Gold "went crazy" Fund suggestion: under the premise of satisfying your own risk tolerance, you can consider holding it for a long time

China Net Finance April 8 (Reporter Zhang Mingjiang) All investors and consumers have a personal feeling, gold "crazy", the price of gold per gram announced by a brand has exceeded 700 yuan / gram, the price of gold jewelry is prohibitive, as an investment product, gold stocks and gold theme funds and other market concerns have attracted market attention.

The most eye-catching asset class this year is gold. On March 27, the international gold price exceeded $2,200 per ounce for the first time in history, and on April 3, the international gold price exceeded $2,300 per ounce. In addition, since February, as of April 3, the gold stock index (931238.CSI) has risen by more than 40%, while the gold price (London gold spot) has only risen by nearly 13% in the same period, and gold stocks have risen more than three times the price of gold.

For the recent rise in gold prices is so alarming, China Southern Asset Management believes that, firstly, the Fed's interest rate cut expectations will trigger a decline in real interest rates, which will increase the investment value of gold. A series of recent data releases from the United States continue to show economic resilience, further weighing on interest rate cut expectations. It is widely expected that interest rates may be cut as early as June, which may push the dollar lower, thus providing a better market for gold. Gold prices and the U.S. dollar have a seesaw relationship, when the U.S. dollar is strong, gold prices may fall, and when the U.S. dollar is weak, gold prices may rise. Second, strong demand from central banks around the world has driven gold to appreciate. After the major Western economies represented by the Federal Reserve entered the channel of interest rate cuts, Western countries made the choice of diversifying foreign exchange funds and increasing gold reserves for the sake of the safety of foreign exchange reserves. According to data from the State Administration of Foreign Exchange of the People's Republic of China, as of the end of February 2024, the size of the mainland's foreign exchange reserves was US$3,225.8 billion. In addition, this is also the 16th consecutive month that the mainland has increased its holdings of gold since the resumption of holdings by central enterprises in November 2022. Finally, the tension in the international geopolitical situation and the lack of investment channels have made investing in gold the first choice for many people.

China Southern Asset Management believes that gold, as a unique investment product, has three major attributes: commodity, currency and finance, and is affected by many factors, including global economic conditions, monetary policy, international geopolitical risks, inflation expectations, and market supply and demand. With the changes in the market and the adjustment of policies, the value and trend of gold will also change, so investors need to maintain keen insight and rational judgment.

Tianfeng Securities believes that the overall environment facing gold is that the negative impact of the high dollar interest rate environment on the economy is gradually emerging, the rise in US bond yields may be nearing the end, and the Federal Reserve has begun to cut interest rates. The Fed is currently facing further easing of financial conditions and a resurgence in inflation, and is trying to rein in the gradual rise in real interest rates. Gold has also been affected by the Russia-Ukraine conflict, the Palestinian-Israeli conflict and other geopolitical conflicts. In the big cycle, compared with the previous two gold bull markets, there is a high probability that it is in the early middle and early stages of the gold bull market, and there are macro interest rate cut expectations, high inflation, and the downward dollar index and other factors are good for gold's performance.

As for whether the current gold is still worth allocating, Sun Wei, manager of the Southern Shanghai Gold ETF Initiation Connection Fund, believes that although the current gold price is at a relatively high level, investors are worried about the rise in gold prices, and this fear of heights is normal. Looking back at gold's past history, gold has experienced bull and bear cycles since 2000, but its overall return has been good, with an annualized return of more than 8%, which is comparable to equity assets such as the S&P 500. Therefore, if you plan to hold gold for a long time, you may not need to worry too much about short-term volatility.

Sun Wei believes that from a long-term perspective, the rise and fall of gold has its own laws, and the cycle is long, and it will not be easily reversed by short-term macro factors. The equity market may have some thematic investments to hype expectations and concepts, and it may take a long time to realize the performance after a wave of speculation, but gold is not such a logic. At the moment, the market is divided on whether the US economy will fall into a recession, but recession expectations have persisted. Generally, interest rates rise when the economy is strong and fall when the economy is stressed. At present, the reason why the US economy has been able to maintain a certain degree of resilience is mainly due to the expansion and continuation of fiscal policy, but there is always a time for this strong stimulus policy to be withdrawn. If the U.S. economy does weaken or even fall into recession, gold's move may be worth looking forward to. Therefore, whether it is from the underlying investment logic or the current situation (Fed interest rate cut expectations, central bank gold purchases, global geopolitical landscape) or considering the future trend of economic and global changes, gold may still have a high allocation value.

In addition, gold stocks are also one of the investment targets that investors have attracted much attention, and Liu Tingyu, fund manager of Yongying Gold Stock ETF, believes that the main investable targets in the gold field are physical gold (such as gold bars), paper gold, gold ETFs and gold stock ETFs. Gold ETFs and paper gold track the spot price of gold, and like physical gold, they are linked to the domestic gold price. The performance of gold stocks is highly correlated with gold prices, but the elasticity of ups and downs is higher than that of spot gold, so it is called "gold investment amplifier".

Liu Tingyu believes that from the perspective of historical performance, gold stocks have long-term excess returns relative to spot gold (as of April 3, 2024, the CSI Shanghai-Shenzhen-Hong Kong Gold Stock Index has risen by 122.99% since 2019, compared with the cumulative excess of 32.86% compared with Shanghai Gold and 43.63% compared with the cumulative excess of London Gold Price, and the historical trend does not predict future performance). Under the precursor of considering their own risk tolerance, investors can consider sharing the profit growth of listed companies in the gold industry chain through gold stock ETFs or feeder funds. For investors, it is difficult to choose the short-term timing of gold or gold stocks, so on the premise of satisfying their own risk tolerance, if they are optimistic about the upside of the sector, they can consider holding it for a long time, or use regular investment to spread the cost, and strive not to miss the future growth opportunities of the sector.

Another institution reminds that for friends who want to pursue short-term higher returns, they should pay attention to the fact that the current gold price is indeed at a high level, and there is a risk of falling back after a short-term rapid rise, especially the impact of the uncertainty of the Federal Reserve's interest rate cut. Therefore, when investing, you need to consider whether to use spare money to buy at low points in batches, and the second is to control your position and not be blindly aggressive.

(Editor in charge: Tan Mengtong)