Ashok Mittal of Karvy Comtrade sees gold trading rangebound this year between USD 680 per ounce and USD 840 per ounce. He expects USD 680 per ounce to hold.
According to him, crude should have traded somewhere between USD 60 per barrel and USD 70 per barrel. “But now since it has broken USD 48 per barrel support and even the second level at USD 45 per barrel, we may see it somewhere between USD 38-39 per barrel, if not those USD 23 per barrel or so.” He sees crude between USD 38 per barrel and USD 58 per barrel in the next six months.
Here is a verbatim transcript of the exclusive interview with Ashok Mittal on CNBC-TV18. Also watch the accompanying video.
Q: How do you look at these commodities, lot of people have invested in it, what is your take on where do you think this year might end?
A: I think what you said is right. We have seen turmoil happening across the board in the whole world in all the asset classes and that is where you feel confused about what you should do with the funds and I think in all those asset class you will find gold to be little safer in terms of investing, having lower volatility and then whatever opportunities are there people will try to invest some money in gold.
I think we should still remain rangebound on gold for this year and on a very large range maybe USD 680/oz, which has been there - it has hold very well earlier also - I will expect that USD 680/oz should hold now also and on a larger range we may see somewhere between USD 680-840/oz as far as gold is concerned.
Silver may not exactly go along with gold because silver is now being seen as industrial product and it will largely move as per the industrial growth side and the signs are not very good or encouraging as far as the industrial growth across the world is concerned. Because you see Japan or even Europe going to recession period or negative growth side, so it is not a great story about silver maybe because you will not see investment demand coming on silver.
Thirdly if you look at crude oil obviously I think we have seen quite a large dip happening on the prices. I personally feel that USD 147 per barrel was not a right price and maybe even USD 40 per barrel is not right price. I personally feel it should have been somewhere between USD 60-70 per barrel but now since it has broken that USD 48 per barrel support which we were earlier expecting to hold on and even the second level at USD 45 per barrel has broken and has traded below that and has closed below that, so I am afraid that we may see somewhere USD 38-39 per barrel if not those USD 23 per barrel or so.
Q: What would you advice on gold and silver?
A: I think if you are looking at investing some amount I will suggest that instead of playing purely on margins, the investor should actually invest in gold in a systematic manner maybe looking at gold mini contract of 100 gm and he should buy one lot when the gold is about USD 740/oz which means about USD 20/oz lower from the current levels and the second lot one should look to buy close to USD 680-690/oz because that is very strong level and I am hoping that level should hold.
In rupee terms if you look at MCX prices, which are about Rs 12,300/10gm I think Rs 11,800/10gm should be on good level on mean ways and then maybe one should try to invest at Rs 200 here and there.
Q: You think gold BeEs (Benchmark exchange traded schemes) could also be an option?
A: It is a good option. What we see on the holding cost is it is little higher in terms of what you see on the ETFs and sometime we have seen the spreads being little higher but yes otherwise it can be in the gold ETFs as well.
Since the investor is also looking at investing in silver and we incidentally don’t have ETFs on silver, similarly one should look at silver where USD 8.5/oz is a very good – the recent low at about USD 8.45/oz or something should be very good support and I hope that should not break in the near-term.
Maybe in rupee terms, it will be about Rs 15,800-16,000. I think that is a good level to invest and one can invest for little longer period. I am hoping that the period which he is expecting is a little longer maybe about three-four months time. I still hope that gold and silver should outperform any other asset class in next couple of months.
Q: In coming six months where do you see crude prices panning out?
A: It is really tough to take a call on six months that too on crude because we are seeing significant movements happening in three days period or two days period. However, there are important things when we are looking at crude prices that too for a six month period – one is that I will assume that we will bottom out somewhere about USD 38 per barrel or so. So still there is some kind of a downside maybe about USD 5-6 per barrel from the current levels and from there I will expect that this is very strong support level to hold on and then we see some kind of bounce happening towards USD 58-60 per barrel from those levels.
Secondly, the call we are going to take on dollar-rupee - I do expect a lot of movement happening on the rupee in the next about 5-6 months time. If things do not change, we may see rupee going to maybe about 56 to a dollar or so. So even if you will have USD 38-40 per barrel on the international markets and let us assume that rupee depreciates then you will see the price in terms of rupee for crude oil may not appreciate as much as it may happen on the international markets.
So I will say that I will look at a level between USD 38-58 per barrel in the next six months or so.
Q: Considering that the investor is looking at a long-term what levels would you recommend for silver MCX?
A: I think the good support level in the international markets is USD 8.43-8.45/oz, which is a very good level to buy. So I think the investor should wait for some more time and if he gets it around USD 8.43-8.45/oz then one should buy. If one buys at that time, one can hold for a long-term and can get good returns and will have less risk.
