On April 8, the gold plate rose again, Yintai gold rose strongly by the limit, Chifeng gold, western gold, Shandong gold and so on rose one after another.
Real interest rates are still low
Generally speaking, interest rate hikes are negative for gold, but Minsheng Securities points out that when the Fed's interest rate increase expectations have been digested by the market, inflation expectations remain high. With weak economic growth, tightening policies are expected to lag behind inflation. Real interest rates (nominal interest rate-inflation rate) are difficult to beat inflation, gold prices are likely to hit a new high.
In addition, from historical data, the price of gold is highly negatively correlated with real interest rates, while real interest rates on 10-year Treasuries are already at historic lows.
Minsheng Securities also pointed out that since 2010, central banks have bought gold for 12 consecutive years, especially in emerging markets, reflecting that countries have begun to pay attention to the risks of their own foreign exchange reserves since the economic crisis in 2008.
In the context of the substantial expansion of the global central bank table, monetary credit is gradually being challenged. Central banks will increase the demand for gold to maintain currency stability and resist the risk of weakening US dollar credit. With the recent higher-than-expected geopolitical risks in Russia and Ukraine, under the influence of the central bank's gold purchase behavior, risk aversion is heating up, and there are obvious signs of rising gold investment demand.
Gold price may usher in an upward trend.
Looking back at the characteristics of stagflation in the United States in the 1970s and 1980s, the recession under high inflation expectations is a sign of stagflation.
At present, it is difficult to see an inflection point in global inflation. the green energy revolution, repeated epidemics, conflicts between Russia and Ukraine, and rising labor costs have all caused supply-side disturbances or rising supply costs. with the stimulation of demand under loose policies, commodity prices continue to rise, driving inflation.
Minsheng Securities said that at present, the long-and short-term spreads of US Treasuries have been upside down, which is an important signal reflecting the expectation of economic recession. The US economy may enter a period of stagflation. Looking back on the stagflation period of the 1970s, physical assets outperformed financial assets as a whole, and gold prices may usher in an upward trend.
Gold stocks are more flexible
Reviewing the trend of gold stocks and gold prices, Minsheng Securities pointed out that gold prices are consistent with the trend of the stock sector, but stocks are more flexible.
The market valuation of gold stocks fully reflects the changes in fundamentals. Compared with commodities, the value fluctuations of individual stocks are also affected by the changes in corporate fundamentals and other factors, which is the main reason why the volatility of gold index is higher than that of gold price. However, from the overall trend, it points out that the time when the upward trend of gold prices is established is usually accompanied by good opportunities for the layout of gold stocks.
In terms of related companies, Minsheng Securities pointed out that compared with gold, the value fluctuation of gold stocks is also affected by its fundamentals and other factors, resulting in the volatility of the gold index greater than the gold price. When analyzing the elasticity of performance, we should focus on the proportion of mineral gold production, the comprehensive cost of gold, and the planning of increasing production and reserves.
As the fluctuation of gold cost in mines is negligible relative to the trend fluctuation of gold price, the rise of gold price can directly lead to an increase in the profit of mineral gold business, and the performance with a higher proportion of mineral gold is more flexible to the performance of gold price.
