Gold has soared to a seven-year high. Can you still get on the bus?
As the Spring Festival approaches, gold is once again hot. In the shopping mall, you will find that the price of gold jewelry has soared to more than 400 yuan a gram! Looking at the international gold market again, affected by the situation in the Middle East and various "black swan" incidents, gold has soared to $1,600 per ounce, setting the highest value in seven years!
Is it necessary to add gold in 2020? There is a paragraph that says: "When the weather is sunny, the proportion of physical gold in the family asset portfolio is at most 1%; But if you consider ‘ A certain president ’ The proportion should be raised to 5%. "
So, how do you view the current gold market?
"When the cannon rings, there are two thousand gold."
At the beginning of 2020, the United States suddenly attacked Iranian officers, and the situation in the Middle East escalated, which made the global gold market almost crazy, breaking through the key point of $1,600 per ounce and hitting a new high in the past seven years.
In other words, there are "three treasures" in the rise of gold: dollar, liquidity and geopolitical conflict. Nowadays, the global economy is weakening, many countries are caught in the tide of interest rate cuts, dollar assets are at a high level, and the conflict between the United States and Iraq is gaining momentum. The world is facing a major change that has not been seen for many years. Under various uncertain factors, risk aversion is rapidly heating up and gold prices are rising sharply. Some analysts even pointed out that the price of gold is expected to rise above the historical high of $1,900 per ounce in 2011.
Figure 1: Gold price trend in 2019, source: Oriental Fortune Network
Let’s lengthen our observation point of view. Since the 1970s, every geopolitical turmoil has been accompanied by a short-term rise in gold, such as the Soviet invasion of Afghanistan, the Iran-Iraq war, the Gulf war and the Iraq war (as shown in Figure 2) … … It can be seen that gold is a good safe-haven variety. Can we take the house when we start fighting? But a few gold bars can be taken away if you want, and can be used all over the world, because gold is universal equivalent and the world currency.
Figure 2: 1968 & mdash; Influence of geopolitical conflict on gold price in 2011, Source: CITIC Construction Investment Research.
Careful readers find that although gold has an upward trend in the short term after the geopolitical conflict, it cannot reverse the trend of greater dimension and longer cycle.In other words, 1980 — In 2001, wars were frequent, but the gold market experienced a cyclical big bear market for 20 years. The international gold price dropped from 600 US dollars/ounce in 1980 to about 270 US dollars/ounce in 2001. In 20 years, the price of gold halved and fell by more than 50%. Therefore, it is risky to take war or conflict as a gold investment decision.
To analyze the deeper reasons behind this round of 20-year bear market is a more reliable way to decide gold investment. As we all know, the last 20 years of the 20th century was the "golden age" of global economic growth. The tax reduction reform and information technology revolution led by the United States took the lead in getting rid of the trouble of economic stagflation and created the innovation dividend and the bull market in the capital market that continued to recent years. During this period, the average annual growth rate of the American economy reached about 3.5%.
At the same time, another big country, China, started the reform and opening up, with an average annual growth rate of more than 10%. In other words, during this period, the rate of return on investing in China and the United States, whether it is the stock market or the property market, is far better than that of gold. Smart money is allocated to assets other than gold.
When considering large-scale asset allocation, the investment community will use the famous "Merrill Lynch Clock" investment model. According to the explanation of this model, when the economy recovers, the returns of the stock market and the property market are greater than gold; In the stage of economic stagflation and recession, the investment value of gold is highlighted again.
The "Kondratiev Long Wave" in the cycle theory also shows that gold assets will enter a long-term bull market with the long-wave (50-60 years) recession as the starting point, and obtain significant excess returns in the supermarket during the recession period of 5-10 years.
In terms of data, after 2001, the United States experienced the Internet bubble and the real estate bubble successively, and the economy fell into recession, with an average economic growth rate of less than 2%, while gold experienced a bull market, which rose to $1,500 per ounce, a fivefold increase (as shown in Figure 2).This angle proves that gold is an enemy of economic growth, but a friend of economic recession.
Since 2018, the world has lowered its economic growth expectations. Under the catalysis of risk events such as trade friction, Brexit and the Middle East crisis, the safe-haven value of gold has soared together with the price of gold.
"Gold does not create value!"
At the end of the year, many people will buy some gold for the Spring Festival and send it to their relatives, friends and elders. Judging from the domestic gold price, we still remember that a few years ago, gold was only more than 200 grams, and the incident of Chinese aunt robbing gold was impressive. Recently, gold has risen to 400— 450 yuan, one gram. Those who buy early must "earn" So, is the future gold still worth buying?
Let me start with a "sad" conclusion: in the long run, gold has little investment value.
Warren Buffett is not optimistic about gold investment. In 2009, he made an interesting metaphor, comparing gold with stocks. He said: "Coca-Cola’s stocks can make money, and Wells Fargo’s stocks can also make a lot of money. It’s much better to have a goose that can’t stop laying eggs than a goose that can sit there and spend insurance and inventory. " Goose that can lay eggs is a stock that will pay dividends continuously. The latter kind of goose refers to gold. Holding gold can’t earn interest or dividends, but it needs to pay a high storage fee.
Look at a clearer set of data. Professor Siegel of Wharton Business School collected the performance of various financial assets in the United States for more than 200 years and drew the following chart.
Figure 3: 1802 & mdash; In 2002, the return of $1 invested in various assets, source: The Long-term Magic Weapon of Stock Market, Siegel.
The data clearly shows that one dollar invested in the US stock market is worth 704,000 dollars after 200 years, which is 700,000 times. Investing in gold, 1 dollar becomes 4.52 dollars.Siegel commented: "In a long time, gold can protect investors from the impact of inflation, and there is no other role."Siegel’s famous research method and final conclusion have been widely confirmed by many countries and become a yardstick of asset allocation today.
In the long run, the only asset that can beat the inflation rate is stock assets. However, many people must doubt that, since American stocks make so much money, why are China stocks always trapped? Of course, there are chronic diseases in the China stock market itself, and there are also improper choices of stock targets by retail investors. For example, assets such as Maotai, the "wine gold", cannot be excavated.But a key problem lies in "not being able to hold" good stocks and not holding high-quality assets for a long time.
Although gold has no investment value. But gold also has an irreplaceable side. It does not guarantee that you will get rich, but it can guarantee that there will always be meat to eat! For example, in the 1990s, if you held 100 yuan, you could buy 20 Jin of pork, but in 2019, you could only buy 3 Jin. But if you have been holding 100 yuan’s equivalent gold, you can still buy pork of similar weight today.
Siegel’s explanation and data are very convincing, but there is a key question, that is, how long is the long term? Keynes said, "In the long run, we are all dead." Who will hold gold for 200 years? How to grasp the present is the problem that everyone is more concerned about.
Gold, infatuation and confusion
Standing at the threshold of 2020, global economic turmoil, weak growth and inflation are coming … … Such a big environment is in line with the common sense that "jewels are hidden in prosperous times and gold is bought in troubled times". However, this strategy is too rough. According to the above analysis, it is not difficult for us to conclude that gold has the dual attributes of currency and commodity. To judge the trend of gold price, it needs to be comprehensively deduced in big logic according to different attributes and perspectives of various dimensions.
In the long run, the operation of gold price shows certain regularity with the fluctuation of global economy. We need to recognize whether the present is the end of the last round of growth cycle or the eve of the new industrial revolution. In addition, monetary credit has a long-term law, that is, after the collapse of the Bretton Woods system in 1971, the exchange relationship between gold and the US dollar has changed from 35 US dollars/ounce to 1,600 US dollars/ounce today.
The international community is increasingly dissatisfied with the long-term depreciation of the US dollar. Gold, the "anchor of money" for thousands of years, has been recognized again. In fact, in recent years, many central banks have greatly increased their gold reserves as a tool for credit hedging, which also constitutes the upward pressure of gold from the demand level.
In the medium term, gold, as a precious metal, has commodity attributes and global liquidity. From quantitative easing after the crisis to the era of negative interest rate under the tide of global interest rate cuts, it is expected that the prices of various commodities will rise strongly.
In the short term, global risk appetite is the core factor affecting the fluctuation of gold price, especially the world’s concern about geopolitical turmoil.
It can be said that even the cleverest brain can’t give an accurate judgment on the trend of gold prices, but a three-dimensional and multi-dimensional observation perspective helps us get closer to the real situation.
Ironically, when summing up his investment achievements, Buffett told a metaphor of "ovarian lottery": "I have excellent conditions in all aspects, a good family environment, and my parents are very intelligent and go to a good school. These are very important. But I was born in a good place at the right time, and I won ‘ Ovarian lottery ’ 。”
Buffett’s main wealth accumulation was realized in a good era of rapid economic development in the United States, and he made the right investment at the right time and place — — Stock assets share the growth dividend. Another important reason is that he lived long enough, and 99% of his wealth was realized after the age of 50. From a long-term perspective, the "ovarian lottery theory" may enlighten our gold investment.
Gold will always make people obsessed and troubled, greedy and fearful. Perhaps this is the charm of gold.