As a metal currency, gold (1235.68, 4.98, 0.40%) can be used as a store of value and to avoid risks. Inflation and depreciation of the US dollar will lead to an increase in global gold prices, so many countries need to reserve gold. Maintain the value of the domestic currency. The stock market and bonds are "paper" assets, and historical trends show that gold market and stock market prices usually move in opposite directions. Why is this happening?
The relationship between the stock market and gold prices is complicated. As the stock market rises and risk appetite increases, investors will transfer funds out of low-risk, low-return gold and invest in the stock market or other products. Investment demand for gold will decrease as the stock market rises. However, as the stock market rises, the economy grows, and jewelry and industrial demand for gold will rise, driving up gold prices. The degree to which gold prices correlate with changes in the stock market depends on the balance between gold investment demand and physical demand.
What is the current stock market situation?
The current bull market in the U.S. stock market began in March 2009 and is now entering its fifth year. From a historical perspective, the bull market cycle in the stock market has been too long. There are rumors that the approximately 30% increase in the U.S. stock market last year was an advance of the 2014 increase. The stock market's strong gains last year were driven by expectations of strong economic growth in 2014.
The stock market plummeted yesterday evening, and Greek stocks were the king of the plunge, falling 13.0% and leading the world in decline. The plunge in the stock market boosted gold to soar by US$40. Yesterday's market trends indicate that the stock market has entered the final stage of the bull market. Economic growth is slow, the Federal Reserve and central banks of various countries are gradually withdrawing from loose monetary policies, and interest rates will be raised in the future. These dangerous signals have caused the stock market to continue to be poisoned and spread, and one day it will become poisonous and die.
A fall in the stock market is good for gold
The recent relationship between gold and the stock market shows that a fall in the stock market will be very beneficial to gold, as investors will flow to safe-haven assets. As an asset class, commodities performed well in 2014. The Thomson Reuters/Jefferies CRB Commodity Index has increased by 10.97% since 2014, but the S&P 500 Index has increased by only 1.66%. In addition, Comex gold futures also rose by 8.1%.
Investors must pay close attention to stock market trends. If the U.S. stock market continues to fall, then the bullish snobbery in the gold market will surely continue to rise.
Gold and Stocks Questions and Answers from Netizens
Q: Are there any advantages over gold and stocks?
Answer: One is the domestic market and the other is the international market. Stocks are subject to too much speculation by domestic institutions, while gold is speculated by people all over the world.
Q: The gold market is now better than the stock market Want to be better?
Answer: The stock market is falling, but gold is rising. In addition to stocks, gold’s rise also benefits from technical buying and short covering. However, the trend of gold is affected by international speculators and is relatively uncertain.
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