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At the 2021 China International Silver Industry chain Summit Forum and China Silver Market Application Symposium hosted by (SMM) of SMM Information & Technology Co., Ltd., Guan Ping, deputy general manager of brokerage headquarters and general manager of Cooperation Department of Guangzhou Futures Co., Ltd., shared the financial instruments hedging strategy of customers of silver industry. He said that since 2021, the internal and external ratio of silver has fluctuated frequently near the export profit and loss window, and has been opened from time to time. According to the real-time exchange rate and the comprehensive cost of 50 yuan / kg, the highest export profit is about 200 yuan / kg, which is currently about-80 yuan / kg. With the steady operation of the exchange rate, the variables in the internal and external markets have been digested. The ratio will continue to fluctuate near the window, profits above 50 yuan can be locked to establish anti-sets, and repeated flexible operation, and the need to effectively put risk in the first place.
Risk Prevention in interest rate fluctuation
Us dollar interest rates have been low for a long time: after the 2020 outbreak, LIBOR showed an L-shaped trend, remained near zero interest rates for a long time, and continued to hover at the level. The long-term maintenance of zero interest rates has provided a significant boost to inflation and contributed to a significant upside in commodities.
Inflationary pressure on the US dollar has soared: since the first quarter of 2021, core CPI in the United States has accelerated upward and successively broke through the three key points of 2%, 3% and 4%, and there is still no obvious turning back at present. The Fed's attitude towards inflation has changed from a strong push for more than a decade to a happy outcome, and has rapidly evolved into a change of color in the current talk!
The fundamentals of the dollar are supported: since 2020, the United States has surprised the world in terms of epidemic prevention, and the repeated spread of the epidemic has had a great impact on the economic pattern. But at the same time, the fundamentals of the United States have also fully demonstrated stability and resilience. Non-farm payrolls reversed after the first wave of the epidemic in 2020 and are now close to the 150 million level. The stability of employment and the continued decline in the unemployment rate indicate that the US economy can withstand the impact of monetary tightening.
The unemployment rate in the United States continues to decline: the inverted V-shaped trend of the unemployment rate in the United States since 2020 reflects that the endogenous cycle of the United States economy has not been broken. A sustained unemployment rate of less than 6 per cent will provide support for the US economy. As a result, it heralds a slight shift in US monetary policy, from ultra-loose to mild tightening.
With the current inflationary pressure in the United States, austerity is imperative; and the economic fundamentals are relatively stable and can withstand the impact of austerity; but the relatively high exchange rate pattern of the US dollar makes interest rate increases have incentives to push up the exchange rate and thus affect the international balance. Therefore, taking into account the internal and external cycles, Guangzhou Futures believes that there may not be a nominal increase in interest rates for the US dollar, but tightening measures such as shrinking tables will take the lead.
On the domestic side, since 2021, it has been affected by the implicit regulation and window guidance of the central bank, superimposed on the operation of the open market. Although the central bank's benchmark interest rate and LPR have not been adjusted, the bill discount rate obviously shows a pattern of first rising and then restraining, and the recent downward trend has become clear. Therefore, it is expected that domestic interest rates will continue to fall steadily.
It is expected that the tightening of the US dollar and domestic easing will continue in the fourth quarter of 2021 and early 2022, and the real interest rate gap between China and the United States will continue to narrow. Based on this situation, the silver market will perform as follows:
1. The anchor of precious metals is still essentially the dollar, so the tightening of the dollar will put pressure on the overall price of silver.
two。 The loose pattern of domestic interest rates and the strong performance of the RMB will pull silver upward.
3. Combining the internal and external market factors, it is expected that the impact of interest rates on silver is neutral and short, and the price feedback on silver will show a weak fluctuation of 20-22 US dollars per ounce.
With regard to the two major risks inside and outside interest rates, hedging strategies are recommended as follows:
1. For the interest rate risk of US dollars, if it involves spot financing and payment, it is recommended to lock in the current lower interest rate in advance through tools such as letter of credit discount.
two。 In terms of domestic interest rates, in the pattern of continuous easing, there is not much risk at the financing end. In the financing link, the focus should be on grasping the phased low level of bill discount, reasonably arranging the financing schedule, and ensuring a win-win situation between abundant liquidity and capital prices.
3. With regard to the asset-side and wealth-side risks of domestic interest rates, it is suggested that customers in various industries should grasp the bank's 1-3-year certificates of deposit and lock in an annualized income of 3.8% and 4% in advance, so as to build a solid foundation for the "solid collection +" model.
4. Based on the risk that the interest rate is derived to the spot field of silver, it is recommended to buy or fit the put option of silver appropriately, control the position at 10%, enjoy the short results at less cost, and shield the risk of short selling!
The future influence of gold-silver ratio and exchange rate on silver
After the epidemic, the high price of gold and silver has fallen sharply. According to the calculation of the Shanghai Gold Institute, the current gold-silver ratio has fallen from 115 to 70-75. Based on the continuous strengthening of the reserve attribute of gold in the long-week scenario, there is a rebound momentum in the ratio of gold to silver.
Us inflation has been rising since 2021 and accelerated out of control in the second quarter. But at the same time, yields on 10-year Treasuries rose and fell back into the 1.2 per cent yield range. The rise in inflation and the decline in Treasury yields seem to be the opposite, but they can occur at the same time, reflecting the strong distortion of the near and far end of the capital.
Under the premise of capital surplus at the far end, from a long-term point of view, gold can essentially be regarded as a sustainable 0-coupon treasury bond. With the long-term stable and low pattern of long-term US debt yields continuing, gold is bound to be much stronger than silver in the imaginative space. The story attribute of gold will help gold and silver to strengthen again.
The gold-silver ratio will rebound more quickly to 90-100 points, and the absolute price performance is expected to show a "gold strong and silver weak" pattern. In terms of specific operation, considering that the inner disk caused by the decline in silver export profit and loss is stronger than the outer disk, you can consider making long US dollar gold, shorting US dollar silver, and controlling the position by 10% Mel 20%.
Since 2021, the RMB exchange rate as a whole can be regarded as two-way fluctuations around the 6.45. under the clear statement of the central bank's "managed two-way fluctuations", Guangzhou Futures believes that in maintaining the stable and orderly flow of funds, and stable exchange rate and other key financial elements of the micro point of view, the exchange rate will still be stable and strong.
Exchange rate conclusion
1. From a fundamental point of view, under the premise of maintaining the basic economic concept of internal and external circulation, the exchange rate is in an awkward situation. "substantial appreciation is disadvantageous to exports and obvious depreciation suppresses imports." under the basic financial pattern that stability comes first in the post-epidemic era, it is estimated that the exchange rate will remain stable in the fourth quarter of 2021.
two。 From the perspective of market information, under the expected narrowing of interest rate spreads between China and the United States, RMB swaps continue to rise to around 1800BP, forming a certain long-term depreciation pressure, but under the background of the central bank's foreign reserves operation and successful management and control experience, the pressure can be controlled!
Based on the above, it is predicted that the RMB 6.45 axis will be maintained!
With regard to the gold-silver ratio, it is recommended to do the following arrangement:
1. Gold and silver ratio, Guangzhou futures is firmly bullish, it is recommended that small positions continue to try, seize the overall trend of gold is too strong!
two。 In terms of exchange rate, it is suggested that from the perspective of risk prevention and control, RMB forward and RMB futures contracts should be locked to shield market risks!
3. From the perspective of enhancing earnings, we can comprehensively consider the implied space of RMB depreciation swap point, and match the actual settlement and purchase background, properly sell RMB options to improve the comprehensive rate of return of the business!
Analysis on the consistency of Internal and external Price fluctuation
Since 2021, the internal and external ratio of silver fluctuates frequently near the export profit and loss window, and sometimes opens. According to the real-time exchange rate and the comprehensive cost of 50 yuan / kg, the highest export profit is about 200 yuan / kg, which is currently about-80 yuan / kg. Guangzhou Futures believes that with the stable operation of the exchange rate, the variables in the internal and external markets have been digested. The ratio will continue to fluctuate near the window, profits above 50 yuan can be locked to establish anti-sets, and repeated flexible operation, and the need to effectively put the risk in the first place!
Under the premise of internal and external anti-containment and the closure of the physical export window, the comparative prediction of the potential trend in the future is as follows:
1. The internal and external window closes, the implied message is that the market distortion becomes smaller, it is more difficult to appear independent market, that is, the internal and external fluctuations are becoming more and more consistent!
two。 The consistency of internal and external volatility is enhanced, which represents the mutual substitution enhancement of the position to a certain extent in terms of hedging strategy.
3. Increased consistency of internal and external volatility will also suppress internal and external transactions at the arbitrage end, thereby reducing the overall market position size.
4. The improvement of the consistency of internal and external fluctuations, in line with the current restrictive policies on the positions of financial institutions, will reduce the share of self-supporting business of financial institutions.
Under the general pattern of internal and external consistency, it is recommended to make the following arrangements:
1. In terms of anti-arbitrage and exports, we should adhere to the core of physical profits and losses, study and judge with the trade window instead of statistical arbitrage strategy, and suggest that under the premise of export profits, we should strictly lock the foreign exchange and constantly brush the smaller bands.
two。 Under the reduction of overall positions in the market, implied intra-market trading, especially Tender contracts, tends to be relatively diluted, so intra-market cross-market arbitrage is recommended to see more and move less, and there is no risk opportunity to operate again!
3. Internal and external current overall pattern is "the overall situation is insipid, there is no lack of thunder", in the short-term event transaction level, it is expected that there will still be wasteful opportunities at the end of the year, under this premise, we should leave enough internal disk funds and outer disk quota, thus the internal market interest spread arbitrage and internal and external ratio arbitrage greatly!
Other market opportunities
Since 2021, it has been influenced by the invisible regulation and window guidance of the central bank, superimposed by the open market operation. The bill discount rate shows a pattern of going up first and then going down, and it has become clearer recently that the mainstream interest rate of the full-year silver bill discount of the National Stock Bank has fallen below 2.5%, and the opportunity for the back-end of the spread business is more obvious. The opportunity of front-end pledge is obvious!
Guangzhou futures spreads are expected to show a loose pattern in the fourth quarter, commercial banks will transition from strengthening supervision to achieving targets, front-end low-risk product pledge invoicing channels will show a substantial recovery, and opportunities will become increasingly apparent.
Therefore, it is suggested that the coordination of silver trade and spread business should be as follows:
1. Lock in structured deposits in advance, reissue bills, large certificates of deposit and all other pledged products and invoice lines to ensure the source of interest spreads.
two。 Lock the export channels of city commercial banks, and try to solve the problem of "big banks can't open, small banks can't stick".
3. Make use of letter of credit and international trade background, match properly with re-export of other non-ferrous varieties, do the carrier of wide spread business as far as possible, and expand the business channel.
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