The plunge in panic has stimulated gold investors too much. So what caused the price of gold to plummet so historically?
The culprit: rumors of sale in Cyprus
On April 1 1, Reuters reported that the documents of the European Commission showed that the Cypriot government agreed to sell its surplus gold reserves to raise about 400 million euros, which would be the largest gold sale in the euro zone in four years. After the news was announced, there was panic selling in the gold market. Although the amount of gold involved in Cyprus is not large (about 10 ton), gold traders are still worried that other countries in the euro zone will take this as a precedent and follow suit in the future. Especially in countries that are deeply in debt crisis like Portugal and Italy, the gold reserves far exceed those of Cyprus.
Behind the scenes: Goldman Sachs, Merrill Lynch and other financial institutions sing empty gold.
On April 10, Goldman Sachs lowered its gold price forecast of 20 13 from 16 10 to 1545 and 20 1490 to 1350. In addition, international investment banks such as UBS, Deutsche Bank and Societe Generale have recently lowered their expectations for gold and silver prices this year and next. Many internationally renowned investment banks such as Goldman Sachs collectively sang high-profile gold, which led to panic selling by investors and accelerated the decline of gold and related precious metals.
Macro factor: China's economic data is low.
On Monday, after China's disappointing economic data was released, the growth rate of 8% below market expectations suppressed investor sentiment. Some analysts believe that the US economy continues to recover steadily, the US dollar strengthens, and the market's expectation of quantitative easing by the Federal Reserve weakens, which weakens the safe-haven property of gold as a precious metal and suppresses the gold price from sliding into a bear market after the bull market of 12.
Market factor: Gold investors switch to stocks.
Since the beginning of this year, the continued weakness of gold prices has greatly reduced the interest of precious metals investment investors in gold investment, and many gold investors have turned to stock trading.
Conspiracy Theory: The Federal Reserve may manipulate the price of gold.
European and American analysts have used social media to vomit Bernanke and his Federal Reserve, thinking that this is their next big game. The former assistant secretary of the US Treasury is even more blunt: "This conspiracy has been going on since April. The exchange told individual customers that hedge funds and institutional investors are releasing information about selling gold, warning individual customers to withdraw from the market early. Then, a few days ago, Goldman Sachs announced that the gold market would sell further. What they want to do is keep individual investors away from gold. Obviously, desperate things are happening. "
Crisis of confidence: Is gold questioned as an effective hedging tool?
Credit Suisse, a precious metals analyst, said: "Obviously, there are more doubts in the gold market than a week ago-the scope of doubts includes the independence of the central bank, its control over gold reserves and the sanctity of EU treaties. Gold investors once again realized that investing in gold is not a very effective hedging measure. "
Increased transaction costs: The increase in margin will force long investors to close their positions.
The New York Mercantile Exchange raised the minimum margin for gold and silver futures. Increasing the margin will increase the transaction cost, which may cause investors to be forced to close their positions due to insufficient funds, thus amplifying the short-selling volume of gold.
Forced liquidation factor: Paulson lost $654.38 billion in two days, and may be forced to liquidate his position if he does not clear his position.
Hedge fund giant Paulson lost almost $654.38 billion in personal wealth in the past two days. Judging from the trend of gold in the past two days, if Paulson does not clear his position, he will be forced by short sellers, and if he clears his position, it will inevitably aggravate the decline of gold prices.
Kuroda effect in Japan
After Japan's new president, Haruhiko Kuroda, introduced more than expected easing measures, the volatility of Japanese government bonds rose sharply, comparable to that of Greek government bonds. In order to meet the surge in margin requirements, Japanese financial institutions choose to sell other assets to strengthen capital and liquidity, rather than selling bonds. Since QE2, the trend of gold price is highly negatively correlated with the connotation volatility of Japanese government bonds.
The full text information comes from: Changzhou Evening News article "Revealing the Nine Reasons for the Gold Crash"