Stay Away From Gold

Here is the price trend, between Jan 01, 2013 and Jan 21, 2014, of Gold. 

On July 06, 2013, I published my blog, for your reference it is below, forecasting forward direction in the price of Gold, and strongly suggesting to stay away from investing in Gold. 

You may decide for yourself whether I was right or wrong in my prediction. Of course, no body could give you the exact future price, but, gauging the direction going forward is a big skill in itself, isn't it? :-)


Source: nytimes.com

Walk The Talk

Walk the talk! I like this idiom a lot, and it's always on my mind. It sounds familiar and simple, right? Well, it simply means practicing what you have been preaching. Now, it sounds complex, right? :-) Many people, usually, don't practice what they preach, as doing so requires tons of real guts and demands for justness -- and they are hard to wear on your sleeve, right? :-) Right!

I, personally, try to practice what I preach... Definitely to a very large extent. And, to a large extent means really to a large extent, by all means and by all standards. By the way, I am a human being, too. :-) I do make mistakes, but, then, I do fix them as well -- no matter what it takes. Sometimes, people remind me of not walking my own talk, and, then, I immediately go back to the burning issue to fix it, with all my heart. In the end, trust me, it feels so, so better.

How do I do so? Again, trust me, it's simple. You just have to be plain-and-simple honest. Honest to yourself, honest to others, honest to your religion, honest to your principles. See, it's as simple as that. Honestly! :-)

If you are religious, and, if you firmly believe that the Almighty is just and takes care of everyone and everything, which consequently means having a strong faith in the Almighty, then just practice plain-vanilla honesty each and every time -- religiously. 

Never play games, because when you play games, you think, or might appear to have thought, you can undermine the Almighty's bigger game -- which, by any and by all means, you definitely cannot. So, a wise man would never take his chances against the Almighty! Right? Are you wise? I am :-) At least, I always try to be :-) See, it's plain-and-simple honesty. :) It's so simple -- and, this is called walking the talk. :-)

Short Gold

Last week, I got an interesting call from the UK. A learned, finance lady called me up, and was trying to sell me the idea of investing in her gold-backed financial instruments. I didn't buy her idea, and, consequently, she failed to sell her products to me. We had some interesting discussion on the phone -- she was betting on the gold price going north, and I was making her understand that the gold price will go south, hereon! We both failed to convince each other. 

Her position on gold: it will go up as it has come down a lot. In other words, gold has seen a large correction, and looking at the historical trend in the gold price, it will go only north, hereon! Indeed, pretty optimistic lady! :-)

My position: The past is not a good indicator for predicting the future. Markets, by and large, don't work like that. Moreover, the world has, of late, changed a lot, as it doesn't work the way it used to. All key players -- traders, speculators, investors and governments -- manipulate markets like anything. The recent hike in the gold price (between 2009 and 2012) was not only because of the speculators/investors who were hoarding on to gold, but also because of the governments worldwide which were busy hoarding on to gold. However, their purposes were, by and large, the same: to hedge against the foreseeable inflation and to hedge against the greenback going south -- both of which have not yet happened even after three years of their prediction -- or, to but it in a better way, they never understood how the world worked and how economies were integrated! That's the precise reason, why some less-dumb players have started offloading their gold hoardings, leading to some neat correction in the price of gold. My back-of-the-envelope analysis says that gold will be trading between $950 and $1050 by the end of this year! 

Of course, she didn't buy my analysis, but, instead, assured me of her calling me again, if I get right in my prediction -- by the end of this year. Lady, I will be waiting for your call! :-)

The Never-ending Drama of the Euro Zone

I have, for long, been reading about the never-ending drama of the Euro-Zone and have quite been bemused with it too. Trust me; it really is amusing, for many non-obvious reasons. The drama has been unfolding itself since the onset of the Great Recession of 2008. Technically, the Euro Zone is out of the recession now, but the hangover of the recession is still there! It seems the Euro-Zone has fallen in love with the hangover itself :-)

The core factors at play for the ongoing drama are:

1) The Euro itself. The workings and the interests of the Euro are at loggerheads with the interests and purposes of the Euro-Zone economies! In a plain vanilla term, the widely differing Euro-Zone economies never needed a common currency in the very first place. It was the fear of the hegemony of the Greenback that rushed the creation of the Euro. The 17 Euro-Zone economies are very different from each other, as some (peripheral Euro-Zone economies) are import-driven economies -- that need a strong Euro to pay less for its bills -- and some are export driven economies (such as Germany) -- that need a weak Euro, for pumping its export up and for making its export much more competitive on the global markets. Hence, the straight-jacket-solution, the Euro, has, since its inception, been at conflict with the interests of the economies that use it as their local currency. The obvious consequence of this conflict is the prosperity of the German export during the Great Recession, riding the tide of the undervalued Euro. Whereas, the peripheral Euro-Zone economies have been struggling to pay their debts off, and have literally been "begging" around for bailouts -- these economies primarily are import-driven and a weak Euro is detrimental to their economic health. Undoubtedly, there are other strong factors at play for the sufferings of these peripheral economies as well. I will discuss those equally important factors later.

2) Germany is not playing its supposed leadership role. It's the strongest economy amongst the 17 members of the Euro-Zone. The reasons for Germany taking a back seat are many. For example, it's benefitting from a weak Euro as its export is growing by leaps and bounds; it is skeptical of its leadership role, thinking that the economically weaker Euro-Zone members will ask it for money, if it gets desperate to save the Euro by extending a helping hand to the struggling member economies; it still is feeling guilty of having dragged Europe into two world wars, and, now, it doesn't want itself to be the reason for the third disaster to Europe.

3) There is going to be a tightly contested election in Germany this year. So, all political parties and leaders in Germany are playing safe by not committing any national resources to the bailout of the struggling European economies. There is a widespread ill-feeling in Germany of the luxurious social benefits in the struggling Euro-Zone economies, and most Germans believe that their tax monies should not be used for paying for the lavish social benefits to the peoples of those struggling economies.

I believe that the Euro-Zone drama will not end until the upcoming election is concluded in Germany, and that Germany has to come to the forefront to bail its fellow members out, consequently saving the Euro, and ending the long drama. I guess that's the cost Germany has to bear with, after having enjoyed the weak Euro for long. After all, the struggling member economies will indirectly have paid Germany for bailing them out by giving the global financial markets enough reasons for shorting the Euro! Haven't they? :-)

Being Positive

Many times, we all hear people talking about being positive. Do we all really get what it means being positive? I have a doubt!

Let me share with you all the mantra for being positive, and equally important is the skill to identify positiveness -- a quality that is even harder to gauge and vouch for. 

In layman terms, being positive requires no prejudice and no pre-judgment. It demands for being neutral, at least at the beginning, if not overtly positive right off the bat. Then, as events/times progress by, start taking things/events/people at their face value, without jumping to conclusions on your own -- now, this is the hardest part. Why is it the hardest part? It is simply because you need to understand things and try to gauge the progress as well. The trap here is being judgmental before the right time and without having enough information. Try to gauge the prevalent intents, means and goals, and generate as many perspectives as possible, before making any sort of conclusion. Keep reminding yourself of the fact that clear communications are the way to go. When you have, at least, three parties' perspectives -- third parties', second parties' and first parties' -- you are good to go for your conclusions. A caveat here is not to conclude things completely in isolation. You must get your perspectives cross-checked and reiterated with the parties involved either covertly or overtly, as far as possible. Then is right the time to conclude by all means. After all, we ought be decisive in life, right? Concluding, per se, is not an evil thing. In fact, it is a mandatory thing to achieve and seal substantial progress. Good luck!

And, when you are evaluating others of their positiveness, make sure you have enough perspectives, backed by good enough qualitative and quantitative information, before arriving at your conclusions. Help yourself run through the above exercise. It really is a no-brainer, but, usually, is not highly practiced.

To be candid enough, I too am in the process of learning what I have just preached. :-) So, please feel free to remind me of my own exercise, whenever you observe that I am forgetting my own lesson. Thanks. See ya back, soon. :-)

Kausar Fahim's Undertaking 2.0

It has really been a very, very long time since I posted my last blog. Well, since then, I have been so busy, with so many chores of life that it was not possible for me to come up with some quality blogs. So, instead of producing junk, I took a long break! Well, having said so, I don't want to claim that all my previous blogs were of high quality! :-) The caveat is that my blogs' readers had neither reprimanded me of, nor appreciated me much for, my past blogs! So, I decided to take the benefit of doubt. (-_*)

Going forward, I have decided to put extra efforts to make my blogs interesting and light. I don't intend to give my readers high blood-pressure and/or hyper-tension. I would love to see a smile on my blogs' readers' face, while reading my blogs. Anything more than that would be considered great bounty! :-)

However, as usual, criticism, to my blogs, is always highly solicited. So, please feel free to type in your valuable comments whole-heartedly. 

Thanks, fellas. 

The Inflation Problem in India

The Indian Government has long been struggling to tame the inflationary pressures that run in the excess of 6%. Since early 2010, the Reserve Bank of India has increased the interest rates six times, but, has still failed to meet the longing objectives. Why?

The simple answer is that they are trying to fix the wrong side of the problem. It's true that demand is high in the Indian market, but, more than just demand, it is the supply-side that is highly constrained! By increasing the base rates, the RBI has just been trying to bring down the demand, so as to tame the inflation. The actual, and thus the long-term, solution to the problem requires on the government part to invest billions of dollars in fixing the pathetic supply-side problems. But, fixing the supply-side of the problem requires guts, courage, discipline, honesty, accountability, high-standards of governance, and tons of money.

Instead of tackling the real-and-higly-challenging problem, the government is busy giving the world, especially to the global investors, an eyewash by frequently increasing the interest rates. Sad? Indeed.

The Global Currency War

The global fight to reducing the value of currencies is peaking up. It might reach to its zenith, with the Fed further printing crispy US dollars, and pumping those dollars in the global economy, either directly or indirectly. The Fed is thinking of buying the US Treasuries, with its new crispy greenbacks, and is going to keep the interest rates near to zero, for a long time. If this happens, the US dollar will get diluted, and US exports will become more competitive on the global markets. Thus, it is a direct, currency-war response to China. But, the challenge for China is to move its currency further down, in tandem with the greenback, against a basket of currencies. Thus, China needs to keep buying US-dollar denominated assets, especially US debt, extending its love-hate relationships with the greenback. For global investors, it is a no-bariner to guess the US treasury yield, and, for the global market, it's a no-brainer to guess the direction of the new money!! :-)

Another challenge for China is to weigh-in the costs and benefits of continuing its currency war, as it holds almost 10% of US debt -- the dollar asset the value of which goes down, every time the dollar is getting devalued. So, the ultimate question for China is to consider whether it is worth keeping its currency devalued so as to export more and more, and then keep buying US-debt with the money earned so to keep exporting even more and more, and, then, somewhere in the cycle, the US brings down the value of the debt down by printing new greenbacks!! Undoubtedly, it is a vicious circle!!! A vicious circle in which China has a huge chance of losing, rather than of winning!! Isn't it illogical to bet on someone else, especially when your entire fortune is at stake? But, it appears, for China it is not!! China has been keeping most of its economic strategies US-centric!! China really needs to come to grips with itself -- that it is a behemoth and it should now be inward looking rather than outward looking!

Although, it all started with the US and China, but, of late, some more countries have hopped on to the bandwagon in the currency markets to manipulate their currency in order to export more and more, such as Japan, South Korea, Indonesia, Brazil, etc., making the currency war global. It's a dangerous-and-quite-pointless fight the world is getting into, as it is purely a beggar-thy-neighbor policy, which is not only mean, but also cheap!! Why? In one way, this unequivocally proves that the world has run out of real innovations, or, at best, it proves that the world has really given up on real innovations, which are the real-and-awesome sources of renewed exports that bring livelihood to all, including the producers and the consumers alike. But, instead of focusing on this aspect, the whole world is getting into a dog fight!! May God save us all. Aamin!

My Blogs: Easier to Read, Simpler to Understand, and Friendlier to Share

I have earnestly tried my level best to make the template of my blog as simple as possible, in order to enhance the ease of readability. Moreover, now, you can share my blogs with others through your very own Gmail, Blogspot, Twitter, Facebook, and Google Buzz accounts.

As usual, please keep enjoying my blogs secretly! :-)

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