Gold as an investment

The value of gold, in terms of the real goods and services that it can buy, has remained largely stable for many years. In 1900, the gold price was $20.67/oz, which equates to about $503/oz in today's prices. In the two years to end-December 2006, the actual price of gold averaged $524. So the real price of gold changed very little over a century characterized by sweeping change and repeated geopolitical shocks.
In these days when the stock market has more than -30% of it's previous high, Fixed deposits in banks offer less than @10% taxable return - Gold can be a very good investment option.
It is interesting to note that Gold doesn't have a correlation with the other asset classes like bond, share or cash. So it can be a good tool for portfolio diversification. One can keep @5% assets in Gold. Invest in Gold in the form of bars, coins, Exchange Traded Fund etc.

SENSEX crashes further

Sensex crashes to 13461.60 (by -340.62) amid political uncertainty and rising crude oil price.

RBI hikes REPO rate and CRR

RBI has increased the Repo Rate ( a rate at which RBI lends money to the banks etc.) by 50 basis points to @8.5% with immediate effect and Cash Reserve Ratio (CRR) by 50 basis points to @8.75% in two stages from July5 and July 19, 2008.
T a recent Repo hike of 25 basis points on June 11, 2008. The last CRR hike was on May24, 2008.

The four major issues that influenced RBI:

1. Inflation has increased to a 13 year high to @11.05% YOY as on June7, 2008
2. Investment demand remained strong increase spit of earlier increases
3. Strong internal consumption. Non-oil item import has increased considerably
4. Higher supply of oil bonds and other liabilities increased pressure on Government

Expected impact on Market

Short term money market rates to move up

Investor's should:
Invest @50% in debt fund with at least six months horizon
Invest @50% of the investible fund in Equity based Mutual Fund for longer term ( 3 years)

New Scheme Calender

Fund	Scheme	Type	Objective	Face Value (Rs.)	Intial Offer Period
					From	To
Birla	Birla Fixed Term Plan - Series AW	Close	Debt	10	09-JUN-08	07-JUL-08
Chola	DBS Chola FMP Series - 9 - 13 Months	Close	Debt	10	18-JUN-08	26-JUN-08
Escorts	Escorts FMP - 13 Months	Close	Debt	10	23-JUN-08	30-JUN-08
HDFC	HDFC FMP - 370 D - June 2008 (2) - Series VIII	Close	Debt	10	20-JUN-08	26-JUN-08
JM Financial	JM Fixed Maturity Fund - Series X - Q5	Close	Debt	10	18-JUN-08	16-JUL-08
JM Financial	JM Fixed Maturity Fund - Series X - Q4	Close	Debt	10	18-JUN-08	09-JUL-08
JM Financial	JM Fixed Maturity Fund - Series X - Q3	Close	Debt	10	12-JUN-08	11-JUL-08
JM Financial	JM Fixed Maturity Fund - Series X - Q2	Close	Debt	10	03-JUN-08	02-JUL-08
Kotak	Kotak FMP 12M Series 7	Close	Debt	10	09-JUN-08	26-JUN-08
LIC	LICMF Fixed Maturity Plan - Series 42	Close	Debt	10	25-JUN-08	27-JUN-08

Stock market corrected by 278 points today

Stock market has continued to slide today. It has lost 278 points and closed at 14293.