Chinanews Client Beijing, August 20th (Peng Jingru) As the price of gold rose, Buffett, the "stock god", also began to "gold", but the minutes of the July meeting of the Federal Reserve released on the 20th caused gold prices to fall by more than 3% in the short-term. Let ordinary investors feel dilemma: to follow or not to follow?
Gold price fluctuated back and forth at the $2,000 mark
On the 18th, the London gold spot rose back to US$2,000/oz, and the highest intraday price was US$2018.63/oz. Before the investor's happiness passed, the price of gold began to fall again. On the 19th, the London gold spot Asian morning market opened shortly, the highest intraday price was 2006.14 US dollars per ounce, and then fluctuated all the way down, closing at 1928.42 US dollars per ounce.
The minutes of the Fed’s July meeting announced in the early hours of the 20th said that the ongoing public health crisis will severely affect economic activity, employment and inflation in the short term, and pose considerable risks to the economic outlook in the medium term.
The market interprets this as the Fed’s commitment to future easing is less than expected. On the 20th, the London gold spot opened at a price of $1,927.87 per ounce, which was 3.9% lower than the highest point on the 19th.
"The linkage of geopolitics, international economy, international finance and capital market, these four levels cause gold price fluctuations." Zhang Wenbin, deputy general manager of the marketing department of Xiamen Gold Investment Co., Ltd. explained the reasons for the fluctuations in gold prices.
London spot gold chart.
Zhang Wenbin told Chinanews.com that, first of all, the two-party stimulus policy negotiations in the United States have reached a deadlock, which temporarily failed the market's expectations of inflation. Secondly, Russia's news about the registration of the new crown vaccine has pushed up the market's risk appetite. Third, the US non-agricultural data and the US PPI data released by the overnight market last week were negative for the precious metals market. Finally, at the technical level, gold prices face the need for profit settlement and adjustment.
Buffett "slapped his face" to buy gold stocks
The news of Buffett's opening of gold stocks also affected the gold market to a certain extent.
On August 14, the 13F report disclosed by Buffett’s Berkshire Hathaway showed that Barrick Gold, the world’s second-largest gold mining producer, was the only stock holding position in the second quarter of the “God of Stocks” and held a total of 2090 shares as of the end of the quarter. Ten thousand shares, with a market value of 563.5 million US dollars, Berkshire Hathaway became the 11th largest shareholder of Barrick Gold.
According to data, Barrick Gold was founded in 1983 and its headquarters is in Toronto, Canada. It is one of the world's largest gold producers, with global reserves of more than 2,700 tons.
Data map: Gold jewelry in a shopping mall in Taiyuan City, Shanxi Province. Photo by China News Agency reporter Zhang Yun
You know, Buffett has more than once before bluntly said that "gold is useless", and even said: Long gold is more fear. Therefore, Buffett's move made many people exclaimed "Living to see you". Max Keiser, a well-known American financial commentator, said: "Buffett's dumping of bank stocks and buying Barrick's gold is a huge change, and its importance cannot be overemphasized."
Some market participants believe that this shows that even Warren Buffett’s Berkshire Hathaway cannot ignore, or is unwilling to miss the rise in gold. "The'stock god' Buffett did not resist the temptation of gold." Some netizens commented.
Affected by the above-mentioned share news, Barrick Gold surged nearly 12% overnight. The stock price of 30.13 US dollars hit the highest level of the stock since February 2013, and the cumulative increase of the stock during the year exceeded 60%.
However, it is worth noting that investing in gold mining producers does not mean holding physical gold or futures contracts. Buffett plays with stocks and mainly relies on dividends distributed by gold miners to make money.
According to historical data, the stock price performance of gold mining companies in the past decade or so has generally been far worse than the performance of gold futures prices, but there are also views that the rise in profits of gold mining companies under the epidemic may cause them to overtake them.
Big guy blessing, can you buy gold along with it?
In addition to Buffett, there are many big players in the financial sector who are publicly bullish on gold or announced their gold positions.
Bridgewater, the world's largest hedge fund, and Paulson & Co, a subsidiary of American hedge fund predator John Paulson, both increased their gold holdings in the second quarter. Among them, Qiaoshui substantially increased its positions in SPDRGoldTrust gold ETF during the quarter, accounting for 15.34% of the investment portfolio, increasing the position by 34%, and holding positions worth over US$900 million.
Data map: RMB and US dollars. Photo by Chinanews reporter Li Jinlei
Does it mean that you can buy gold with confidence?
Brian Belski, chief investment strategist at BMO Capital Markets, said on the 18th that if you buy gold because Buffett’s Berkshire Hathaway bought Barry worth more than $500 million. Gram gold stock, then you are late.
"I think we should maintain a neutral position in gold." Belsky warned that, fundamentally speaking, gold prices and mining may over-expand.
In response to the follow-up trend of gold, UBS stated that it will maintain the expected price of gold at $2,000 per ounce at the end of the year. Under the background of increasing geopolitical tensions, the price of gold is expected to rise to $2,300 per ounce in the short term.
"Gold investors should also maintain a strategic determination for gold investment. Don't change their long-term confidence and plans for gold investment because of short-term price adjustments. Gold may face greater adjustments and wide fluctuations in the short term." Zhang Wenbin said .
Zhu Zhigang, vice president and chief analyst of the Guangdong Gold Association, said that the current major factors affecting gold prices, such as the intensification of the global epidemic and geopolitical tensions, have not changed, so gold prices are still bullish in the long run. "In this case, investors should grasp the rhythm and don't follow the trend."
Li Qilin, chief economist of Yuekai Securities and Dean of the Research Institute, analyzed that on the one hand, the possibility of a rebound in the dollar is increasing, which will drag down the valuation of gold. On the other hand, there is a big gap between inflation expectations and the nominal interest rate of U.S. Treasuries, and the real interest rate may slow down.
"Therefore, it is not cost-effective to continue chasing more gold for trading in the short to medium term. It is even more recommended that you wait for the risk to be released before entering the market or making allocations on dips." Li Qilin said.
Buffett did not resist the "temptation" of gold, can you resist the "temptation" of Buffett? (Finish)