In just past June, the international gold price fell by more than 7%, from the previous $1,900 to $1,780, which is also the sharpest decline in international gold prices in five years. By early July, although international gold prices rebounded, they were still in a relatively weak state. Although international gold price showed a significant decline in June, in the eyes of many people, the short-term international gold fell too much, and it is now the best time to buy gold. Some investors also believe that buying gold at this time can effectively resist inflation .
It is not groundless to say that buying gold can fight inflation. In the 19th century, people used 1 ounce of gold to make a high-quality suit in London, England, but now they can still make the same suit in London at the price of 1 ounce of gold, which shows that the value preservation function of gold still exists.
However, gold usually strengthens when a credit crisis occurs in currencies such as the US dollar. If the dollar index starts to rebound, the gold price will most likely fall. The US dollar and gold are largely in a seesaw effect, that is, the gold price will fall when the US dollar rises, and the gold price will rise when the US dollar falls.
. There are three main reasons for the sharp decline in international gold prices this time: First, because the inflation rate in the United States exceeds more than 5%, in June, the Federal Reserve repeatedly stated that it would tighten the monetary policy , and revealed that there must be two hikes in rate before 2023.
At the same time, the world is vaccinating the new crown vaccine. The new crown epidemic is expected to be controlled in the future, so the world economy may gradually recover in the next one or two years. Under such a background, international gold will be sold by investors, and it is reasonable that gold prices will fall.
Furthermore, judging from the global capital market situation, a large amount of funds flows to the stock market. Today's investors prefer high-risk and high-return investment products, and for gold, which does not have much room for growth, it will definitely not be loved by many investors. In this case, it is very normal for international gold prices to fall due to selling.
Finally, this round of gold rising market rose from 1100 points and continued to rise to its previous highest point of 2089 points, nearly doubled. Under this circumstance, the market has diverged in the high-level areas, and some profit-making chips have chosen to withdraw because they feel that they are "very cold at high places". Since international gold prices are still at historical highs, investors are more cautious and dare not enter the market blindly.
So, can the current gold price fight inflation ? Our answer is no. First, gold is not completely incapable of fighting inflation. It depends on when you buy it. If you buy it at $1,100 per ounce and sell it out now, you can make money. And if you buy international gold above $1,900 per ounce, you will definitely lose money. Therefore, whether buying gold can fight inflation depends on whether the timing of your purchase is correct.
Second, if you want to fight inflation by holding gold for a long time, you may be disappointed. Judging from the data from the past 10 years, 10 years ago, the price of gold was $1,500 per ounce, and by the end of June this year it was only $1,780, which was only $280, and the increase of was roughly 18%. This means that in the past 10 years, international gold has increased by 1.8% per year. With such a return on investment, , it cannot beat annual inflation at all. Therefore, it is unrealistic to think that holding the investment product of gold can fight inflation.
Third, even if domestic investors buy gold bars issued by banks at the low level of international gold prices, they hold them until now and then take them out and cash out. Many banks are unwilling to recycle gold bars issued by themselves. Even if some banks are willing to recycle gold bars, banks still have to inspect and appraise gold bars, and these fees must be paid by investors themselves.
So in the end, it is actually difficult for investors to make much money by investing in gold. If you sell gold jewelry to stores selling gold, they will put the gold price very low, and investors will likely sell it well below the market price. It is easy to buy gold in the country, but it is difficult to sell it.
The international gold price continued to fall in June. Whether buying gold can fight inflation now is difficult. If you buy gold mainly in the bottom area, you can still make money. This ability to buy low and sell high is difficult for ordinary people to grasp. Judging from historical data, gold has not given investors a high return rate in the past 10 years, and it is impossible to resist inflation.
More importantly, gold is a niche market in China, and it is easy to buy gold bars and gold jewelry, but if you want to sell and cash, merchants basically do not collect it, and banks only collect gold bars issued by themselves. They also need to strictly appraise it and then keep the recycling price very low. In the end, investors can't make much money. It is not realistic to expect to use gold to fight inflation.
