Though most unlikely, but if then where we see the gold prices....
In first place, I would like to say that Gold may be costing 10000$ per ounce as per gold holding of US to the tune of 8500 tonnes and currency in circulation.
In Indian terms, value of rupee will certainly appreciate but Dollar is not going to crash.Intrinsic value of Rupee if pared with gold comes to roughly 31 and accordingly gold may be costing Rs 100000 per 10 gms. In a way, we may say that rupee is devalued to the tune of 65% by money market operations by Banks and RBI.
If reforms are taken up inspite of and despite the opposition by so called socialist leanings, FDI and foreign investments in India will increase and rupee will start appreciating due to inflow of dollar into India consequent upon renewed FIIs' confidence in Indian Polity about their intent. After all, we have seen a devaluation to the tune of more than 20% within six months after Union Budget, when FIIs' confidence in India was at its lowest point.Hence at this point, we should do every thing possible to regain this confidence so rupee value may be appreciated to 50-51 levels again.With these levels, I do not foresee any appreciable change in crude prices in dollar terms thereby making our imports cheaper. Gold however may appreciate in Dollar terms to 2100-2125$ per ounce but this may still not increase our import bill as gold imports are on the decline to the extent of 40%. Our Balance of Payment situation will also improve significantly.
So, by 2013 budget I see gold levels on Indian soils at Rs 34500 per 10 gms along with a much better BOP situation.
Albeit, political situation and stability may be key factors....
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