‘Equity rout: Fresh rally expected in silver, corn’

Last Updated : 10 August 2011 at 22:20 IST
MUMBAI (Commodity Online): Equities’ loss could be commodities’ gain! When funds erode in legion from equities, commodities seem to be gaining.

Take the case of gold:

Spot Gold prices hit a record high of $1,779.14/oz and were seen at $1,771.45 an ounce at 10:28 a.m. EDT; a gain of 1.6%. The commodity has gained 6% so far this week.

This is in sharp contrast to the slide in equity markets: S&P 500 index dipped 3.2% to touch 1,134.52 at 10:20 a.m. in New York, Wednesday. Meanwhile, The Stoxx Europe 600 Index plunged 3%.

Possibly, the money that has deserted equities is finding its way to commodities.

Selected-commodity rally expected

“Gold may be going up. But there is a psychological limit to it.” said Martin Patrick, formerly a Professor of Economics at Maharajas College in Kochi. “Once gold goes up beyond a point, people may start fearing it is too high a peak and seek other options.”

“As a result, Silver may gain…” he said. And, added that it could well breach the $50/oz way too ahead of October 2012.

“Corn is another possible contender…”he added, and said, “agricultural-commodities in general holds better scope when it comes to investments in a situation like this.”

India a beacon of hope vs. China

Martin Patrick termed India a beacon of hope in the light of market routs.

“Indian consumption is driven domestically. Unlike China, we consume a lot of what we produce and are not depended on exports, beyond a point.” he added.

Latest reports suggest that China’s July trade surplus has risen to $31.5bn on record exports.

“Despite the absence of FDI (Foreign Direct Investment) in various sectors, India achieved many things that China did through FDI.” he said.

“Still, China sports many a strength that India do not…” he quipped.

With the health of several global banks in question, and the fear of debt-crisis contaminating France, equity markets are in a bloodbath.

As published in: http://www.commodityonline.com/news/%E2%80%98Equity-rout-Fresh-rally-expected-in-silver-corn-41556-3-1.html