Do you want to track commodities ?

A must visit site for people who want to track commodities.

Before investing in commodities we should note that, like all investments they have wide price fluctuations over time and it’s impossible to predict which commodities will be in favor and which will be out of favor and for how long.

To illustrate those price fluctuations, U.S. Global Investors produced what it calls the Periodic Table of Commodity Returns. That table shows how the price of 14 commodities have ebbed and flowed over the past the decade, and illustrates the principle of mean reversion — the concept that returns eventually move back towards their mean or average.

For instance, the table shows that palladium was out of favor in 2008, falling 49.29% that year, but in favor the following two years, rising 118.07% in 2009 and then 96.6% in 2010 & Lead was out of favor in 2008 falling 62.52% but gained 152.37% in 2009.

Let’s try to catch the trend for the year 2011.

http://www.usfunds.com/research/the-periodic-table-of-commodity-returns/

Reliance Gold Savings Fund

Investment in Gold is never new to an Indian. Reliance Mutual Fund has announced a new NFO – Reliance Gold Savings Fund which is primarily an open ended fund and  will primarily invest in Reliance Gold Exchange Traded Fund.

The NFO Period is 14^th February to 28^th February 2011.

I recommend the fund for the following reasons

·         Gold is a less volatile asset. The performance  of gold has not only been strong, but it’s volatility has been low

·         Gold as an asset over centuries has maintained its value against inflation and considered a hedge against inflation

·         An Ideal Portfolio diversifier with very low/negative correlation with other asset classes

·         A Safe Haven Asset – During Uncertain times gold affirmed its position as an insurance for investment portfolios.

Gold Still looks attractive

·         Strong Investment demand in Major Consumption Nations – India & China

·         Fundamental weakness in US Dollar & Fear of Inflation

·         Central Banks Buying spur

·         Geopolitical Uncertainties

The Fund has a benefit of holding gold in a paper form with no need of a Demat account or storing the Gold with the Locker. The Gold which you hold in this fund will also not attract wealth tax.  Small investors can also invest in the fund through the SIP route.

The one drawback of the scheme is that being a Fund of Fund scheme the charges of the scheme would be higher. The cost of the normal ETF is around 1% in the scheme the total cost the investor will bear is capped to 1.5%. But it’s worthwhile given it’s advantages like liquidity, SIP route etc.