Is the soaring gold bull or bear?

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Recently, after temporarily falling below US$1,900 per ounce and taking a big step back from the massive rebound in the summer, the price of gold tried to rebound. However, the price fall may not end, and it cannot be ruled out that this year there will be a level of US$1500–1700. As the price of gold rose rapidly in a short period of time, the market generally expects that the price of gold will recover. In less than three weeks, the price of gold broke through the high of US$1920 set in 2011, soared above US$2000, set a record high of US$2075.47 per ounce, and then fell below the 2000 mark. Some people believe that due to the rapid fading of pandemic concerns, gold prices may continue to fall, and bull market trends like this are not uncommon.

This wave of gains started at US$1050 and reached US$2075. To give back 50% of gold, the price of gold must be pulled back to between US$1,500 and US$1700. This large-scale price drop may occur this year or early 2021, and from then on, the gold bull market has started to go crazy.

Recently, the price of gold can be said to have risen and fallen sharply. Many people are talking about gold. What is going on? Gold, which was originally relatively stable, fell sharply after experiencing a seemingly very strong bull market. It feels like a sign that a bear market is about to come. So what should we think of gold?

First of all, we need to understand what gold is? Gold and silver, as a familiar form of currency management in human history, can be said to be the currency chosen by all countries in the world. Later, as countries began to gradually issue paper money, gold and silver did not completely separate from the currencies of other countries. They only began to use gold and silver as reserves. Gold gradually became a kind of reserve metal from the original direct currency until the last century. In the 1970s, US President Nixon announced the complete decoupling of gold from the US dollar. Only when gold gradually declined from its original basic position and became a relatively normal world precious metal. So as long as the Yellow Turban is not currency, then we cannot view gold in terms of many things about currency. But there is another very special thing, that is, gold. Although it is not currency, gold has a very special property. This is the preservation of market value. After all, for most people, the paper money in our hands will depreciate. However, there was basically no inflation in those years at the basic position, so everyone has gradually become accustomed to using gold as an important means of maintaining market value.

Secondly, after understanding the value of gold, let’s look at how we currently view gold? For gold, which is a universally recognized property of value preservation, when a relatively serious inflation starts within a period of time, there will be a large-scale increase in the price of gold. This is because for all investors in the world, when When everyone is not sure what the future state will be, gold is undoubtedly the most recognized form of reserve, so the greater the volatility of the economy, the greater the possibility of crisis, and the price of gold will rise. The more powerful. In addition, gold is priced in U.S. dollars. If there is a large-scale release of water by the Fed or the adoption of quantitative easing in the United States, there will be the possibility that the U.S. dollar will continue to depreciate. As the U.S. dollar may continue to depreciate, under such circumstances , The price of gold will rise because of the depreciation of the U.S. dollar. In essence, the value of gold has not changed, but because the U.S. economy has problems, the U.S. dollar has begun to depreciate, which leads to gold. It has become more expensive. In fact, the US dollar has started to release a lot. So the current large-scale increase in the price of gold during the previous period and the large-scale decline during this period are actually inseparable from the international economic situation. Since the previous international economy was in a relatively crisis state, everyone felt that I don’t know when this epidemic will end, and the impact of the epidemic on the economy is getting more and more serious. Therefore, under such circumstances, the price of gold will inevitably rise. This is the core source and foundation of the price increase. Therefore, there will be a decline because of the news of the vaccine and the influence of the continuous improvement of economic data. Under such circumstances, everyone does not agree with the value of gold.

Third, what should we think of the future of gold? If the world economy starts to recover in an all-round way, the possibility of a further drop in the price of gold still exists, but from the current point of view, the complexity of the world economy is still in a state of uncertainty, and the struggle between humans and the virus is still struggling. In the process, we have not yet seen the possibility of a full victory, so in this case, the price of gold will still be in a range of fluctuations, but everyone wants to say that the purchase of gold is a form of property Comprehensive preservation of value, or even realization of comprehensive appreciation, is an undesirable choice from the current point of view. Therefore, there is no need for a large-scale rush to buy gold. You must know that the gold that Chinese aunts rushed to buy back then has only just paid back this year.

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Digital Nomad

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