Sino-Singapore Jingwei Client, July 30 (Wu Yihan) The strong price of gold continues. On July 29, after the Federal Reserve announced that it would maintain the federal funds rate unchanged, the international gold price (denominated in London spot gold) continued to rise, once breaking through $1,980 per ounce, approaching a record high.
After the continuous surge, the current international gold price has reached a historical high. With the implementation of loose monetary policies by central banks this year, global market liquidity is relatively abundant. In addition to gold, the prices of many assets such as crude oil, non-ferrous metals and silver have also begun to rise to varying degrees. In this context, can gold continue to rise in the future? Will other assets become the next "gold"? It is becoming a topic of concern to investors.
Photo by Dong Xiangyi, the new Jingwei in the data map
Can crude oil and non-ferrous metals rise in a relay?
Based on the opinions of securities firms in the market, the two factors of loose currency + depreciation of the U.S. dollar are generally considered to be the main reasons for this round of gold prices.
The Industrial Securities macro team pointed out that with the global central bank’s “big water release”, a large number of bond assets have entered the “negative interest rate” era, which has increased the price-performance ratio of “zero interest rate” gold, and this year’s Fed’s further easing has strengthened this logic. , Market funds began to look for allocation opportunities around the world, ample liquidity and the depreciation of the U.S. dollar promoted the rise in prices of commodities such as gold.
Jiang Shu, the chief analyst of Beijing Jinyang Mining, said in an interview with the Sino-Singapore Jingwei client that there are many similarities between the rise in gold prices this year and the rise in gold prices after the 2008 financial crisis. The main point is that the two rounds of gold Rising prices were all initiated in the context of the “release of water” by global central banks.
It is worth mentioning that after the 2008 financial crisis, with the global central bank's "release of water", in addition to gold, the prices of crude oil, non-ferrous metals and other commodities also ushered in a wave of vigorous rises. In recent times, the prices of crude oil, copper, lithium, and zinc and other non-ferrous metals have also seen a clear upward trend. Therefore, after the price of gold has risen to historical highs, whether crude oil, non-ferrous metals and other commodities can continue to rise has become the focus of attention of many investors.
New latitude and longitude in the data map
In this regard, Tianfeng Securities macro analyst Song Xuetao pointed out in a recent research report that compared with the fundamentals of the global economy this year and after 2008, the rise in commodities such as crude oil and non-ferrous metals this year lacks a basis for forming inflation.
The analyst believes that, on the one hand, China has now entered a period of industrial upgrading and structural transformation, and there is no need for a large amount of infrastructure investment and construction as it did in the past; on the other hand, the asset-liability ratio of the US corporate sector has reached historical levels before the epidemic. High point, and now there is no room for proactively increasing leverage. Therefore, overall, market demand has limited support for commodity prices.
In Song Xuetao's view, the current financial attributes of bulk commodities are stronger than their industrial attributes. The recent price fluctuations of these assets are mainly due to factors such as consumption scenarios, debt burdens, and income expectations that hinder economic recovery in the post-epidemic period, and monetary easing cannot be smooth. It is transformed into real purchasing power and actual demand, which leads to the flood of financial liquidity. Therefore, in the past period of time, gold, which has the strongest financial properties, has gained the best momentum, followed by silver, which is closely related to gold, and copper, which is a non-ferrous metal.
The macro group of CICC also stated that looking forward to the second half of the year, although the epidemic will continue to recur in individual countries, the gradual global recovery is still the main theme. Since the supply-side recovery is faster than the demand, this economic recovery will be an inflation-free recovery, and the cyclical sector may hardly rise sharply. Strong varieties (such as copper, lithium, and building materials) may continue to be strong, but relatively weak varieties may increase their share prices due to poor earnings expectations, and valuations may not necessarily increase significantly.
Silver and Moutai are comparable to gold?
Although the bulk commodities with industrial attributes are not favored by analysts, some assets with both industrial attributes (or commodity attributes) and financial attributes have attracted the attention of many brokerage institutions. Among them, the discussion about "whether buying silver is better than buying gold" and "whether buying Moutai equals buying gold" is the most heated discussion.
Southwest Securities pointed out in a recent research report that the pricing logic of silver has both financial and industrial attributes. From the perspective of industrial attributes, as the epidemic stabilizes, the recovery of industrial demand such as electronics and photovoltaics and the large-scale commercial use of 5G will drive the increase in market demand for silver; from the perspective of financial attributes, the ratio of gold to silver (gold price/silver (Price) There is a large room for repair. Since March 2020, the global silver ETF holdings have increased more than gold, mainly due to the sharp increase in the previous gold price, which has made silver investment cost-effective.
On the other hand, Liang Zhonghua, a macro analyst at Zhongtai Securities, pointed out in a research report in mid-May that the over-issuance of banknotes will inevitably lead to an increase in the prices of commodities marked with banknotes. In the long run, if banknotes continue to be over-issued, as long as they are scarce assets that are slow in supply and can survive for a long time, they will benefit from the nominal price of banknotes. In addition to gold, Moutai also meets this characteristic. This point of view has triggered a discussion in the market about whether buying Moutai is equivalent to buying gold.
New latitude and longitude in the data map
Liang Zhonghua analyzed in the research report that the annual supply rate of Moutai is very slow and will not suddenly increase production; if Moutai is stored for a long time, the longer it is stored, the better the quality, and the intrinsic value will not be depleted, but will also increase. . Therefore, the characteristics of Moutai and gold are similar, and they can even be used as currency. A bottle of Moutai can be easily converted into cash.
However, there are also different market views that, whether it is silver or Moutai, although both have financial attributes, the price of the former is constrained by the price of gold and industrial demand, while the price of the latter has to take into account the real consumption situation in the market.
A research report recently released by the Shenwan Futures Research Institute pointed out that following the rise of gold is the main driving force for the rise of silver, and due to the smaller silver plate and stronger speculative properties, the price elasticity of silver is often better than the performance of gold when market risk sentiment rises. . In contrast, the benefits provided by silver’s own fundamentals are relatively limited. Although the market is now speculating about the expected recovery of silver industry demand, under the influence of the spread of the epidemic and the rise in silver prices, the demand for jewelry, industry and silverware Will be suppressed.
Liquor industry expert Sun Yanyuan pointed out to the Sino-Singapore Jingwei client that high-end liquor, as a luxury consumer product, will affect its sales when the economy as a whole faces downward pressure. In particular, the current price of Moutai has reached more than 2,600 yuan. If its price continues to rise, not only will consumer demand in the market drop, but its financial attributes will also be under pressure from public opinion.
More importantly, whether it is silver or Moutai, the current prices are already at historical highs. Wind data shows that the London spot silver price rose to a historic high of US$26.20 per ounce on July 28, and was reported at US$24.26 per ounce as of press time. When the Sino-Singapore Jingwei client checked the major online shopping malls, it was found that the price of Maotai 53° Feitian Liquor that can be bought directly without reservation and panic buying is basically above 2,650 yuan per bottle.
The next gold, or gold?
What is interesting is that although the price of gold continuously breaks historical records, there are still many institutions that continue to watch high gold prices.
According to Reuters' Chinese website, on July 28, although the international gold price had hit a record high of US$1981.20 per ounce that day, Goldman Sachs still raised its 12-month gold price forecast to US$2,300 per ounce. According to reports, Goldman Sachs said: "We have long advocated that gold is the last currency, especially in the current environment where the government devalues legal tender and pushes real interest rates down to historically low levels."
The Industrial Securities macro team also pointed out in a research report on July 28 that although the price of gold has hit a record high, the current price of gold may not yet fully reflect the impact of the "big water release". In comparison, there is still room for gold to rise. The team analyzed that, on the one hand, the increase in the price of gold in this round is still far less than the expansion of global central banks; on the other hand, gold still has a relatively large relative advantage over low-interest assets such as cash and bonds.
Photographed by Luo Kun, the new latitude and longitude in the data map
However, as the price of gold continues to rise sharply and the precious metals market is booming, regulatory authorities have begun to alert investors of risks.
On the afternoon of July 28, the official website of the Shanghai Gold Exchange issued a notice stating that due to the influence of international factors, the price of gold and silver has been volatile recently, the level of holdings is high, and market risks have increased significantly. All member units are requested to prepare risk contingency plans to remind investors to do a good job in risk prevention and increase risk awareness. If the risk situation of gold and silver further intensifies, the exchange will take appropriate risk control measures based on market conditions to prevent market risks and protect investors' interests.
Jiang Shu said that from the perspective of technical indicators, the price of gold is now at a serious technical overbought level. Under this circumstance, if the United States recently disclosed more optimistic economic data, or if the U.S. dollar showed a corrective rebound in the short term, the price of gold is likely to undergo a sharp correction, and investors should pay attention to related risks. (Zhongxin Jingwei APP)
(The opinions in the article are for reference only and do not constitute investment advice. Investment is risky, and you need to be cautious when entering the market.)
All rights reserved by Sino-Singapore Jingwei. Without written authorization, no unit or individual may reprint, extract and use in other ways.