With regard to the pricing mechanism of gold, there are different opinions in the existing research framework, and it is difficult to achieve consistency. The main reasons are as follows: first of all, the factors that drive the gold price objectively are extremely complex. The rise and fall of gold price more reflects the current trend of the world macro-economy, but it is difficult to reach a consensus on the judgment of the macro-economic trend. Secondly, in the short term, the most intuitive factors affecting gold price are the current trend of US dollar index and various "black swan" events, which is also the most important basis for the market to judge the trend of gold price, but to analyze the fluctuation of gold price based on short-term macroeconomic changes, it is inevitable to combine political events, oil prices and monetary policy for analysis without a long-term perspective. Finally, gold has entered human society for more than 3000 years, has long been integrated into the social economy, but also into human thought and culture, and its main influencing factors switch in turn at the stage of historical development, leading the price of gold. The price operation law of gold is dominated by market risk aversion in the short term and depends on the contradiction between economic growth rate and power in the long run. On the basis of previous studies, this paper explores the commonness of gold price trend through Schumpeter's economic cycle theory, which is the mainstream of the market.
The economic cycle of this paper is mainly based on Schumpeter's comprehensive economic cycle theory, including Kondratiev cycle long cycle, Jugla cycle and short-term inventory cycle.
Kondratiev cycle
According to Schumpeter's comprehensive economic cycle theory, there is a long cycle in the development of the capitalist world, that is, the Kondratiev cycle, which is mainly based on the changes in prices and economic growth, and the cycle length is about 60 years. It includes four stages of economic prosperity, recession, depression and recovery, each of which is about 10 years. We list five long cycles according to the interval of nearly 300 years on the market. In the first stage of each long cycle, technological innovation leads to the improvement of overall production efficiency, the increase in marginal costs after the peak leads to a shift in growth, and finally enters the stage of depression and recovery. In the second half of the long cycle, the economy will slowly move towards stagflation.
The price of gold in a long period. Looking at the trend of gold prices from a long-term perspective, we can find that stability is the main theme of gold prices during the prosperity period if there are no huge political events (wars, etc.). During the recession, there is bound to be a big fluctuation in the price of gold, either caused by natural price changes or by major political factors. During the depression and recovery, gold is generally high, but most likely it will go through three rounds of big ups and downs. This is the fundamentals of the trend of gold in the long cycle. From the current point of view, it is now in the second half of a new long cycle, and the sharp rise and fall under the high price of gold is destined to be the basic style of the last 10 years.
Juglar cycle
The Jugla cycle is a cycle of investment in fixed assets or equipment, believing that crisis or panic is not an independent phenomenon, but one of the three stages of social and economic movement, which are prosperity, crisis and depression. The recurrence of the three stages forms a periodic phenomenon.
There is no unified standard for the division of the Jugla cycle, and the index of the proportion of equipment investment to GDP is generally used, but the market has little difference in the division of the equipment investment cycle in the United States. This paper briefly divides the Jugla cycle period by combining the proportion of equipment investment in GDP, output gap and unemployment rate.
The price of gold in the Jugla cycle. Since 1975, the equipment investment cycle in the United States has gone through five rounds, and there is no significant relationship between the gold price and the equipment investment cycle, but the gold price will probably rise when the Jugla cycle decreases. In terms of subdivision, from 1983 to 1991 and from 1992 to 2002, there is a certain negative correlation between them, and the positive correlation between gold and equipment investor cycle is more prominent in other stages. From the long-term point of view, during the period of recovery and prosperity of the American economy from 1983 to 2002, the financial property of gold price weakened, the macroeconomic aspect improved, the rate of return on investment in the social capital market gradually increased, and the gold price did not have a strong driving force to rise. Exuberant equipment investment activities mean that the social economy continues to develop, and it is difficult for funds to flow into the gold market.
Precious metal cycle
Analyzed from the economic cycle, from a long-term perspective, the trend of gold and silver is basically the same, and there is an obvious cycle in itself, with an upward period of about 10 years (during which it goes through a big peak) and a 20-year period of decline. the period of decline can be subdivided into adjustment period (each adjustment period will have two or three peaks) and horizontal period.
Specifically, the macro events in each cycle are roughly as follows:
The rising period from 1970 to 1980. The collapse of the Bretton Woods system in 1970-1975 was followed by the first oil crisis, which led to a small peak in precious metal prices in 1974. After 1975 and 1980, the depreciation of the US dollar superimposed the second oil crisis, which made the price of precious metals reach a long-period peak.
The period of decline from 1980 to 2000. From 1980 to 1983, in the context of the economic recession, the United States tax cuts and monetary tightening led to the repair of the dollar and the decline in the price of precious metals. In 1983, risk aversion triggered by the Latin American debt crisis led to a rise in precious metal prices, followed by a gradual strengthening of the dollar and a long-term decline in precious metal prices. From 1985 to 2000, the Internet science and technology revolution in the United States, the Fed's interest rate hike and the Asian financial crisis were good for the United States, and silver entered a long-term horizontal trading stage.
During the period 2000-2011. Entering 2000-2011, the Internet Bubble, the birth of the euro and the financial crisis hit the dollar index, and the price of silver rose strongly.
The period of decline since 2011. After 2014, the monetary expansion policy around the world gradually withdrew, the United States began to raise interest rates, and silver rose weakly. Silver rose for a short time in 2016 due to the weakness of the dollar and Brexit, before the dollar continued to raise interest rates and precious metals fell.
Under the independent cycle of precious metals, there may be opportunities to rise in the future: when precious metal prices gradually enter the downward channel, there will be two large-scale pullbacks, looking back on the last large-scale pullback. after peaking in 1980, precious metal prices adjusted deeply around 2016 and 1987, respectively, with an interval of about 3 years, corresponding to this stage in 1983 and 2019. From the comparison of the overall trend of the world, after 1980, the United States adopted monetary tightening and large-scale tax cuts to stimulate the economy. Although the international fundamentals in recent years are different from those around 1980, for the United States, the oil price soared in the early stage. the policies of large-scale tax cuts and interest rate increases and shrinking tables in the later period are similar to those in that year at the same time.
Inventory cycle
The inventory cycle (Kitchin cycle) is a short cycle as long as 3-4 years, and its basic driving force is the inventory change of manufacturers, and it is the general economic law that commodity inventory changes periodically under the mediation of supply and demand. Schumpeter's comprehensive cycle theory holds that generally a Jugla cycle consists of three independent Kitchin cycles. The indicators for dividing the inventory cycle are different. This paper uses all manufacturing inventory, manufacturing PMI order inventory and inventory-to-shipment ratio to divide the inventory cycle.
This paper uses the data correlation analysis between the gold price year-on-year and the US manufacturing PMI order inventory year-on-year. The results show that the correlation coefficient is 0.146 and the regression goodness-of-fit is 2.6%. By exploring the changes in gold price and the short-term inventory cycle in the United States, we can see that there is no obvious relationship between gold price changes and short-term inventory cyclical fluctuations. However, it is worth noting that there is an obvious reverse relationship between the ratio of gold and other commodities in the inventory cycle. For example, the ratio of gold to silver shows a certain cyclical change in the inventory cycle, and the overall trend is a reverse relationship. This can be understood as the trend of gold is not as good as silver in the upward trend of the economy, on the contrary, it is larger than silver. This ratio change is particularly obvious in the ratio of gold to other metals. For example, by comparing the ratio of gold to copper, we can see that there is a strong negative correlation between the two changes after 2000, and the rise or decline of the ratio of gold to copper is negatively related to the trend of inventory cycle in the United States.
With the help of Schumpeter's comprehensive economic cycle theory, which is popular in the market, this paper aims to define a general trend based on the times for the trend of gold, so as to help us partially judge the specific operation of gold price. Overall, the trend of gold obeys the long-term fluctuation of 60 years, and we can use long-period and medium-period to define the trend of the next 10 years. In the short term, there is no obvious relationship between the price of gold and other commodities in the inventory cycle, but the ratio of gold to other commodities is negatively related to the inventory cycle. The ratio of gold to other commodities in the market can simply be regarded as a reflection of the current economic trend. If the ratio is high, the degree of economic prosperity is lower and vice versa. From the perspective of inventory cycle, the price of gold has no obvious trend of change.
