When the price of gold rises, why do gold shops run away one after another? Why don't you see developers like this when housing prices rise?

Pay attention to the official account, the compass of the west wind, to read the text "What is the endgame in ten years?"

There are a few full-level readers who don't understand why there is so much news about the closure of gold stores and even the running away of bosses as the price of gold rises.

This sounds unreasonable, just like rising house prices, real estate developers have always laughed from ear to ear, and have never heard of the strange thing that housing prices are rising, and real estate developers have to run away.

The reason for this is very simple, industry differences.

How does a real estate agent operate?

It's very simple, take a loan, take the land, and sell it to you.

If the house price rises, his profit will become larger, and the land price has been prepaid according to the price before the increase, then the higher the house price, the greater his profit.

Moreover, usually people buy houses up rather than down, and when they rise, there are more people who come to buy houses, and the sales volume is also large.

But on the other hand, if the house price falls, the land price can still be paid according to the previous price, and the fall in house prices means that the developer's profit margin is reduced, or even the loss of money.

You must know that the developer borrows money from the bank to pay the land price, which is equivalent to a margin transaction after adding leverage. They are waiting for the sale of their house to pay off their debts.

What's more, in the process of falling housing prices, sales will also decline, and developers will not be able to repay the bank if they are unable to return the money.

Then let's look at the gold market in reverse.

First of all, the price of gold in the market is not determined by gold mining companies, or brick-and-mortar stores such as gold stores, but by margin trading.

If you take out the money that the world trades in gold every year and draw a pie chart, you will find that the proportion of physical gold bought and sold is very small, including the gold reserves that central banks buy each year, and this is still a very small proportion of the transaction value.

What is the overwhelming majority? is margin trading.

In other words, the margin trading of opening positions, closing positions, opening longs, opening shorts, and increasing leverage is what determines the price of gold.

So, as a gold production, processing, and sales enterprise, they have to do one thing, what do they do?

It's hedging, I want to lock in profits, I want to control risks.

You are digging for gold, the price of gold fluctuates, and the process of digging gold takes time, so what if the moment you dig it out, it just falls?

So I have to short in a certain psychological position in advance, for example, I estimated the cost of digging out is 1800, and the current price is 2000, I am worried that after I dig out, it will fall, so I will short at 2000.

What is actually equivalent to? It is equivalent to me locking in the profit of 200 in advance.

Those who mine gold, those dealers who have gold reserves on hand, will do this.

So if it goes up sharply, will they get extra profits?

No, it won't.

He may have been short at 2000, in other words, whether you rise to 2400 or fall to 1600, his profit will always be 2000-1800 and will not change.

If you don't understand shorting, you can think that it is equivalent to selling them in advance according to the price before the price before the rise in the past.

See, that's one of the biggest differences between dealing gold and real estate.

Developers have to bet on the ups and downs, because the property market does not provide you with short-selling varieties, but gold is not, they don't bet on the ups and downs, they come up and lock in profits.

If developers also have short-selling varieties, then they will also short-sell at the moment of buying the land, locking in profits in advance, and the future rise in housing prices has nothing to do with them, and of course, the decline has nothing to do with it.

This is the first difference, the developer actually hoards the house, and the gold store does not hoard gold.

The second difference is that developers are really selling houses, while gold shops are divided into two types, one selling handicrafts and the other selling financial products that lack regulation.

It is very simple for you to go to the developer to buy a house, if it is an off-plan house, sign a contract, and after you complete the construction, it will belong to you, and if it is an existing house, it will be yours now.

But there are two models for gold shops.

The first is to sell handicrafts.

For example, the cost of the raw material of gold bought by a gold shop is 550, and when he sells you jewelry, it is priced at 800.

What is this 250? It is the processing loss, the design fee, the manual cost of the process, the rent, water and electricity, the operation and management fee of the façade, and so on.

If gold shops only do this one business, then what will affect them the most?

Affected the most by sales.

Because it has nothing to do with the cost, you say that the price of gold has risen, 800-550, his profit is still 250, and you say that the price of gold has fallen, 700-450, his profit is still 250.

However, the price of gold has risen, and there are fewer people who come to buy at 800, and the rent of my store, the salaries of the staff, and these rigid expenses are indispensable, so it is likely that the business is not doing well.

This is the biggest difference between selling gold and selling a house, when the price of gold rises, it is usually accompanied by a decrease in sales, and when the price of housing rises, it is usually accompanied by an increase in sales.

In addition to this, there is another business, the second, selling gold bars.

Usually the person who goes to the gold shop to buy gold bars does not mean that he pays for it and takes a gold brick home, it is not like this.

Because the gold bar sold in the gold store has a premium compared to a place like the gold exchange.

For example, gold bars of the same purity, which sell for 590 in gold shops and 550 on the gold exchange.

So if you really buy raw materials and come back to make jewelry by yourself, people will go to the gold exchange to buy them, and they won't go to the gold store to buy them.

For example, when buying rice in bulk, I always go to the farmer's house to pull rice, and I don't go to the supermarket to buy rice.

So there is a premium, why can the gold bars in the gold store still be sold?

Because they offer two services.

The first one is the recycling business, where you buy gold bars in our store and can sell them back to our store in the future, and if it goes up a lot, you can earn the difference.

The second is the storage business, where you can put the gold bars you buy in the store and not take them back, and there is interest every year.

Let's think about it, can gold itself live?

Of course not, Warren Buffett said back then, one is the gold reserves of the United States, and the other is all the arable land in the United States, which one do you want?

He felt that the latter was more valuable, because he could fetch food, while the former could not make interest.

It doesn't matter if he's right or not, what matters is that he told the truth, gold doesn't grow.

Why do you earn interest when you deposit money in the bank? Because money can be lent out, lent to others, and there is interest on the loan, so you will be given interest on the deposit.

Then you won't take out the gold you deposited and borrow it, where will the interest come from?

So if the gold shop gives you interest, what does it mean?

It means that what you are actually buying is not gold, but what you are buying is equivalent to a financial product.

For example, I run a gold shop, I have a gold brick in my hand, and I show it to a hundred customers, and I show it to you, and I keep it for you, and I pay you interest, and you go and pay for it.

A hundred guests were satisfied, paid and left.

In fact, I took a hundred cents and showed only one gold brick.

So what am I going to do with this 100 percent? I took it to invest, I lent it out, I might have lent it to a real estate agent.

Otherwise, what am I going to do to pay you 100 guests interest?

So what happens when the price of gold rises sharply?

These 100 guests came to pick up the gold bricks they deposited and wanted to buy them back at a high price.

Just ask, how can I have so much money to buy 100 gold bricks at such an expensive price and pay them to these 100 people?

What is this? This is the run tide, Hu Xueyan can't bear it, what can I do as a gold store except run away?

So to sum up, you can clearly see the difference between gold trading and real estate trading.

If you're buying gold jewelry, you're paying a premium of $250 and you're actually buying handicrafts.

If you're going to buy gold bars through a store, it's best to choose a very large store and take the gold bars home and not store them in the store.

Take the gold bars home, and if the store is still there in 10 or 20 years, you can cash in according to the agreed recycling model.

In the end, you buy physical gold from the gold exchange in the same way as the central bank's reserves, so that the price of the purchase is relatively unpremium, at least you don't need to pay any store rent, water, electricity and labor, but this kind of gold bar, in the future, you will have to find your own recycling channels.

But in reality, all of the above, even if the gold reserves purchased by central banks are taken into account, they account for only a very small part of the trading share of the international gold market.

The real big deal is margin trading on the international market.

Usually traders talk about the price of gold, talk about gold trading, referring to the international market margin trading, aunts buy and sell gold bars, in fact, can not affect the price of gold.

However, self-media usually do not fully explain the details of today, so people often mistake all kinds of information that are not related to each other.

Pay attention to the official account, the compass of the west wind, to read the text "What is the endgame in ten years?"