Hedging is not the whole problem of gold. After the outbreak of the conflict between Russia and Ukraine, the dollar index and dollar denominated gold rose at the same time, entering a more classic “risk aversion mode”. According to the calculation, we find that: at present, the sovereign currencies of major countries / regions are depreciating relative to gold, which has appeared before February 22: before the Russian Ukrainian conflict is included in the asset price, the gold denominated in the sovereign currencies of major countries has exceeded the high point on June 2, 2021, and the gold denominated in Japanese yen has reached an all-time high. A similar situation occurred before and after the European debt crisis. The US dollar index and gold rose simultaneously under the demand for risk aversion (201001-04 to 201006-30), but after the US dollar weakened in the later stage (201006-30 to 201108-22), gold ushered in a period of greater flexibility. At present, investors need to consider whether the real opportunity of gold is covered up by event exchanges.
The other side of gold: natural currency vs credit currency. Gold is not money, but money is gold. The relationship between real interest rate and gold is not absolutely stable. It is a part of gold Pricing: according to real interest rate = nominal interest rate inflation, real interest rate is actually the actual income of holding credit currency related assets (gold itself has no interest). It can engrave the opportunity cost of gold most of the time. But the opposite of gold always corresponds to credit currency. When investors have a crisis of confidence in the gold denominated credit currency, gold will bring the most flexible moment. Historically, the collapse of monetary credit will be reflected in the sharp rise in the price of all physical assets, behind which is the sharp depreciation of the credit currency of the valuation unit. The most extreme examples are the sharp depreciation of the German mark after World War II, the hyperinflation in Zimbabwe and the crazy issuance of legal currency by the national government during the Republic of China. The less extreme example occurred in the stagflation period of the United States in the 1970s: the historic opportunity of gold due to the disintegration of the Bretton Woods system and the supply shock.
“Vanishing inflation”: real asset inflation vs financial asset inflation. Inflation is essentially a monetary phenomenon, that is, monetary growth faster than potential output itself will bring inflation. However, for a long time in the past, the currencies of the world’s major economies were significantly over issued, the nominal prices of most physical assets were in a long-term downward trend, and inflation seemed to “disappear”. In theory, if all money is used to price physical assets, the nominal price may rise sharply even if there is excess supply. The extremely unbalanced distribution of money between physical assets and financial assets is the logic behind it: after 2011, none of the nominal prices of major commodities can outperform the growth of broad money, most of which are even negative. The proportion of financial assets in the total national assets of the United States continued to hit a record high, reaching 74.79%. However, some hidden worries have emerged. The annualized yield of one-year local currency treasury bonds of major economies (the United States, Japan and Europe) after excluding inflation in 20042021 is far lower than that of gold denominated in local currency. In the past, the return of holding financial assets may be more from the 40 / 60 stock bond portfolio, that is, in the past, the monetary part flowed to the support for technological progress and the real economy. Even if there was inflation, it was more conducive to the performance of stocks, thus attracting more money to hold financial assets.
Golden historical opportunity. When there is an unprecedented supply shock, ten-year inflation expectations in the United States have reached an all-time high. Under high inflation expectations, the long-term real rate of return of holding us national debt assets is close to negative value. At the same time, the US government debt has reached an all-time high. At this time, the method of significantly raising the real interest rate to improve the actual return of creditor holders has many obstacles because it is too “painful”, and equity financial assets are also facing the dilemma of high decline. The hidden worry of the credit currency represented by the US dollar is emerging, and the positive feedback mechanism of the future currency pouring into gold and anti inflation real assets may be taking shape. If we calculate the gold price based on the global broad currency / global gold reserves, the ratio of the gold price to the world bank’s gold price in 2020 is still lower than that in 2011, and the most expensive gold price measured by this standard actually appeared in 1980, that is, the end of the third round of stagflation in the United States. Based on this, we prefer the gold price to be slightly higher than US $2203 / ounce. Historically, the most elastic stage of gold stocks in the United States in the 1970s is often after the long-term price center of gold has been confirmed and moved up again and again; The performance of China National Gold Group Gold Jewellery Co.Ltd(600916) shares from 2002 to 2011 is the same. According to the advantages of enterprise resource endowment and profitability, combined with the relevant views of the metal and materials team of Minsheng Securities Research Institute, the gold related beneficiary targets include: Zhaojin mining industry, Chifeng Jilong Gold Mining Co.Ltd(600988) , Shandong Gold Mining Co.Ltd(600547) , Yintai Gold Co.Ltd(000975) ; At the same time, combined with the factors such as tracking deviation, tracking error and management scale of the fund, it is suggested to pay attention to: Wells Fargo Shanghai Gold ETF (518680) and Hua’an gold ETF (518880).
Risk warning: inflation is lower than expected; US economic growth exceeded expectations; The performance is less than expected
