in illegal trade. The move is going to impact the Gold import & steep fall is expected in coming months. It will reduce Gold import bill followed by less stress on Country Balance of Payment. The major part of the sector will move from black to white segment  non law abiding jeweller will start following taxation law laid down by the government. Lower import by India will impact global Gold price given the struggling economy of major world economy.

It is expected that Global Gold inventory will be higher than expected just like Oil inventory will lead to panic selling. Currently, falling Indian currency is kept the tab on free fall of Gold price as Foreign Institutional Investors are selling their position. Once the pressure on $ demand reduces and impact of Demonetization gets reflected in Indian economy then Indian currency will recover by 8 to 10%. The Global level fall coupled with Indian currency recovery will lead around 20 - 25% fall of Gold price in India. Any legitimate investor sitting on cash and willing to invest in Gold then they should wait till Feb 2017 to reap in the benefits.
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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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