Gold, like commodities, is not a friend of time. The investment concept of "being a friend of time" is aimed at interest bearing assets, while non interest bearing assets and even assets or investment tools with time value are "enemies of time". Investors trading commodities, gold and other assets are not making friends with time, but studying and judging prices or trends.
Theoretically, the trend of gold is the result of the "race" between nominal interest rate and inflation. Gold is an interest free asset. Under the US dollar pricing system, the US real interest rate drives the international gold price, but the negative correlation with the international gold price is not the 10-year tips yield, but the year-on-year difference between the 10-year US bond yield and the US CPI. Theoretically, the direction of gold price is the result of the year-on-year "race" between the yield of 10-year US bonds and the US CPI. However, since 2016, this traditional perception has been overturned by negative interest rates.
The rise of negative interest rates has made nominal interest rates the main driving force of the gold trend and turned gold into an "inflation averse asset". After the Bank of Japan announced the implementation of negative interest rate in early 2016, the scale of global negative interest rate bonds increased sharply. The outbreak of the epidemic in 2020 further boosted the scale of global negative interest rate debt. Here, non interest bearing gold has "allocation value". On the other hand, there is a seesaw relationship between inflation and the scale of negative interest rate debt. The rise of negative interest rate debt has temporarily changed gold from anti inflation assets to inflation aversion assets.
In the coming year, bullish gold has a high winning rate. 1) The inflection point of structural high inflation after the epidemic is approaching, and the lethality of this factor to negative interest rate bonds will weaken. 2) The US economy may slow down in Q4, and the risk of recession next year is very high. If the conflict between Russia and Ukraine triggers a supply chain crisis, the United States and even the world will usher in an economic recession earlier. In the coming year, the profitability of US stocks will gradually weaken, and the demands of institutional investors for the allocation of safe assets such as gold will rise. 3) The expectation of scale reduction has been partially digested. The probability of 10-year US bond yield breaking 2.5% is not high, and the peak is expected to be around the landing of scale reduction boots. With the landing of the scale reduction boots, the approach of the mid-term election and the emergence of downward pressure on the economy, the yield of 10-year US bonds may enter the downward cycle from the end of Q2 to the beginning of Q3. The scale of global negative interest rate bonds is expected to rebound again, and gold will also rebound for about a year. At present, although it is still slightly on the left, the allocation value of gold has been very significant.
Risk tip: the US economy exceeded expectations; The global epidemic exceeded expectations; The Fed's monetary policy exceeded expectations; Us and global inflation is higher than expected; The conflict between Russia and Ukraine exceeded expectations.
