Sunday, 28 July 2013
10,000 Dollar Gold?
As gold has marched higher throughout the last decade, there has been no shortage of market predictions for gold prices. I remember when $1,000 once seemed like a radical prediction. Then it was $2,000. Then it was $5,000. As you might guess, $10,000 was the next magical number being predicted.
Gold now seems like a bargain at $1,000. And the $2,000 level was nearly hit recently. Will we look back a couple years from now and say gold would be a screaming bargain at $2,000? That could very well happen. I think gold will continue moving higher, but I have no idea where this market will end. However, several people have been calling for gold to move to $10,000 and I have to wonder if this is just a marketing ploy or there is some solid analysis to back-up these predictions. Are these people just radical gold bugs or do they have a legitimate basis for their price predictions?
I wanted to get into the head of one of these people, so I spoke with Nick Barisheff atbmgbullion.com. He recently wrote a piece aboutGold’s Long Road to $10,000. I quickly realized Nick is a wealth of information on economics and the gold market. He made some very good points about the federal debt, gold being used as a currency, investment demand for gold and many of the financial problems in the US and around the world that we have been talking about for some time.
He did explain that his prediction for $10,000 wasn’t really a hard prediction. It was more of an overall trend prediction. Basically, if we stay on the same course we have been on for years, then he believes gold will continue moving higher. I agree completely with that. However, Nick did say that gold hitting $10,000 in about 5 years is a real possibility.
The point that hit home the most for me is when he talked about the amount of gold above ground is nearly $2 trillion. There are about $250 trillion dollars in investments around the world, not including real estate. Less than one percent of those investments are currently in gold. A shift to 2, 3 or 5 percent would lead to a dramatic run in gold. Much of the gold in the world is not for sale, so there is only so much to go around. Therefore, you could have a lot of money chasing a small amount of gold.
It is not difficult to imagine a scramble to buy gold if the dollar continues to deteriorate. Same thing if and when another financial crisis arises in the US. The crisis in the Eurozone is currently fueling the rally and many investors feel it is only a matter of time before the US starts to face the same issues. Printing more dollars has bought the US some time, but how long can this continue? The longer the economy stays weak, the more dollars the government will probably print to prevent major downturn. The dollar will probably continue to decline and this means more inflation and higher gold prices.
I have to say there weren’t any radical thoughts in my discussion with Nick. It is currently difficult to imagine gold moving to $10,000, but it was difficult to imagine gold moving to $1,900 when it was trading at $300. There was a great amount of economic logic and facts to back his argument.
I had to ask if he thinks this would be another bubble market and gold prices will eventually crash like they did in 1980. He feels that will not be the case this time. There will probably be some major setbacks along the way, but it is unlikely politicians will get their act together. We can probably expect more of the same and that is irresponsible fiscal and monetary policy. Gold will thrive in this environment as is has for years now. Gold will probably also become more of an investment asset class, which means more investment demand. I’m not saying gold will get to $10,000 in the next 5 years, but I’m not saying it won’t either.
Gold will reach to 10,000 dollar after 4-5 Years. Is it true? Then read this.
The temporal jury is still out on Nick Barisheff’s $10,000 Gold. Either it will be this generation’sDow 36,000, a signpost marking a secular top, or a prescient and gutsy call for faith in gold’s fundamentals at a time when many are giving up on precious metals.
The latter is more probable, for reasons that Barisheff, CEO of Canadian gold dealer Bullion Management Group, spells out early on. To hit just a few of the high points: the developed world is grossly over-indebted and is holding a 1930s-style depression at bay with insanely-low interest rates and unprecedented amounts of newly-created currency. In response, the developing world, led by China, India and Russia, is buying up every bit of gold they can get their hands on, with an eye to the inevitable changing of the currency guard when the dollar, euro and yen are depreciated to nothing and the yuan and ruble rise to take their place. This dynamic, says Barisheff, will send gold soaring – though of course it will actually be gold sitting still and the dollar plunging.
As a gold dealer, Barisheff is at his best when clarifying the differences between paper gold like ETFs and unallocated storage and the real thing like coins and allocated accounts. This paper-versus-physical distinction has become front-page news recently, and is a crucial piece of information for new gold investors. The time will come when millions of people who think they own gold find out that they really don’t. This book’s readers will avoid that fate.
In Barisheff’s analysis, the US is in the final stage before hyperinflation, with debt beginning to overwhelm the system while crucial needs like infrastructure are starved to pay for entitlements, overseas military adventures and interest. Here’s how he describes what comes next:
Stage 5 is hyperinflation, the worst economic phase of the fiat cycle, when currency becomes essentially worthless. Hyperinflation has occurred fifty-six times since 1795. During the Weimar hyperinflation, which we will discuss in more detail below, only gold was accepted as reparation payment. Of course, it is probable that a significant structural change will occur, likely involving the formal recognition of gold as money, in order to avoid hyperinflation on a global scale.
Where would gold have to be set to account for all the paper currency now circulating? That’s right, $10,000.
A final note about this book’s production values: The publisher, John Wiley & Sons Canada, has done a great job with the cover art, the graphs and the indexes, while Barisheff’s presentation is clear and logical. This is a polished production from beginning to end, which makes it an easy read. Everyone associated with it should be proud of what they’ve produced.
Saturday, 27 July 2013
Friday, 26 July 2013
The glass industry of pakistan
Glass industry is one of the few
industries which is still showing positive figures in the current economical
crisis of Pakistan ,
where every other industry is facing the economical crunch. Having a strong
local market of seven to nine billion and also creating its presence in
international market now, the Pakistani Glass industry can be divided into
three major divisions which are pharmaceuticals, food & beverages and
construction. . Looking at the Porters model, we would analyze that how Ghani
Glass meets it opportunity and threats in the organization’s external
environment.
When
an industry is emerging, the barriers to entry can be medium to low. On the
other hand for an established industry, the barriers to industry will be high
to very high. Even with the continuously increasing product demand and growth
of glass industry, still it’s not an easy ground for the new entrants as it has
got high setup costs associated with it. Glass industry is very much of an
established industry meaning that the barriers to entry are high to very high
because of the following reasons; Customers have little brand loyalty, Products
provided are not unique, Switching costs are low, Production process is easily
learned, Access to inputs is easy, Access to customers is easy, Capital and
Technological requirements are high.
The following buyer supplier matrix portrays who has how
much power in business negotiation.
|
Buyers
Importance in Suppliers Customer Base
Low Medium High
|
Buyer
monopsony
Power
|
Negotiating
Power
favors
 Buyer |
Mergers/
Complex
Negotiations
|
|
Higher
Buyer
Power
|
Frequent
Negotiations
Biz-Dev
Contacts
|
Negotiations
Power
Favors
Suppliers
|
|
|
Pleasant
Relationships
Simple
Contacts
|
Higher
Supplier
Power
|
Suppliers
Market
Power
|
|
|
Low Medium High
Suppliers Importance in Buyers Supply
Chain
|
|||
Ghani
Glass because of its established position in the industry has got comparatively
good bargaining power against both the buyer and the supplier.
Looking
at them separately, the bargaining power of suppliers is medium because some of
the supply chain is controlled by the Ghani group as they also deal in the
mining business silica. 40% of the silica supplies come from there own mines
and the other 60% percent is supplied by the other suppliers. Some of the
chemicals being used in glass manufacturing are supplied by ICI Co. in return
for supplying ICI with salt.
On the other hand the bargaining
power of the buyers is medium due to the fact that
·
There is a concentration of buyers and these
buyers buy in large volumes
·
The product is undifferentiated and can be
easily replaced by substitutes
·
Switching to an alternative product is
relatively simple and does not require high costs
·
Customers have access to market information for
evaluation.
Though
the current economical crisis is not affecting the glass industry by much but
the recent continues power outages has surely affected the production. This has
further decreased the supplies despite the fact that the demand for glass
products is increasing as new beverage and pharmaceutical companies are also
expanding their businesses and their products are dependant on the glass
industry.
As
there is an increasing demand for glass products and shortening of supplies,
the industry is now moving towards acquisitions, mergers and research &
development to coop up with the increasing demand.
Threat
of substitutes exists if there are alternative products with comparatively low
prices and better performance parameters. For Ghani Glass products, major
substitutes are plastic bottles and Tetra Pack. Both of the substitutes have a
relatively there own specific market share which is not affecting the Ghani
glass by much.
Plastic bottles are low in demand because of the safety
issues and its shorter life span, on the other hand Tetra Pack products due to
its seven layer packaging though are safe but they are expensive too.
High
competition result in fluctuating prices and low profit margins in the industry.
For Ghani glass the local competitors are Murree, Baluchistan ,
Prince, Khawaja and BGL. Internationally Germany is the lead runner in glass
manufacturing industry because of their lead in technology and availability of
technical expertise. This high degree of rivalry is due to exit barriers,
industry concentration, fixed cost/value added products and also the customer
can easily switch between products
The
market for these glass products has now moved from the seller’s market the
buyer’s market as there has been an increase in buyer companies as compared to
glass manufacturing companies. Another aspect of these markets is that in Pakistan most
of the market is of price conscious consumers, this is the reason that why the
glass manufacturing companies of Pakistan is not adhering to the
quality issues. In result, for the quality conscious markets like construction
glass products and glass decorative, all of the glass products are being
imported from the European countries. In addition to that the government has
also reduced the import taxes for these glass products which have further
raised concerns for the local glass industry.
The
Pakistani glass industry has limited itself to a very narrow market due to its
high technological requirements, but there are many other untapped markets too
which the industry can look into like glass tubing, glass used in electronics
(monitor and TV screens), heat resistant glass, fiber glass and laminated
safety glass.
Company Profile
History of Ghani Group
Ghani
Group of companies was founded by Sheikh Abdul Ghani in 1963. The origins of
this group can be found in the mining industry as per its involvement in coal,
salt and sand mining since 1959. It evolved to become the leading manufacturer
of glass in Pakistan
with a reputation for unrivaled excellence in the standards of glass products
and services. Today, Ghani Group is running a diverse range of businesses
including three glass plants, an automobile plant, number of leading
mining companies, one textile unit, and trading houses and has an annual
turnover of over Rs 8 Billion. Ghani Group ventured into the glass manufacturing
through Ghani Glass Limited. Ghani Group was not new to the glass
manufacturing industry. They had been supplying silica sand to the glass
industries four decades back. The chosen
manufacturing field was glass manufacturing due to the robust demand for glass
products in the country.
Ghani Glass
Ghani
Glass Limited is a public limited company, incorporated on December 31, 1992 . The company is
engaged in the business of manufacturing and sale of glass containers and sheet
glass of different types. The company is the premier supplier of glass products
and has a market share of over 85% in Pakistan . It exports to around
12-26 countries world wide and has gone for merger with Kaasaf Ul Musaffa, a Dubai based company.
Through
continuous development in innovation, expansion and quality focus, Ghani Glass
is leading the glass industry with a total turnaround of over 2.0 Billion Rs annually.
Mission
is to be successful, by effectively and efficiently utilizing our philosophies,
so that we achieve and maintain constantly the high standards of product
quality, advanced techniques and customer satisfaction.
Vision and Philosophy
"Nothing
in this earth or in the heavens is hidden from Allah"
To indulge in honesty, integrity and self-determination, to
encourage excellence in performance and most of all to put our trust in Allah,
so that we may, eventually through our efforts and belief, become the leaders
amongst glass manufacturers of South Asian Countries.
Location
Its
manufacturing facilities are located in three provinces:
- NWFP - Ghani Glass Limited, Hattar (GGL-I)
- Sindh
- Ghani Glass Limited,
- Punjab– Ghani Glass Limited, Sheikhupura (Float Glass Plant)
Market share
Ghani
Glass Limited is the leader of glass manufacturers of the country as it
captures over 85% of market share. It also has international reach over 12
countries. The production of GGL-I, GGL-II combined is 110,000 tones per annum
and of GGL3 (Float Glass Plant) is 100,000 tones per annum.
Business divisions
The
production facilities of the company are divided in two major divisions:
Float glass division: During the year 2007, the division
introduced two new categories of glasses in its product line, Green float glass
and Brown float glass.
Container glass division: The division catering beverages and
Pharmaceutical industry has achieved significant growth in the market share in
the beverage industry along with already being a leader in the Pharmaceutical
industry.
To formulate any strategy, you have to first look into
different internal and external factors for an organization and the industry as
well.
Internal Profile
Matrix
Description of IFE
For
any organization to capitalize on an opportunity, it needs to look for quality
and efficiency in all its operations. Thus technology plays a vital role in
improving business processes and their operations. This could be only possible
if the management of the organization is aimed to follow these benchmarks,
tries to make a footprint in the industry in the form of high market share and creates
awareness about the practical implementations in the organization. For this an
organization has to be financially strong. The weights as shown in “Exhibit ” are
assigned on the bases of above stated considerations. Ghani Glass Co. is strong
on most of these grounds and its major strengths include financial strength,
quality products and technology indicated by the rating 4. But the company is
not pursuing policies and practices which could suit their employees. In result
the organization’s major weaknesses are on issues like salaries, turnover rate
and hiring of technical experts. As a result, Ghani Glass Company is just above
an average in it’s over all internal strength, concluded from the total
weighted score of 2.75.
External Profile Matrix
Description of EFE
As we can see from “Exhibit ” that technical up-gradation, expansion,
competent staff, quality and lack of system are the most important issues that
are effecting the glass industry, as indicated by the weight of 0.15 for
technical up gradation and 0.1 for the rest of the above mentioned factors.
Ghani Glass’s current strategies are encapsulating issues like technical
up-gradation, expansion and quality as indicated by the rating 4, 4 and 3
respectively. Also Ghani Glass Co. is not pursuing any policies and practices
to attain and retain its competent work staff, as indicated by 2. Despite the
organization’s weak HR policies, the total weighted score of 2.9 indicates that
Ghani Glass is above average in its efforts to pursue strategies that
capitalize on external opportunities and avoiding threats.
Competitive Profile
Matrix
Description of CPM
From
“Exhibit ”, we can see that an organization’s financial position is of key
importance as it also leads to the strength of other key factors. Ghani Glass’s
financial position is very strong as compared to the financial position of its
competitors which are Murrey Burry and Balochistan Glass Ltd. So Ghani Glass
has the competitive advantage of being financially strong. There are certain
other important critical success factors like market share, availability of resources,
cost structure, production capacity and technology. Ghani Glass Company is
strong on most of these factors, as shown by a total weighted score of 3.145
which is more than that of BGL and Muree Burry scores of 2.42 and 2.145
respectively.
After the evaluation of several
internal, external and competitive factors, different types of matrices are
used for the matching stage to come up with different strategy options.
SWOT
Matrix
In
SWOT analysis shown above, a comparison is done for the organization strengths,
weaknesses, opportunities and threats.
Strengths VS
Opportunities
By
comparing organization’s key strengths (financial strength, labor force, good
relations with suppliers, state of the art technology) with its key
opportunities (growing local and international market and innovation). Leads to
three different strategic options of:
- Diversification
- Market development
- Product development
Strengths VS Threats
To
overcome the weaknesses (growing market can attract competitors, loss of key
staff, supply less than demand, government policies, substitutes, power
tariffs, increase in cost of raw materials) Ghani Glass will have to capitalize
on their key strengths of financial strength, educated management, state of the
art technology and production capacity. This leads to an option of retrenchment
strategy for Ghani Glass.
Apart
from this, Ghani Glass will also have to work on the policies of improving
their incentive system to reduce the loss of key staff in their organization.
Ghani
Glass will have to avail the opportunities (growing local and international
market, innovation, technical up-gradation and increasing preference for
quality products) to minimize its weaknesses of poor salary and reporting
structure, turn over rate, accountability and lack of technical expertise.
For
this Ghani Glass will have to work on the policies of career progression and
improving the reporting structure.
Weaknesses VS Threats
Ghani
Glass will have to minimize its weaknesses of high running cots and lack of
expertise, to reduce the effects of threats like increase in cost of raw
material, unstable government policies, power tariffs and new competitors.
Space
matrix
Space
Matrix compares the internal and external dimensions for an organization to
evaluate the strategic direction it should follow. These internal and external
dimensions include financial strength, competitive advantage, industry strength
and environmental stability, respectively.
According
to the directional vector (2.05, -0.2), Ghani Glass lye in competitive quadrant
indicating competitive strategies. These competitive strategies include
backward, forward, horizontal integration, market penetration, market
development, product development and joint ventures.
GRAND MATRIX
|
Rapid
Market Growth
|
|||
|
Weak Competitive Position
|
Quadrant
II
|
Quadrant
I
|
Strong Competitive Position
|
|
Quadrant
III
|
Quadrant
IV
|
||
|
Slow Market Growth
|
|||
Grand
Matrix shows the options of strategies which Ghani Glass can follow concerning
its current industrial scenario through the comparison of market growth and competitive
position.
According
to our analysis, Ghani Glass Company falls in quadrant 1 according to its
strong competitive position and rapid market growth of the industry as
encircled in the above figure. And can follow the strategies mentioned in
quadrant 1.
Ghani Glass can further increase
its revenue by 100% if it tries to utilize its financial position to the
fullest potential. In the next three years Ghani Glass can look for new markets
not only by geographical areas but also by developing new related glass
products. For that rigorous R&D by attaining expertise can help Ghani Group
increase its customers in both local and international markets with its new
glass products.
Also continuous research and
development regarding production processes will help Ghani Glass in its cost
cutting, better profit margins and decreasing the effects of increasing utility
expenses in the coming years.
Pakistan has the second largest number of fast-growing companies among 15 regions including Middle East, North Africa and Turkey
Pakistan
has the second largest number of fast-growing companies among 15 regions
including Middle East, North Africa and Turkey, according to 2011 Arabia Fast Growth 500.
A total
of 70 companies from Pakistan made it to the list of Arabia500, with Turkey
topping the list with 117 companies and Saudi Arabia ranking third with 40.
Arabia500
is a project by AllWorld Network which aims to bring together the fast-growing
companies of the world based on their yearly growth, number of employees and
revenue generation.
E2E
Supply Chain Management tops Pakistan’s list with a growth rate of 1,918% in
the Transportation and Aviation Industry between the years 2008-2010. Founded
in 2006, the company has a 2010 revenue range of $50-200 million and 297
employees.
Exceed
Private Limited comes second in Pakistan’s list with a growth rate of 1,320%,
revenue range of $10-50 million and 90 employees in the Construction and
Engineering Industry.
Companies
from Pakistan which made it to the list include Rozee.pk, Folio3, Vita Pakistan
Limited, The HobNob Group, Iqra National University-Iqra Trust and others.
The
least number of companies are from Yemen and Syria with one from each, while
two companies from Palestine also made it to the list. Other countries in
Arabia 500 include Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco, Qatar,
Tunisia and UAE.
The
winners are invited to the Arabia 500 Awards Ceremony and Global
Entrepreneurship Summit in Turkey which takes place from December 3-6.
Companies from Pakistan
|
Rank
|
|||||
|
1
|
1,918%
|
2008-2010
|
50-200 million USD
|
Transportation and Aviation
|
|
|
3
|
1,320%
|
2008-2010
|
10-50 million USD
|
Construction and Engineering
|
|
|
4
|
954%
|
2008-2010
|
1-5 million USD
|
Import/Export Trade
|
|
|
8
|
477%
|
2008-2010
|
10-50 million USD
|
Agriculture and Mining
|
|
|
10
|
392%
|
2008-2010
|
< 1 million USD
|
Consumer Goods
|
|
|
12
|
388%
|
2008-2010
|
10-50 million USD
|
Construction and Engineering
|
|
|
13
|
385%
|
2008-2010
|
< 1 million USD
|
Software Services and Products
|
|
|
17
|
337%
|
2008-2010
|
< 1 million USD
|
Import/Export Trade
|
|
|
20
|
304%
|
2008-2010
|
< 1 million USD
|
Recruitment and Training
|
|
|
23
|
271%
|
2008-2010
|
< 1 million USD
|
Construction and Engineering
|
|
|
26
|
229%
|
2008-2010
|
< 1 million USD
|
Education
|
|
|
28
|
217%
|
2008-2010
|
5-10 million USD
|
High-Tech and Telecommunications
|
|
|
32
|
194%
|
2008-2010
|
< 1 million USD
|
Professional and Consulting
|
|
|
34
|
186%
|
2008-2010
|
10-50 million USD
|
Consumer Goods
|
|
|
38
|
173%
|
2008-2010
|
5-10 million USD
|
High-Tech and Telecommunications
|
|
|
39
|
171%
|
2008-2010
|
1-5 million USD
|
Finance and Insurance
|
|
|
43
|
157%
|
2008-2010
|
10-50 million USD
|
Travel and Tourism
|
|
|
44
|
149%
|
2008-2010
|
1-5 million USD
|
Professional, Scientific and Tech Services
|
|
|
45
|
146%
|
2008-2010
|
1-5 million USD
|
Professional and Consulting
|
|
|
47
|
143%
|
2008-2010
|
10-50 million USD
|
Transportation and Aviation
|
|
|
50
|
136%
|
2008-2010
|
1-5 million USD
|
Professional, Scientific and Tech Services
|
|
|
55
|
127%
|
2008-2010
|
1-5 million USD
|
Textiles and Fashion
|
|
|
57
|
122%
|
2008-2010
|
10-50 million USD
|
Manufacturing and Packaging
|
|
|
58
|
119%
|
2008-2010
|
50-200 million USD
|
Agriculture and Mining
|
|
|
60
|
116%
|
2008-2010
|
10-50 million USD
|
Manufacturing and Packaging
|
|
|
64
|
109%
|
2008-2010
|
1-5 million USD
|
High-Tech and Telecommunications
|
|
|
65
|
105%
|
2008-2010
|
5-10 million USD
|
Manufacturing and Packaging
|
|
|
68
|
98%
|
2008-2010
|
1-5 million USD
|
Consumer Goods
|
|
|
73
|
83%
|
2008-2010
|
10-50 million USD
|
Professional and Consulting Services
|
|
|
76
|
79%
|
2008-2010
|
5-10 million USD
|
Health and HealthCare
|
|
|
78
|
78%
|
2008-2010
|
1-5 million USD
|
Construction and Engineering
|
|
|
79
|
75%
|
2008-2010
|
1-5 million USD
|
Education
|
|
|
82
|
75%
|
2008-2010
|
5-10 million USD
|
Textiles and Fashion
|
|
|
86
|
71%
|
2008-2010
|
1-5 million USD
|
Education
|
|
|
91
|
64%
|
2008-2010
|
10-50 million USD
|
Textiles and Fashion
|
|
|
105
|
52%
|
2008-2010
|
10-50 million USD
|
Construction and Engineering
|
|
|
106
|
49%
|
2008-2010
|
10-50 million USD
|
Travel and Tourism
|
|
|
107
|
47%
|
2008-2010
|
< 1 million USD
|
Energy and Power, Water
|
|
|
109
|
45%
|
2008-2010
|
50-200 million USD
|
Textiles and Fashion
|
|
|
111
|
41%
|
2008-2010
|
200-500 million USD
|
Construction and Engineering
|
|
|
116
|
36%
|
2008-2010
|
< 1 million USD
|
Import/Export Trade
|
|
|
117
|
36%
|
2008-2010
|
10-50 million USD
|
Conventional Energy
|
|
|
125
|
28%
|
2008-2010
|
10-50 million USD
|
Software Services and Products
|
|
|
127
|
28%
|
2008-2010
|
5-10 million USD
|
Computer Networking and Software
|
|
|
130
|
27%
|
2008-2010
|
< 1 million USD
|
Education
|
|
|
131
|
27%
|
2008-2010
|
1-5 million USD
|
Agriculture and Mining
|
|
|
133
|
27%
|
2008-2010
|
10-50 million USD
|
Food Industries
|
|
|
134
|
26%
|
2008-2010
|
10-50 million USD
|
Software Services and Products
|
|
|
136
|
25%
|
2008-2010
|
10-50 million USD
|
High-Tech and Telecommunications
|
|
|
148
|
15%
|
2008-2010
|
5-10 million USD
|
Manufacturing and Packaging
|
|
|
149
|
14%
|
2008-2010
|
1-5 million USD
|
Professional and Consulting Services
|
|
|
151
|
14%
|
2008-2010
|
1-5 million USD
|
High-Tech and Telecommunications
|
|
|
153
|
12%
|
2008-2010
|
1-5 million USD
|
Finance and Insurance
|
|
|
157
|
10%
|
2008-2010
|
< 1 million USD
|
Food Industries
|
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