Author: Li Yunfei|Source: Original
The international gold price has risen sharply again, and China has been hoarding gold for 16 consecutive months, what important signal has been released? Should we ordinary people follow the trend to buy gold? Follow me and share some wealth and dry goods for you every day.
As of April 5, the international spot gold price rose to a high of $2,310 per ounce, setting a new record! While the domestic retail price of gold exceeded 710 yuan per gram.
It can be said that this round of gold market is rare for decades! At this time, there are netizens who have bought a large amount of gold, and I guess my heart is happy.
So let's talk about it first, why is the international gold price open and rising?
The rise and fall of gold prices is related to three factors, that is, the dollar exchange rate, the international environment, and the U.S. economy! First of all, the Federal Reserve has been saying that the U.S. dollar will cut interest rates three times this year. A U.S. dollar interest rate cut will most likely mean that the U.S. dollar will depreciate. And the US dollar and gold are both international hard currencies. Therefore, the relationship between the dollar and gold will be inversely proportional. A strong dollar means gold is weak, and a weak dollar makes gold strong. When the U.S. dollar weakens, people use U.S. dollars to buy gold to preserve value.
Second, the international environment has been very unstable in recent years. The Russia-Ukraine conflict and the Palestinian-Israeli conflict will bring uncertainty to the global economy. Investors are also buying gold to hedge against risk. There is a saying called: gold in troubled times, antiques in prosperous times. That's what it means.
Moreover, if investors alone cannot promote such a market for gold, there is another big driving force behind it, that is, global central banks. According to UBS, global central banks are buying gold in large quantities, with more than 1,000 tonnes per year for the past two years, the highest level since the 60s.
It is worth mentioning that as of the end of February 2024, China has increased its gold holdings for 16 consecutive months, and the mainland's gold reserves are currently 72.58 million ounces, an increase of 390,000 ounces from January!
So why do global central banks hoard gold in large quantities? This has to do with the long-term economic expectations of the United States. Now that the scale of U.S. debt has exceeded 34 trillion U.S. dollars, and it is growing wildly at a rate of 1 trillion new U.S. bonds every 100 days, it is the risk of a U.S. bond bubble behind this.
The main theme of global gold hoarding is to de-dollarize, weaken the hegemony of the dollar, avoid the risk of U.S. debt and avoid the risk of a weakening U.S. economy. Because once the U.S. economy weakens, he will use the dollar tool to harvest the world's wealth.
So will gold prices hit new highs in the future?
Over the years, the sharp rise in gold prices is inseparable from the strengthening of gold's monetary attributes, which reflects the international monetary system and the trade-offs of various forces. From a long-term point of view, now the Sino-US game, the Russia-Ukraine conflict, the Palestinian-Israeli conflict, etc., it can be said that the international geopolitical situation is becoming more and more complex, and the process of global de-dollarization will only accelerate in the future, which will promote the rise of international gold prices.
In the near term, the expectation of US dollar interest rate cuts this year has been continuously released, which will also form an upward support for gold prices. The China Gold Association said that once the Federal Reserve starts cutting interest rates, gold prices are expected to hit new highs.
So since the gold market is so good, should we ordinary people buy it?
We only need to understand that gold is an investment product, not a legal tender, so we will have a certain risk when we buy gold. As the saying goes, plans are not as fast as changes, and it is normal to usher in a big fall after a big rise. It can be said that gold is an "old way of investing"! Warren Buffett famously said that is, invest in productive growth companies, not gold!
In addition, ordinary people buy gold on the basis of the international gold price, and increase the manual costs, technical fees and other expenses of the gold store, and when selling gold, the gold store has to deduct this part of the cost, and also charge a certain handling fee. This reversal also offset a large part of the profits.
So, we ordinary people still have to be cautious about this matter! What do you say?
Author: Li Yunfei, founder of a large Internet company, CEO of a large food chain enterprise, engaged in the Internet and physical chain industry for 20 years, has been reported by Sohu.com, Netease Finance, Tencent, Phoenix.com, Zhongxun.com, Baidu and other well-known media platforms, good at financial knowledge analysis, entrepreneurial guidance!