Background:
1: The amount of currency issued in the world since 2020 has exceeded the sum of the previous 30 years. There are still many products whose prices are only equivalent to the prices in 2008. Therefore, judging from the historical global currency volume corresponding to commodity prices, many types of commodities have experienced relatively large increases.
Supply and demand fund balance
2: In 2023, due to the epidemic, China passively and gradually withdrew from cheap labor force, causing global inflation to rise again. The core of 40 years of rapid global development is the cheap labor that China's reform and opening up has contributed to the world. But next year may be the beginning of our gradual bid farewell to cheap labor. It is an indisputable fact that liberalization will definitely bring additional deaths. We will calculate that the new crown epidemic will affect at least 2 million people next year based on the mortality rate of one in 800 in Hong Kong and our bloodline.
At present, the elderly are still the core force. They have pension support and have to take care of children. According to international data, most of these deaths are among the elderly. How much labor force does a family affected by a population of 2 million need to lose to balance the normal running of the family? In the past, a two-month salary of 5,000 was enough to keep the family running. Now, after quitting the labor force at home, one person may need a monthly salary of 10,000. There is a high probability that the global economic crisis will break out next year. The core of this is that the possible gradual withdrawal of cheap labor in China will push the world's inflation to a certain height again. Without hard work, there would be no basis for the operation of the world economy. The current new crown model provided abroad shows that the population that may be affected by this round of epidemic has reached 0.8%, so using China's base calculation, it is a population impact of tens of millions.
life
Natural cognition and thinking will change when the impact is great. Everyone will re-examine the value of their own lives. The thinking that triggers this problem is experiencing death and witnessing death.
There is no new generation of 996. It is time for the world to change and silently shoulder the responsibility with health.
India has such a population base but unfortunately because of religious beliefs they prefer to lie flat. Although the death of a master's degree in West China was fueled by foreign forces, many of it is also a fact faced by domestic hospitals. Therefore, there has been a wave of medical strikes abroad in the past few years, especially in Henan, which has forced the medical system to not take vacations until March next year. It is worth paying attention to whether strikes will occur in China.
There are many industries that exchange healthy bodies for money. After witnessing and experiencing death, it may not be effective to use the original chips to make everyone pay, so the improvement of welfare will inevitably increase costs. The rise in commodity prices in China is bound to push global inflation upward again. This is why without the 996 of Chinese people, there would be no basis for the cheap operation of the world economy.
3: When there is still a surplus of global investment funds, but there are only a few viable targets left, then we must pay attention to it
gold.
days of money supply
The price of gold this year has been around $1,800 The consolidation is caused by the Federal Reserve deliberately suppressing gold. The rise in gold will weaken the strong position of the U.S. dollar and affect the issuance of U.S. dollars at a higher price (as long as the relationship between supply and demand is balanced, there is no reason why the U.S. dollar keeps falling and the U.S. dollar price keeps rising, but commodity prices do not rise.) At present, U.S. debt has exploded Breaking 29 trillion U.S. dollars, no other country in the world can take on such a large amount of U.S. debt, so the United States can only borrow from itself, which means that QE cannot be stopped, and the Federal Reserve has to spend its own money to buy it. Therefore, logically, non-industrial varieties recognized by the world and linked to the U.S. dollar are needed to transfer inflation. And gold is a good target.
US debt exceeds 29 trillion
The investment value of gold
One: From 2009 to August 2019, the overall increase in 10-year gold was 70%, and the 10-year cumulative compound interest was 5.45%. In terms of inflation from 2009 to 2019, the actual inflation rate has reached 6.3%.
Three: Monetary easing started from the economic crisis in 2008 and ended in 2012. The overall growth rate of gold in 4 years is: 100%, and the cumulative compound interest in 4 years is 17.8%. Therefore, compared with the inflation index, investing in gold during a period of stable global development did not outperform inflation. However, during the downturn of the global economy or the outbreak of an economic crisis, gold can steadily outperform the index and inflation. In 2020, due to the financial crisis caused by the epidemic, most countries around the world printed more money to cope with the financial crisis.
The United States is making money like crazy
How has the history of gold evolved?
There are three periods in history when gold prices have increased significantly:
The first period: 1861~1865, with an increase of 250%~300%. During the gold standard period, the price of gold was relatively stable. Due to the limitations of gold delivery points, the fluctuations in gold prices were relatively small. In 1862, the U.S. Congress passed the Legal Tender Act, which stipulated that "green back" U.S. bills could be circulated as currency. There is no legal price comparison between the "green back" dollar bills and the sword of gold. In fact, the United States has abandoned the gold standard. As dollars are printed in large quantities, inflation is inevitable. Because the United States' main trading partner is the United Kingdom, and the pound is pegged to gold, the price of gold expressed in "green back" dollar bills is basically the price of 1 pound in U.S. dollars. At the beginning of the American Civil War, 1 pound of gold was worth 4.86 US dollars. However, after 1862, the "green back" dollar bill depreciated significantly relative to gold, and reached its bottom in 1865, when it cost 12 US dollars to buy 1 pound of gold.
American Civil War
The second period: 1970~1980, increase: 2400%. The 1944 Bretton Woods system established the U.S. dollar-based world monetary system, which stipulated that the U.S. dollar was pegged to gold at 35 U.S. dollars per ounce of gold. The currencies of other member states were pegged to the U.S. dollar. Countries could purchase gold from the United States at a price of 35 U.S. dollars per ounce. After World War II, in order to assist European countries in post-disaster reconstruction, the United States continued to import dollars to the world. Europe also had a post-war " dollar shortage" that transitioned into the "dollar disaster" in the late 1960s. Inflation is already increasing due to the flood of dollars. When the Nixon administration announced on August 15, 1971 that the United States would abandon the fixed price relationship between the US dollar and gold, countries around the world experienced significant inflation, and the price of gold skyrocketed, from US$35/ounce to US$850/ounce in 1980.
The destruction of the Bretton Woods system
The third period: 2001~November 2010, increase: 500%. From the beginning of 2001 to June 2003, the Federal Reserve took a total of 13 interest rate cuts, reducing the federal funds rate from 6.5% to 1%, and maintained this interest rate level for more than a year. This extremely loose monetary policy caused the US dollar to begin to depreciate sharply, and gold "sparkled" again.
Low interest rates in the United States
After entering the 21st century, the global economy has been turbulent. From the "9.11" incident in the United States, the outbreak of the U.S. subprime mortgage crisis, to the Greek debt crisis, etc., people's greater reliance on gold has intensified the rapid rise in gold prices. From the gold price of 253 US dollars per ounce at the end of 2000, it rose to 1,424 US dollars per ounce on November 8, 2010, an increase of more than 500%.
911 event
To sum up,
after all types of assets rose sharply after the start of the epidemic in 2020, the asset with the smallest increase was gold, which increased by 19%.
Due to gold’s inherent hedging properties, gold may outperform risks in the early stages of the financial crisis.
Lin Dong
Shenwan Hongyuan Securities Investment Consultant
Practice Certificate Number: S0900619100018.
The information and opinions expressed in this article represent only personal opinions. They are for reference only and do not constitute investment advice. The targets involved are not recommended.
I am not responsible for any losses caused, and investors must be responsible for their own investment decisions. Investment is risky, so be cautious when entering the market.
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