During the gold standard period in the first half of the 20th century, the price of gold was always at a low level, and the small money supply at that time was also a major factor in the cheapness of gold.
After World War II, a new monetary system, the Bretton Woods system, was established, which directly linked currency to gold. The United States established a monetary system with the US dollar as the global benchmark currency at the exchange rate of US$ 35 1 ounce of gold.
However, with the gradual increase in the supply of dollars, this system has been questioned. In the final analysis, the bankruptcy of the monetary system stems from distrust of the dollar. According to the economic principle of "bad money drives out good money", many countries and institutions began to gradually sell dollars and buy gold, which eventually led to the collapse of the system. The gold bull market has been out of control ever since.
Since then, the Smithsonian Agreement was formally concluded, ending the bond relationship between money and gold and turning to a free floating system. Since then, the global distrust of money has also intensified.
Gold has a stable position as a major commodity.
As a major commodity, the increase of gold in the past 30 years far exceeds the CRB index. This also indirectly reflects the preservation effect of gold. As far as capital is concerned, investment in gold will be given priority in an environment of good economy and excess liquidity.
Comparison between crude oil and gold
The successive rise of crude oil and gold may be the most striking part of this bull market. Historically, the comparison between crude oil and gold has been explained since the collapse of the Bretton Woods system in the 1970s.
In this bull market that began at the end of the 20th century, the trend of gold still lags behind that of crude oil, but we believe that the future oil price and gold price will eventually remain at a relatively balanced price.
For the balance point between crude oil and gold, we can get a reference law by comparing the prices. In the past seven years, the exchange rates of 1 ounce of gold and 1 barrel of crude oil have been fluctuating around 10, which indicates that there is still room for the current gold price to rise. If the current price of crude oil is 90 dollars/barrel, the price of gold may rise to 900 dollars/ounce.
Comparison chart of gold and crude oil prices. (Source: mainland futures)
Inverse correlation phenomenon
With the recent weakening or even falling of the US dollar price, the voice of the market for currency preservation is getting higher and higher, and gold is also rapidly rising in this environment, which is favored by the global investment community.
The positive correlation between market interest rate and gold is questioned.
On the other hand, the United States has recently shifted from a rate hike cycle to a rate cut cycle. Does this mean that this economic recession is coming gradually? And will the relationship between gold and interest rate be affected by this?
Fortunately, the trend in the last decade has broken this positive correlation, so we think that gold may not be the victim of this round of interest rate cut cycle.
Since 0 1, the fund has been idling more.
Another feature of the gold market comes from the fact that the positions of COMEX gold futures fund announced by CFTC have been idling for more than 7 years, which will support the bull market in the market outlook.
According to our gradual analysis of the gold price above, I believe that in the future trend, the gold price will continue the rhythm of the bull market, and the hot money in the market is also flocking to this market. The gold price of 900 or even 1000 dollars will not be a dream.
He thinks it will reach 900- 1000 per ounce in the future, but I don't think so. This is just a