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Monday, February 25, 2013

Gold has had a stupendous run ever since the financial crisis broke out in 2007-09. As economies slumped into recession and unemployment rose, governments and central bankers resorted to reckless money printing. Their rationale was that more money in the hands of people will induce them to spend more and thereby bolster economic growth. They could not have been more wrong. Instead of fueling growth, these quantitative easing programs have only reduced the value of paper currencies. And this is where the precious metal gold stepped in. As a tangible hedge against falling currency values and inflation, gold has been the apple of the investors' eye. But the past few months tell a different story. India, which is the world's largest gold consumer, has seen the yellow metal's prices fall by nearly 10% from the record high in November 2012. This is line with the trend seen in the global markets as well. We believe that the gold story is not over. As long as governments cont inue to print money, gold will continue to cement its position as a store of value. Gold prices are bound to correct and such times should be looked upon as an opportunity to add a bit more of the metal to one's overall investment portfolio.

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