Recently, the price of gold exceeded 700 yuan, which triggered the carnival of many investors, and once again triggered a gold investment boom. Is gold really worth investing in by ordinary people? How much room will the price of gold rise in the future? How risky is gold investment?
In fact, the biggest advantage of gold is its scarcity, and in addition, it is decorative in civil use, and it can almost be said to be useless in industry. It is originally a rare metal, but because it is endowed with the attribute of monetary reserves, it does not conform to the law of demand for general commodities, that is, the demand will weaken when the price is high, nor does it conform to the law of supply of general commodities, that is, the supply will increase or be replaced by other varieties when the price is high, but it has become an investment product, resulting in the higher the price, the stronger the demand. Therefore, we can neither simply look at the properties of the metal, nor can we only analyze the general market supply and demand law, otherwise we cannot explain a special commodity that has neither much practicability nor real industrial use, but can deduce a price without a ceiling, killing all the industry, agriculture and even high-tech commodities in the world, who can do it, only gold!
We analyze the reality and future of gold from three factors, and draw a reasonable conclusion about the results of the future gold valuation system, so as to understand whether gold is worth investing in and how to question the investment value of gold.
The first major factor, from the analysis of investment substitution, is gold really worth investing in? The price of gold reflects the cost performance of investment substitution
It is not an exaggeration to say that all major economic masters have gold worship, and many economic experts have been emphasizing a diagnosis that never seems to go out of style: ordinary people only need to focus on one thing in their life, and that thing is gold.
Why? Because investing in gold is very substitutive to other economic investments, that is, the price of gold reflects the value for money of the investment. When the price of gold falls sharply, it means that the hedging function of gold is weakened, and the economic prosperity index will rebound sharply, which indicates that all industrial investment and the development of the real economy have very great prospects. When the price of gold continues to rise, it means that the economic sentiment index will continue to decline, and the continuous deterioration of the investment environment will lead to a decline in the investment profitability of the real economy. The change in the price of gold reflects the actual economic situation and predicts the future economic development trend, which reflects the cost performance of gold investment and measures the value of gold investment, so as to become the vane and balancer of economic trends.
The simple numerical fluctuation of gold prices actually contains the pulse of the overall economy and future development trends. Ordinary investors have no ability or experience at all, but they judge the investment value of the stock market, the investment value of the property market, the development trend of the real economy, and the cyclical fluctuations of the economy. These are not ordinary people can collect, analyze, judge and master, and the price of gold is simple, clear and direct: when the price of gold continues to fall, the investment value of the stock market, the property market and the real economy is highlighted, at this time the investment has a greater possibility of investment success and money-making opportunities: the stock market may have a wave of greater money-making opportunities, the property market may also appear a wave of money-making, entrepreneurship and the real economy will be more prosperous in both purchase and sales, thus providing you with an excellent investment opportunity to achieve wealth appreciation.
When the price of gold continues to rise, it is the opposite, which often means that the overall economic environment is deteriorating, the stock market will continue to be depressed, the property market will fall, and the real economy will face risks, and gold will become a safe haven for capital investment. It is becoming more and more difficult to make money, and it is necessary to be cautious about investment and consumption behavior, not to pursue high returns in the stock market excessively, to properly control the investment in the property market, and to be conservative in the investment strategy of the real economy.
From an economic point of view, the price of gold not only reflects the supply and demand of gold investment, not only reflects the current economic situation and investment environment, but also indicates the future development trend of economy, finance and investment. Only by grasping the key investment value of gold price changes can we explain and illustrate the trends of the economic situation and the future of investment, which is the first layer of our understanding of gold price changes: gold investment value for money.
From the perspective of investment cost performance, it seems that ordinary people are more valuable to invest in gold, after all, simplicity and simplification are more friendly to ordinary people's investment choices.
The second major factor is that the price of gold not only reflects the degree of economic prosperity and investment orientation, but also reflects the degree of turbulence in the world environment
Although gold is a barometer of economic prosperity and investment prosperity, if we only look at gold from this perspective, it may be too narrow. Because gold is more reflective of the present and future of global economic and environmental turmoil. This is why gold has always attracted the public's investment and political attention with its extraordinary attributes in the global financial market.
While we acknowledge that gold, as a "hard asset" and investment "safe haven", provides investors with a robust risk-off option, gold prices show a counter-cyclical economic correlation with equity markets, property prices, and commodity price movements. However, looking at the world, if we look at it from the perspective of global economy, finance, environment and politics, the changes in gold prices are more complex and changeable, because the fluctuations of gold prices do not depend on the impact of changes in the economic and investment value of a country, but are affected by a variety of factors, such as the impact of global inflationary pressures, the impact of global political conflict factors, and the impact of geopolitical risks.
Therefore, we can not judge the current economic situation and investment cost performance of the mainland according to the price of gold, the rise in gold prices may reflect to a greater extent the concerns of global investors about the prospects of the world economy, in this environment, the rise in gold prices does not necessarily mean that gold investment has a higher cost performance for investment, and the decline in gold prices does not necessarily mean that the cost performance of gold investment declines. Whether the property market and the real economy can be invested is not entirely dependent on the rise and fall of gold prices, but should be comprehensively judged by taking into account the actual situation of the mainland, personal investment objectives, and investment risk tolerance.
For example, gold has recently broken through 700 yuan per gram, a record high, but this rise has almost nothing to do with the economic reality of the mainland and the cost performance of gold investment, mainly due to the influence of international factors, if the investment judgment is made on this basis, it may be seriously misjudged. According to the latest data from the State Administration of Foreign Exchange, at the end of March this year, the mainland's gold reserves have increased for 17 consecutive months, reaching a total of 10.1 million ounces, and the amount of increased holdings exceeded 140 billion yuan if measured by the average price of the range.
Central banks have also reverted to gold as a reserve asset, with countries such as Japan, Russia, Turkey and Poland adding to their reserves in fear of over-reliance on the US dollar, with data showing that central banks bought 361t of gold in Q3 2023, compared to a net 77t in the same period in 2022.
According to the updated data of the World Gold Council, at the end of February this year, the gold reserves of the United States have reached a maximum of 8133.5 tons, accounting for 69.7% of the official reserves of the United States, and the gold reserves of Germany, Italy, France and other countries also account for more than 65%, while the proportion of mainland gold reserves is only 4.3%.
In this sense, although gold can be used as a judgment factor for economic prosperity and investment cost performance, it has a certain reference significance and investment value for ordinary people to invest in gold, but because of the worldwide and multi-factor influence of gold price fluctuations, gold is not the only standard to measure the overall economic situation and investment cost performance, and it is not reasonable for individual investors to judge the investment cost performance simply from the trend of gold prices. Therefore, it does not seem appropriate for individuals to invest in gold.
Thirdly, what is the future trend of gold, and is it worth it for ordinary people to continue to invest in gold?
Personal investment in gold should first consider the ability to realize, after all, only realization can truly achieve the preservation and appreciation of investment, otherwise one or two gold is not as valuable as a steamed bun, which is a problem that must be considered before investing in gold. Some investors do not consider the realization of gold blind investment, the result is to earn the index and lose money, earn the price of gold and lose the income, just like some people buy gold bars for 900,000 yuan, but when they rise to 1.5 million yuan, they can only sell for 850,000 yuan. Something like this happens every day. As for how to consider the liquidity of gold investment and whether gold jewelry is worth investing, we will explain it later.
Today, we will mainly look at the future trend of gold prices, which is the most important factor and basis for considering whether to invest. According to the research conclusion of David Rosenberg, a top American economist and president of Rosenberg Research, the price of gold will push up to $3,000 before the next business cycle shifts, an increase of 30% from the current price level. That is to say, the current investment in gold in the next business cycle of the earning power is 30%, all of our investment cost performance considerations are based on this rate of return as the premise, if other investments are higher than this rate of return naturally should not invest in gold, on the contrary, if the investment in other industries and the stock market yield is far lower than the 30% yield, the choice to invest in gold is a wise investment choice.
The Fed's expectation of interest rate cuts, global central banks' demand for gold purchases exceeded expectations, geopolitical risks and other factors have led to gold prices coming out of a safe-haven market that exceeds expectations, and gold prices have reached new highs. The recent rise in gold prices does have a dual pricing factor of both capital and fundamentals. The fluctuation of gold prices fully reflects the recent market expectations for the direction of fundamentals, indicating that there is still some room for gold prices to rise in the future.
But after all, gold has come out of a wave of rising prices, but also faced with the possibility of gold speculative funds profit-taking, so the current gold investment in price and cost performance is in a very embarrassing situation, on the can reap 30% of the investment income, the next will lead to investment losses, coupled with the difficulty of gold investment realization, it is recommended that ordinary investors on the investment in gold should consider paper gold, gold ETF, gold stock ETF and other investment products that are easy to realize, easy to operate.
Gold is naturally a currency, and currency does not necessarily have to be gold. Gold investment is actually not friendly to ordinary people, how to invest and investment value and cost performance need more analysis and research, simply buy bullish, bearish buy is not the law of gold investment. Do you know how to invest in gold now? We'll talk about that next time. (Qijian said Finance)