The dollar hit its highest level in three months against a basket of other major currencies on Tuesday amid expectations for a rise in U.S. interest rates from near-zero levels in the coming months. The History repeats itself and below data will substantiate our claims that with US Fed rate hike and dollar peaking against major currencies money will move out of the gold.
This is exemplified by gold’s bull market in the 1970s. From 1971 through 1974, the Fed funds rate went from roughly 5 percent to 10 percent, during which time the price of gold rose from $35 per ounce to roughly $200 per ounce. The Fed funds rate fell back to 5 percent by 1975 as the price of gold fell by nearly 50 percent. The Fed funds rate soared from 1977, peaking at more than 20 percent in 1980, and during that time frame, gold reached a peak of $850 per ounce.
However we Indians can use this situation to our advantage as we can buy gold in form of jewelery and can appease our wife as ladies are best friend of gold and diamond's. We intend using this technique where we will buy gold with every Rs 1000 fall.
So, divide the capital equally as we see gold not breaking the psychological barrier and thus gold should find support at Rs 20000 mark if the downtrend continues. Thus divide capital in 5 parts which you want to use for gold and buy when it is at 25000+ level; 24000+;23000+ & so on. You can resell if it crosses the buy price with profit. Last year gold recovered from Rs 24000 level. However as a word of caution; the strategy will yield maximum results for an investor with a time horizon of two to three years.
You can even use the gold ETF route to buy gold if you do not physically want to hold the gold. Do read which is better i.e. gold ETF or physical gold as both has its pluses and minuses. Also check out gold bees here.
However if gold is not your penchant; than consider equity route and none can beat our Jackpot tips which is our best intra day tip.
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