Recently, with the rise of global risk aversion, gold prices have repeatedly reached new highs. In this context, global investors, including China, have also begun to rearrange their funds, and gold has become the best place for safe haven funds. According to the news from Reuters on April 7, the latest data released by the World Gold Council (WGC) showed that in March, the global gold ETF (Exchange Traded Fund) recorded a net inflow of 18.73 tons (about US $11.8 billion, and the Aum of asset management increased by 5.3%), the largest since February 2016. Although the stock market rebounded significantly and the US dollar strengthened during the month, the market’s concerns about rising inflation supported the inflow of funds into gold.
The post-90s and post-00s join the group of “hoarding money”
According to China Central Television Caijing reported on the 10th, the reporter came to China’s largest jewelry trading market, Shuibei international jewelry trading center in Shenzhen, Guangdong Province in Shuibei wholesale center, the reporter found that the wholesale price of gold jewelry here has exceeded 400 yuan / g, almost the highest level in more than a year Mr. Chen, a wholesaler from Guizhou, told reporters that the price of gold had risen too fast recently. Taking advantage of the improvement of the epidemic situation in Shenzhen, he hurried to replenish.
According to the data of the National Bureau of statistics, the overall demand for 2021 China National Gold Group Gold Jewellery Co.Ltd(600916) shows a strong trend. The demand for gold jewelry in the Chinese market reached 675 tons in the whole year, with a year-on-year increase of 63%, 6% higher than that in 2019 before the epidemic. From the Spring Festival to the Lantern Festival in 2022, China National Gold Group Gold Jewellery Co.Ltd(600916) consumption increased by 12% year-on-year. Ancient French gold, hard gold jewelry and investment gold bars are the three most popular categories in the market.
Liu Yurong, general manager of a jewelry Co., Ltd. in Shenzhen, said in an interview: the price of gold has risen from 360 yuan per gram to 370 yuan per gram at the end of last year to 403 yuan per gram and 404 yuan per gram a few days ago. The sudden rise of gold also led to the rise of gold sales, because Lbx Pharmacy Chain Joint Stock Company(603883) ‘s psychology is to buy up rather than buy down. Compared with the same period last year, the growth of the whole wholesale is about 15%
With the increasing geopolitical risks caused by the conflict between Russia and Ukraine, the global risk aversion has heated up, and the price of gold has also been pushed higher. On March 8, spot gold hit US $207021/oz, the highest since mid August 2020. However, after hitting a new high, the gold price immediately “dived from a high platform”. As of the latest data, spot gold prices closed at US $192492/ozP align = “center” source: China Central Television Finance
The reporter saw in the gold and silver jewelry sales area on the first floor of a large shopping mall in Shenzhen that all kinds of gold jewelry in the shape of tigers are placed in a prominent position on the counter, including thousands of gold ornaments, pendants, gold bars and bracelets with tiger patterns. Some customers are busy shopping
Gold jewelry, once regarded by young people as “dirt and slag”, is walking into more and more post-90s and post-00s shopping carts. The data show that since December 2021, their orders for gold jewelry have increased by nearly 80% year-on-year. Among them, the orders for post-80s, post-90s and post-95s gold jewelry have increased by about 72%, 80% and 105% year-on-year respectively p align = “center” source: China Central Television Finance
In recent years, taking advantage of the national trend, major brands have injected ancient crafts and Chinese elements into the design of gold jewelry. They not only adopted 5g gold, 3D hard gold, ancient gold, enamel baking color and other new processes, but also launched a variety of trendy styles and linked cultural and creative products, and carried out marketing through various live broadcasting platforms and social platforms, attracting a large part of young consumers.
Citizens’ enthusiasm for buying gold does not just stay on gold jewelry. In addition to the hot sales in gold stores and shopping malls, major commercial banks have also launched new year’s precious metal products with the theme of Chinese zodiac, prompting the gold trading in the bank to continue to heat upP align = “center” source: China Central Television Finance
Analyst: Gold allocation opportunity is coming. It is expected that the gold price will continue to fluctuate upward in the second quarter
According to the daily economic news on the 10th, Qiu Zuxue, an analyst at Minsheng securities, released a research report that it is difficult for interest rate hikes to beat inflation, and the real interest rate will continue to decline. After the epidemic, in order to stimulate the economy, countries have introduced a series of loose policies. Fiscal stimulus policies and interest rate cuts have led to the excessive issuance of global money. The money supply is greater than the money demand required for liquidity, which is the underlying reason for the continuous rise of inflation. According to historical data, the price of gold is highly negatively correlated with the real interest rate. At present, the real interest rate of 10-year US bonds has been at a historically low level. When the expectation of interest rate increase by the Federal Reserve has been digested by the market, the inflation expectation data is still high. With weak economic growth, it is expected that the tightening policy lags behind inflation, the real interest rate is difficult to beat inflation, and the price of gold is likely to reach a new high.
From a historical perspective: the performance of stagflation assets in the 1970s was resumed, and gold significantly outperformed other financial assets. Reviewing the characteristics of the stagflation period in the United States from the 1970s to 1980s, we believe that the economic recession under the expectation of high inflation is a signal of stagflation. At present, it is difficult to see the inflection point of global inflation. The green energy revolution, repeated epidemics, Russia Ukraine conflict and rising labor costs have all caused the disturbance of the supply side or the rise of supply costs. With the stimulation of demand under the loose policy, commodity prices continue to rise, driving inflation. At present, the long-term and short-term spreads of US Treasury bonds have been upside down, which is an important signal to reflect the expectation of economic recession. The US economy may enter a stagflation period. Looking back on the stagflation period in the 1970s, physical assets outperformed financial assets as a whole, and gold prices may usher in a trend upward.
From the perspective of the central bank: the world’s central banks have greatly expanded their tables, and the demand for increasing gold reserves is obvious. Since 2010, the central banks of various countries have purchased net gold for 12 consecutive years, among which the purchase of gold in emerging markets is relatively strong, reflecting that countries have begun to pay attention to the risk of their foreign exchange reserves since the 2008 economic crisis, especially in developing countries. In the context of the significant expansion of the global central banks, monetary credit is gradually challenged. Central banks will increase the demand for gold to maintain the stability of currency value and resist the risk of weakening US dollar credit. With the recent geopolitical risks in Russia and Ukraine exceeding expectations, under the influence of the central bank’s gold purchase behavior, risk aversion has heated up, gold ETF positions have rebounded, and there are obvious signs of rising investment demand.
Xu Ying, a senior analyst at the east securities derivatives research institute, also released a research report that the US real interest rate is easy to fall but difficult to rise, and the space for the passive strength of the US dollar index is limited. It is expected that the gold price will continue to fluctuate upward in the second quarter.
What are the other ways to invest in gold?
Datong securities investment consultant Zhang Jin said that in the medium and long term, gold is a safe haven asset, but it is not a high-quality investment asset. How to invest has become another difficult problem gold investment can be divided into futures and spot. Futures investment has leverage, which is more suitable for professional investors. Spot investment is the first choice for ordinary investors. Generally, you can choose gold ETF fund of securities category and physical gold of bank category. Physical gold is also divided into investment gold bars, paper gold, etc. The gold investment through these two channels can match the price of the global gold market, so it is a better investment direction
It is worth noting that the purchase of gold jewelry can not replace gold investment and financial management. Gold jewelry generally forms the market retail price on the basis of international gold price plus design fee, processing fee and brand premium. In urgent need of money, I want to discount gold jewelry. Putting aside the handling fees, investing in gold jewelry may not make money.
