A lower RMB exchange rate means a lower RMB exchange rate against the US dollar, and a lower RMB means a depreciation of the RMB. The RMB exchange rate is lower, and gold and silver are quite shocking. Generally speaking, it will cause the price of gold and silver to rise.
Of course, from another perspective, if gold and silver are used as currency, the impact of RMB depreciation will become positive. The devaluation of RMB has caused turmoil in the international market, at the same time, the Fed's expectation of raising interest rates has been affected, and the future trend of the US dollar is also worrying, which has greatly boosted the gold and silver negatively related to the US dollar.
What will happen to gold and silver if the RMB depreciates?
The reaction of gold and silver to RMB depreciation can be explained as follows: the relationship between supply and demand in the physical market at present, or the influence of gold and silver market as a commodity is less than that of gold and silver market as a currency or investment product. Of course, factors such as the Fed's interest rate hike and the strengthening of the US dollar are still the biggest factors affecting the sharp drop in gold and silver prices.
Furthermore, China is the second largest demand country for gold and silver in the world. The depreciation of RMB will stimulate the demand of Chinese people for gold and silver, so that its characteristics of maintaining and increasing value can be reflected, thus raising the price of gold and silver. In this way, foreign exchange will flow out of China. Once this happens, China's economy will fluctuate accordingly, and investors will have risk aversion, which will lead to the purchase of gold and silver, and the price of gold and silver will also rise accordingly.
Impact on the supply of gold and silver: From the perspective of China's physical investment demand, the depreciation of RMB will lead to the relative shrinkage of individual investors' cash and stimulate Chinese people's awareness of investment and financial management, and gold and silver will become the priority objects in the asset allocation list. Therefore, the depreciation of RMB will not only affect the supply of gold and silver, but will be beneficial to the speculation of gold and silver in the short to medium term.
In fact, more and more data show that investors in China are constantly influencing the whole gold and silver market. On June 28th, the international gold price fled because investors locked in profits. However, Alex Thorndike, a trader at MKS Group, said, "So far, it has been mainly sold from China. When the price of gold rises, China investors sell all the way, especially when the price of gold exceeds $65,438 +0.300. We continue to see them selling in large quantities. "
For another example, the national day gold price plummeted. Although there are many explanations for the market crash, Andy Hoffman, a precious metal analyst, believes that the real reason for the crash is actually very simple, that is, the holiday in China. In the past few years, whenever China has a National Day holiday, gold and silver will go up and down. Hoffman said that the China market is closed, which means that the gold and silver markets can be easily manipulated. To be precise, multi-billion-dollar leveraged funds can destroy the market.
The depreciation of RMB will make the price of gold and silver rise. Because the volatility of gold and silver is large and predictable, and because the speculation of gold and silver can be traded in both directions, RMB depreciation is undoubtedly a good investment opportunity.