"People who don't own gold may not understand history or economics. Ray Dario, founder of Bridgewater Associates, the world's largest hedge fund, once said.
Since the beginning of this year, gold prices have soared, investment in the gold sector has continued to be hot, and in the public market, the yields of two gold stock ETFs have continued to lead. As of April 19, ChinaAMC Gold Stock ETF and Yongying Gold Stock ETF have risen by 38.76% and 30.38% respectively during the year (ChinaAMC Gold Stock ETF was established on January 11 this year).
Unlike the previous gold ETFs, which mainly tracked spot gold, these two gold stock ETFs track the stocks of listed companies engaged in gold-related business, and were officially approved in October last year. So far, the year's return has far outperformed that of gold-backed ETFs, which have yielded about 18%. In this regard, some fund managers said that the role of gold price amplifier in gold stocks is more significant.
In addition, the gold stock ETF is still the ETF with a higher "copper content" in the current market, and the copper price has been rising all the way this year, and the main contract price of Shanghai copper futures exceeded 80,000 yuan/ton on April 22. The stock price performance of relevant listed companies during the year was outstanding, taking Zijin Mining, the largest in market capitalization, as an example, the share price rose by nearly 50% during the year, and the latest market value as of April 22 was 454.2 billion yuan.
On April 22, Zijin Mining disclosed its report for the first quarter of 2024, with operating income of 74.777 billion yuan in the first quarter, down 0.22% year-on-year, and net profit attributable to the parent company of 6.261 billion yuan, up 15.05% year-on-year. According to the announcement, in the first quarter, the company's overall operating costs, especially the operating costs of overseas projects, decreased significantly from the previous quarter, and the unit sales costs of mineral gold concentrate and copper concentrate decreased by 14% and 13% respectively from the previous quarter.
The return performance of gold-backed ETFs outperformed that of gold-backed ETFs
Since the beginning of this year, gold-related investments have continued to be hot, and a number of ETFs tracking gold-related underlying have performed well. As of April 19, ChinaAMC Gold Stock ETF and Yongying Gold Stock ETF had annual returns of 38.76% and 30.38% respectively (of which ChinaAMC Gold Stock ETF was established on January 11 this year), ranking among the top two in the whole market, and far exceeding the previous market tracking Shanghai Gold (SHAU)/ The 14 gold-themed ETFs in the gold spot contract (AU9999) have yields of about 18%.
For the difference between the two, Hua Long, fund manager of ChinaAMC Gold Stock ETF, said that the main tracking target of gold ETF is gold spot, which belongs to commodity investment, which is essentially a commodity ETF product, while the main investment target of gold stock ETF is the stock of listed companies engaged in gold-related business, such as gold mining, smelting and sales related listed companies, which can generally be divided into two categories: gold mining companies and gold jewelry retail companies, which are essentially equity investments and equity ETF products. Whether it is a gold ETF or a gold stock ETF, the performance of both asset types is closely related to the price of gold. In terms of investment purity, gold ETFs invest in gold with higher purity, while gold stock ETFs have certain equity attributes.
"In the recent gold rally, the role of gold stock gold price amplifier is very significant. Zhang Yun, fund manager of Yongying gold stock ETF, said in a recent interview with a Chinese reporter that a large number of gold stocks are gold mining companies, and the asset end of its balance sheet is a certain prospecting right and mining right, which is of an option nature, and when gold rises, it is greatly beneficial to gold mining companies, it is not just to look at the rise of gold, but to amplify this increase through the option effect of implied leverage, which is magnified on the profit side. In addition, when the price of gold rises, the mining power of gold mining companies will be accompanied by the expansion of production capacity.
According to Wind statistics, as of the end of March 2024, gold stocks have outperformed the domestic gold price (AU9999) by more than 17 points in the past five years. It should be noted that Zhang Yun also made a risk warning, when gold falls, gold stock companies will also fall more.
"Copper content" determines the trend of earnings
In addition, Zhang Yun mentioned that copper in the non-ferrous metal sector is very noteworthy, and the gold stock ETF is also an ETF product with a high "copper content" in the current market, which contributes to the fund's income.
So far this year, copper's performance has been very strong. Among the listed companies, taking Zijin Mining as an example, the stock price has continued to hit a new high this year, up nearly 50% during the year as of April 19, with a total market value of 475.8 billion yuan.
On April 22, Zijin Mining disclosed its report for the first quarter of 2024, with operating income of 74.777 billion yuan in the first quarter, down 0.22% year-on-year, and net profit attributable to the parent company of 6.261 billion yuan, up 15.05% year-on-year. According to the announcement, in the first quarter, the company's overall operating costs, especially the operating costs of overseas projects, decreased significantly from the previous quarter, and the unit sales costs of mineral gold concentrate and copper concentrate decreased by 14% and 13% respectively from the previous quarter.
"The main reason for the new high of copper is that copper has entered a cycle of de-capacity, or supply-side reform, so that some small, backward copper production capacity will be removed, and large companies will continue to produce copper, so it is beneficial to listed companies. Zhang Yun said.
Ye Yong, manager of Wanjia Twin Engine Fund, also said in a quarterly report that in 2024, the general expectation that the copper industry's original supply would be slightly loose has been reversed, due to the reduction of production expectations by Anglo American Resources and the unconstitutional shutdown of the First Quantum Panama copper mine, and according to the original market general expectation, the supply of copper will be loose in 2024 and in short supply in 2025, and now it seems that the shortage may come early. He continues to be bullish on the opportunities of listed companies in copper resources, followed by iron ore, aluminum, lead and zinc.
Gold's follow-up performance in 2024 is expected to remain optimistic
On April 22, there was a pullback in the gold sector, how should the market look at the future?
Looking ahead, the first quarterly report of Yongying Gold Stock ETF said that it will continue to be optimistic about the subsequent performance of gold in 2024. First of all, the U.S. dollar index and U.S. bond interest rates are still relatively high, as the Federal Reserve enters the interest rate cut cycle, the U.S. dollar index and U.S. Treasury interest rates turn downward or will bring about the main upward wave of gold in the future;2024 global election year geopolitical disturbances continue, from the perspective of safe-haven attributes for gold to bring many phased opportunities; from the perspective of funds, the proportion of gold reserves of major gold buying countries is still low, and the central bank's gold purchases are expected to continue in the next few years, while the world's largest gold ETF (SPDR) holdings have risen against the trend since mid-March, and the current holdings are still at a historically low level, which means that there are still a large number of potential capital buyers in the future may enter the market at the right time, or push gold prices into a new round of upward movement.
The quarterly report also pointed out that the listed companies in the gold industry chain are mainly gold mining and smelting companies and gold jewelry retailers, and the stock prices of listed companies in the gold industry are highly correlated with the gold price, but the upward and downward elasticity is higher than that of physical gold. As of the end of March 2024, according to wind statistics, in the past five years, gold stocks have outperformed the domestic gold price (AU9999) by more than 17 points in the past five years. Investors who are bullish on gold prices can also focus on investment opportunities in gold stocks, as well as the expansion of gold gems' channels and increased brand concentration, as the expansion of gold miners and the increase in brand concentration have contributed to the excess returns of gold stocks.
As for whether you can still get on the car, Hualong believes that you need to pay attention to the investment method, try not to choose a one-time purchase, and can choose a relatively smoother investment method, such as regular investment or batch purchase to invest. For most investors, investment should be a medium and long-term thing, the more anxious the investment, the easier it is to make mistakes, and the more concerned about short-term returns, the easier it is to step on the long-term market. It is recommended to extend your investment cycle, and uphold the open-mindedness of not liking things and not being sad about yourself, but you can persist and gain something. The Federal Reserve is likely to open the interest rate cut channel this year, from the perspective of historical laws, the Fed's interest rate cut behavior often does not happen overnight, and it is likely to be a long cycle, and gold assets can often have a continuous market in the interest rate cut cycle, so there is no need to be overly anxious from the investment side.
In the medium and long term, the world is currently in a process of de-globalization, due to the increase in uncertainty brought about by de-globalization, the cost of trade frictions will also increase accordingly, and the inflation center will gradually move up in the future. As an anti-inflation asset, gold is likely to outperform inflation in the medium and long term. For a type of asset that is in an upward channel for a long time, it is not recommended to frequently buy and sell swing operations, and it is recommended that you invest in gold as an alternative asset to win an allocation income.
Editor-in-charge: Wang Yunpeng
Proofreader: Yao Yuan