Prophecy gold prices will rise sharply, it may be too early

2024-02-22 16:09:58 hot news


(Original title: Proponent gold price will rise sharply early)

Huitong Finance APP News-At present,hot news we are in the latest round of forecasts for gold prices.In my opinion, these predictions are more from the expectations of anxiety and high emotions, not fundamentals.

Last month, the Federal Reserve President Powell's pigeon speech boosted the expectations of the Fed's interest rate policy reversal.Bonds and gold are the two biggest beneficiaries.

The logic of bonding bonds is quite direct.The decline in interest rates is inversely proportional to the increase in bond prices; this is the opposite of the situation we have experienced in the past few years, because the rise in interest rates is directly reflected in the fall of bond prices, with a total decline of 50%.



As far as gold is concerned, the price trend is a typical subconscious response, and its basis is to assume that the next round of cheap and loose funds have arrived.

This is of course not a fact.first,The Fed spent nearly 40 years to control interest rates at the lowest level in history.At present, the efforts trying to restore interest rates to higher and more reasonable normal levels have only been carried out for 2-3 years.

Is it "normal" again now?For most investors and analysts, if you live in a fictional world throughout your life, the world continues to create currencies with human low interest rates, and it is difficult for you to treat things correctly.

The expectation of the sharp rise in gold prices is the hypothetical hypothesis based on the impact of gold on the expected low -cost capital impact.This is not the case.

What are the reasons for rising gold prices?

The only reason for the rise in gold prices is the actual loss of the US dollar purchasing power.It only reflects this decline afterwards -after the facts, not before the facts.

When the price of gold reached its peak in 1980, it reflected the effect of inflation, and 97%of the US dollar purchasing power had been eroded before inflation.

At that time, people's expectations for the completely collapsed by the US dollar were not diminished.Along with the expected collapse, some people predict that the price of gold will exceed 1,000 US dollars.

In the end, it did it; however, it took almost 30 years to achieve it.At the same time, the US dollar did not collapse completely.However, its purchasing power continues to decline due to inflation.

The average closing price of gold in January 1980 fell at a low of $ 677 to a low of 250 US dollars in the summer of 2000.

From 2000-2001, it continued until August 2011, and the price of gold has climbed to a new high of $ 1895/ounce.

The "new high" of the gold price was three times the high point in 1980, reflecting the decline in the US dollar's purchasing power at that time by nearly 99%.After the inflation is adjusted, the price is similar.In other words, the "new high" in 2011 reflects the gold value of the same inflation adjustment as in 1980.

Similarly, the price of gold reached the "new high" of $ 2048 in August 2020, reflecting the further decline of the US dollar purchasing power after 2011, and also reflecting the value of the gold after the golden inflation mentioned earlier.

The picture below is the long -term trend of gold prices.


Gold prices in 1980-2023 (adjusted by inflation)

As you see in the chart above,At the end of 2023, the price of gold at the end of 2023 is not the "new high" of the actual gold.In fact, compared to the peak in August 2020, the current price of gold is actually about $ 300.In August 2020, the price of gold will reach the peak of $ 2048/ounce. Unless the currently adjusted gold price after inflation will exceed 2336 US dollars per ounce, it will exceed 2020.

The abnormal logic of gold bulls

When the Fed announced the plan to increase interest rates to reduce inflation to a more easy -to -accept level (it is said that it is consistent with the 2%goal they often missed), their efforts have led to the stronger dollar and the decline in gold prices, at least temporarily.

The Fed now said that recent evidence shows that it has made progress in this regard, and the inflation effect has been obviously weakened even if it has not been completely weakened; it may be unnecessary to continue to raise interest rates.

I ask a question:

If the strengthening of the US dollar and the decline in gold prices are brought by the Fed's two years of controlling inflation, their recent statement shows that they feel that they are approaching their goals, which does not mean that the views on inflation threats have been different. ThereforeIs the decline reasonable?

The purpose of my asking is that the golden bulls seem to have a tendency to look at each other through rose -colored glasses.

The following is the order that sounds: 1) The inflation is very bad; the dollar is about to collapse, buy gold.2) Inflation is not as bad as before; the Fed may not need to continue to raise interest rates, so buy gold.


in conclusion

Gold prices are always chasing the previous inflation effect, which is manifested in the continuous decline in the purchasing power of the US dollar.

At present, the gold price of $ 2060 ounces is 100 times higher than its initial fixed price of $ 20.67.It reflects that the purchasing power of the US dollar has dropped by 99%over the past century.

However, the possibility of rising gold prices has always existed because the effect of inflation will continue indefinitely.The price of gold will not rise significantly until a certain year and month, the purchasing power of the US dollar has further declined significantly.

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