The price of gold is still rising a few days ago, and it has not yet seen the upper limit, and it has already hit a new high in 100 years. If it continues to rise like this, it will really be troublesome, a big crisis is just around the corner, and the country can't help but take action. There's a lot of information in it, and ordinary people must read this issue!
As of April 22, spot gold in London had soared to $2,390.42 per ounce, and the price of gold in New York had reached $2,413.8 per ounce. Looking at the domestic gold price, it has only been more than three months into 2024, and the domestic gold price has broken through the 500 yuan mark and soared to about 560 yuan / gram. Even the price of pure gold jewelry in domestic brand gold stores has risen to 730 yuan/gram. Even some professional investment bigwigs have said, "The trend of gold is really a bit afraid of heights now." The mentality of netizens who bought gold also collapsed, and they did not dare to buy or sell, and their mood was both trance and excitement. On April 22, the international gold price finally ushered in a pullback, down nearly 2.8%, and the domestic gold price also fell, but despite a wave of adjustment, the international gold price has risen by more than 12% since the beginning of the year.
Behind this surge, it is not all a good thing, there may be a big crisis hidden behind it, and the country has to take measures now. The Shanghai Futures Exchange has clearly announced that it will implement a trading limit on gold from April 12, and Shenzhen has also stipulated that real-name registration is required for gold purchases of more than 20,000 yuan. What does this mean exactly?
So let's start by talking about why the price of gold has soared to the highest in a century. Three reasons: The first one is very helpless. Let's talk about our country first, in the past two years, our investment channels have become narrower and narrower, especially the demand in the real estate market has declined. In the past, every household invested a little money in the property market, but now when the house price falls, whoever buys loses. What about the stock market? It's good to be able to throw money into it without losing money. So where do you put the surplus money? Banks? If the interest rate is too low, it will only depreciate. So there is nothing to buy, only gold. Data shows that China's gold purchases in 2023 are the highest in the world, accounting for almost half of global purchases.
The second reason is that people are not optimistic about US Treasuries. As of April, the total U.S. debt has reached a staggering $34.6 trillion, with $1.1 trillion in interest payments each year. Moreover, this interest rate is soaring like crazy, adding $100 billion every four months. Some experts predict that by the end of this year, the interest cost of US Treasury bonds will be as high as $1.6 trillion. If we put this figure into the population of the United States, the total interest on the national debt will be $16 trillion in 10 years, or $48,000 on average for each person! Not only in the United States, but also in the world, the bigwigs have reduced their holdings of U.S. bonds and snapped up gold one by one. Under this trend, the price of gold naturally "soars," while the US Treasury bonds are almost ignored.
But there's one thing that's very strange, I don't know if you've noticed? If you look at the recent financial markets, the dollar has not only not depreciated, but is still appreciating strongly. Recently, the Federal Reserve postponed the interest rate cut, which sent the dollar index straight up, at one point rushing above 106.5. First of all, we have to understand that the global gold price usually goes in the opposite direction of the US Treasury interest rate, the higher the US bond interest rate, the cheaper the gold, and the lower the US bond interest rate, the more expensive the gold. It stands to reason that the dollar is worth a lot of money, and gold should fall, but gold does not play its cards according to the routine and rises against the trend? What is going on? Some people may think that the dollar cannot keep soaring, it will cut interest rates sooner or later, and gold is betting on this expectation. However, the latest economic data shows that inflation in the United States is still quite serious, and it is unlikely that interest rates will be cut in the short term. So this wave of gold price rises, my analysis is a kind of emotional reaction of people, everyone is afraid of missing out, and afraid of loss, so they buy gold to seek peace of mind. You buy it, I buy it, and this has pushed up the price of gold, essentially because everyone is worried that the global economy may go downhill.
But what about the global economy? As the saying goes, gold in troubled times! We speculate about the world economy through the price of copper. Copper prices are often seen as a barometer of economic health, as copper is widely used in a variety of key industrial sectors. Copper prices have hit new highs recently, which actually reflects the gradual recovery of the global economy. All signs of the upside are unreasonable, so this can only be said to be one thing, and the pursuit of gold is an emotional overreaction to the uncertainty of the future.
So, this exposes the problem that gold may be grossly overvalued. Therefore, at this time, don't chase gold anymore, there are two dangerous factors: First, most of the world's gold is now stored in the Federal Reserve Bank of the United States, and the amount of gold in the hands of the United States is huge. If there is a significant deviation in the relationship between the value of gold and the interest rate of the dollar, it is entirely possible that the United States will depress the price of gold by selling gold and adjusting the interest rate of the dollar. This is really risky for us ordinary investors. Now the state is intervening to help everyone control the risk and avoid the possible large-scale loss of wealth in the future. Therefore, although gold is a good hedging tool, you must also be careful about the possible risks behind it.
Second, the country buys gold on a large scale, with its own considerations, such as the instability of geopolitical factors and the multi-asset allocation of de-dollarization. In the event of a global market turmoil, gold can still be used as money to ensure the country's financial security. But for us ordinary people, gold is an ordinary investment product. Now that the price of gold is skyrocketing, it is being over-valued, and once the market reverses, it could leave many people with no money.
Because gold is "high in price and easy to sell", many criminals have recently used it as a tool for money laundering, hiding and transferring illegal assets through gold trading. That's why there are now caps and real-name systems for gold trading, with the aim of cracking down on these illegal activities and protecting the fairness and justice of the market.
Another thing you may not expect is that this year's major policy of our country is to promote domestic demand, so that everyone's money can be spent more on consumption, and economic growth will be driven. If everybody uses the money to buy gold, then who spends it? This is not in line with the country's economic development strategy. Therefore, in the face of the soaring price of gold, we ordinary people really have to analyze calmly and can't rush up. History tells us that anything rises and falls fast, and today's gold peak may be tomorrow's bubble. Invest rationally and act prudently, this is the king.