Weilxin Weekly Review: Investors are often excited when the market is dangerous
Weilxin Investment Consulting Research Center
Chief Analyst Yang Yijun
1 Weekly market summary
This week, the international spot gold price opened at US$1809.65, with a high of US$1849.05 and a low of US$1786.70. As of Friday, Asian trading closed at US$1840.60, up US$28.5, an increase of 1.57%. The weekly K-line first declined and then rose to positive line , ending the four consecutive weeks of decline.
This week, the USD index opened at 104.46 points, with a high of 104.64 points and a low of 102.65 points. As of Friday, Asian midday trading closed at 102.95 points, down 1530 points, a drop of 1.46%. The weekly K-line ended six consecutive positive points, showing a sharp decline in the long negative line.
This week, the Wellxin International Precious Gold Index opened at 4856.93 points, with a high of 5090.91 points and a low of 4784.64 points. As of Friday, Asian midday trading closed at 4990.27 points, up 130.40 points, an increase of 2.68%. The weekly K-line first declined and then rose to the mid-positive line. The precious gold comprehensive index rose by 0.12% this year, and the gold price rose by 0.68%.
This week, the gold price and precious gold index generally showed a trend of first decline and then rise. On Monday, the gold price was suppressed by short to a bottom around US$1,786 in the late Asian trading and early European trading. However, it is not difficult to find that compared with the trends of gold prices and silver, palladium and platinum, the last three varieties bottomed out earlier than gold. Silver led the gold price to bottom out in one day, palladium led the gold price to bottom out in two days, and platinum stage bottom was even more weeks ahead. Therefore, the gold price hit a new low in the early European market on Monday (other precious metals refused to hit a new low) is actually an excellent opportunity to go long in , at least in the short term.
However, the rebound of gold prices on Tuesday and Wednesday was still "shaking" and was not stable, and it seemed that there was still a possibility of continued decline. It was not until Thursday that the US dollar index fell sharply that gold prices rebounded retaliatoryly. The gold price started from the lowest level and rose by up to US$40, and the final market locked in a long-term positive pattern.
The market performance on Thursday is not difficult to see that the weakening of gold prices against the US dollar is still relatively keen. In recent months, gold prices have generally shown a macro-resistant decline pattern relative to the US dollar index. Comprehensive understanding, if we believe that the US dollar index is prone to top for a long time, then the medium- and long-term prospects of gold should be optimistic and we should not panic in the excessive adjustment of gold prices. The common problem that investors often have is that they continue to be excited and brave when risks quietly arrive in the market stage, but when facing market opportunities, they are confused and panic!
2 fundamentals -data and messages
global economy slowdown expectation strengthening
This week, the overall trend of high inflation and the overall trend of global monetary policy guided by the United States will further lead to a more and more consensus on the global economy slowing down and even economic recession.
JP Morgan CEO Dimon said on May 17 that the strong US economy will face the upcoming rate hike and quantitative tightening impact. JPMorgan Chase reported on May 18 that the U.S. real GDP growth forecast for the second half of the year was lowered from 3% to 2.4%, lowered the real GDP growth forecast for the first half of 2023 from 2.1% to 1.5%, and lowered the real GDP forecast for the second half of 2023 from 1.4% to 1%.
Compared with JPMorgan Chase’s euphemism, this week, Goldman Sachs has clearly looked down on the outlook for the US economy in all aspects. Goldman Sachs senior chairman Lloyd Blankfein attended the CBS program "Face the Nation" on Sunday (May 15), urging businesses and consumers to prepare for the U.S. recession, calling it "very, very high risk." "If I run a big company, I will be fully prepared for it... If I were a consumer, I would be ready."
Blankfin pointed out that Americans have long benefited from globalization, which has made goods and services cheaper and made overseas labor cheaper.And "Can we rely on supply chains that are not in the United States and cannot control us now, can we feel calm?"
Through this passage, we compare and think about the recent signal that the United States has frequently released "the United States intends to cancel some of the tariffs on China during the Trump period" and we are silent!
On May 18, Goldman Sachs CEO Solomon said that the bank's customers are preparing for slowing economic growth and falling asset prices, all due to the burden on the economy by "extremely punitive" inflation. "The economy has the possibility of a recession," he said in an interview that he was not overly concerned about the risk, citing estimates from economists such as his company Jan Hatzius, saying that the risk of a recession in the next 12 to 24 months is at least 30%. He is closely watching whether the credit spread of starts to expand more significantly . "We have to get rid of inflation, which is extremely punitive, especially for those who rely on weekly wages and die wages to make a living. It is a huge tax burden for this social class. I think controlling it is very, very important."
According to the Bloomberg News website on the 15th, Lloyd Blankefin, senior chairman of Goldman Sachs, urged companies and consumers to prepare for the U.S. economic recession, saying that the "possibility is very, very high"
S&P said on May 18 that "because of the abnormal negative impact", the forecast for the U.S. economic growth has been lowered. S&P said the reasons for the downgrade of the forecast include rising prices of energy and commodities , the longer than expected conflict between Russia and Ukraine, and the acceleration of normalization of monetary policy. Paul Gruenwald, chief economist at S&P Global , said: "Now is expected to decline by 80 basis points to 2.4%, and the euro zone will fall by 60 basis points to 2.7%. The forecast changes from 2023 to 2025 are relatively small. Since our last forecast, the risk situation compared with the baseline forecast has deteriorated, which is a significant downside risk."
According to the latest draft forecast for EU , the EU lowered its expectations for the economic growth of the euro zone in 2022 and nearly doubled its inflation expectations. For inflation , European Commission predicts inflation rates this year and next year to be 6.1% and 2.7%, respectively, while the previous forecasts were 3.5% and 1.7%, respectively.
On May 16, Director-General of the German Federal Federation of Industry Yoshim Lang said in a spring report to the European Commission that the interruption of Russia's energy supply poses high risks to the European economy. The interruption of Russian natural gas supply will kill European economic growth and put the European economy into recession.
About Europe, the UK and the EU on Northern Ireland have led to the EU's intention to go to the European Financial Center of the UK. The UK has decided to leave the EU, but is still committed to enjoying the treatment of EU member states. On May 17 local time, the United Kingdom announced a plan to revise the "Northern Ireland Protocol", emphasizing that this move is to protect the Northern Ireland peace process. The EU issued a statement saying that if the UK unilaterally tore up the protocol, it will take all measures to respond. Some British media interpreted it as a warning to launch a trade war. Andrea Enria, head of the European Central Bank's regulatory department, said on the 19th local time that in order to strengthen supervision, the European Central Bank will mandate major international investment banks to move their euro business from London to cities in mainland Europe, such as Frankfurt, Amsterdam, or Paris.
In addition, according to the report of the UK's National Bureau of Statistics on the 18th, the UK's consumer price index (CPI) in April increased by as much as 9%, not only setting the UK's inflation record since 1982, but also depreciating the UK's currency is also greater than that of the United States and the European Union, becoming the country with the fastest price surge among all developed economies.
In the past two weeks, the UK has become much quieter about the geopolitical crisis in Russia and Ukraine!
United Nations Released the "2022 Mid-World Economic Situation and Outlook" on May 18 local time.The report forecast shows that the global economic recovery is disrupted by the Russian-Ukrainian conflict, which has triggered a huge humanitarian crisis, raising food and commodity prices and exacerbating inflationary pressures worldwide. The report shows that the global economic growth rate in 2022 was lowered to 3.1%, lower than the 4% growth rate expected in January 2022. The report expects global inflation to rise to 6.7% in 2022, twice the average inflation rate of 2.9% between 2010 and 2020, and food and energy prices will rise sharply. Among them, the EU's economic growth prospects have weakened significantly, and it is expected that the EU GDP will only grow by 2.7% in 2022, rather than the 3.9% forecast in early January.
The above information is not difficult to see that the geopolitical crisis in Russia and Ukraine has worsened global inflation and made global high inflation more lasting, and is the main driving force for the global economic decline. It makes life more difficult for middle- and low-level income earners around the world, and indirectly harms poor Africa.
On May 18, a ministerial meeting on global food security was held at the United Nations Headquarters in New York. U.S. Secretary of State Blinken presided over the meeting. UN Secretary-General Guterres said that the current global hunger level is at a new high. In just two years, the number of people with severe food security has doubled, from 135 million before the COVID-19 pandemic to 276 million today. More than 500,000 people live in famine, an increase of more than 500% since 2016.
How satisfied or trust is the US government and the Federal Reserve?
The United States, NATO, and Europe have intensified the geopolitical crisis of Russia and Ukraine, making it difficult to see a signal of easing the global economic dilemma. Even in the United States, the majority of people hold negative opinions on the political and economic governance achievements of Biden . This week, the Capitol Hill newspaper released the results of two polls on public satisfaction with the current U.S. government:
According to the Capitol Hill newspaper on May 15 local time, according to a poll conducted by the National Broadcasting Corporation (NBC) from May 5 to 7 and May 9 to 10, US President Biden's approval rating has dropped again. Among the Americans who participated in the poll, only 39% expressed their affirmation of his work, and 56% were negative about his work as president.
According to the Capitol Hill newspaper on May 18 local time, according to a latest poll, Americans blame the high inflation mainly on President Biden's policies. In this poll conducted from May 13 to 16, 40% of the poll participants believed that the president's policies should be responsible for high inflation, and only 15% believed that the main reason for high inflation was the impact of the new crown pneumonia epidemic on lifestyle. In addition, Biden received a 44% approval rating in this poll, higher than the last 39%.
This week's speech by Federal Reserve Chairman Powell also potentially conveys the meaning that the US government is mainly responsible for inflation.
On May 17, U.S. Treasury officials said they would discuss pricing caps and tariffs on Russian oil with the leaders of the G7 to replace the embargo. The imposition of tariffs on Russian oil will maintain market supply, limit price surges and reduce Russia's revenue. It is not difficult to see that due to inflationary pressure, the United States intends to concessions on Russia's energy sanctions. However, this way of concession reflects the arrogance of the United States ignoring Russia's existence and also reflects the silly and cuteness. From the perspective of the United States and NATO, it is definitely hoped that Russia's economy and finance, which are subject to sanctions, will be in a mess, and the ruble will depreciate greatly to achieve the goal of harvesting Russian assets. However, Russian ruble has shown its strongest state in recent years; in the year of extremely scarcity of global food, Russia has had a bumper harvest. The dominance of the pricing power of scarce commodities in the disordered market should be mainly in the hands of commodity suppliers, not on the demand side of commodity. Therefore, the United States intends to limit the price of Russia's energy, showing its "arrogant and cute" side.
U.S. Department of Energy data on May 16 showed that U.S. strategic oil reserves fell by 5 million barrels in the week ending May 13, to 538 million barrels, the lowest point since 1987.At present, oil, as the source of inflation, seems to be "supply in short supply"!
Increase crude oil production and increase the release of strategic oil reserves, which will help much in curbing oil prices? Let’s take a look at the statement of Saudi . The Secretary of Energy said on May 16 that the production capacity of refining is insufficient means that even if major oil exporters increase crude oil production, gasoline and other petroleum products will remain expensive. Saudi Energy Minister Abdul-Aziz reiterated that soaring gasoline and diesel prices have exacerbated inflationary pressures, causing the global cost of living to further worsen.
"With rice and no pot" is another inevitable inflation embarrassment at present. The cycle of forging these pots takes several years, and when the pot is made, the world may be peaceful and there is no shortage of oil. This may be the surplus of production capacity. Who dares to make a lot of money? !
Meanwhile, despite the international boycott of OPEC member Russia's oil exports, OPEC+ insists on moderately increasing supply, angering U.S. lawmakers. What's the point of being "antied" in the United States? Which country and group’s economic strategies are not based on their own people’s livelihood interests? ! Except for European pro-American politicians!
JPMorgan Global Commodity Research Department said on May 17: Due to strong demand, U.S. gasoline retail prices are expected to rise another 37% to $6.20 per gallon by August.
The inflation situation in Europe and the United States has evolved to this point, which actually basically means that it is unlikely to rely on a soft landing to reduce inflation! The financial community basically does not believe that the Fed can control inflation without triggering an economic recession. Former Fed Chairman Bernanke , who is hard to say publicly, said this week that the Fed made a "slow response" mistake in solving inflation problems.
Bernanke said that Qualcomm's problem has developed into the worst incident since the early 1980s. The question of when action should be taken to curb inflation is “complex…the question is why they delay…why do they delay responding? I think if you look back, yes, it’s a mistake…and I think they agree that it’s a mistake.” Bernanke said he understood why Powell Fed was waiting, “One of the reasons is that they don’t want to hit the market,” he said. "During the Taper Tantrum in 2013, Powell was a member of my board of directors, which was a very unpleasant experience. He wanted to avoid this by giving people as many warnings as possible. Therefore, gradualism is one of the reasons why the Fed did not respond faster to inflationary pressure in mid-2021."
The author posted on April 12, " The US economy suffered from man-made disasters, the two worst administrations and the Federal Reserve ". Bernanke's rare "straight" statement confirms the author's judgment. Bernanke said Powell showed panic symptoms of "fear" about currency tightening in 2013. This time, Powell is still the case, but the consequences are even more serious. Isn’t this caused by the capabilities of this Federal Reserve? ! It is not difficult to see from Bernanke's speech that Powell hopes to achieve the goal of regulating the economy by using "warning" and "scaring". If the statement is more tactful, that is, what the author has long stated: committed to "public opinion orientation" to achieve the purpose of economic regulation, and to "using mouth" to raise and cut interest rates to achieve the purpose of regulation...
But this time, the Federal Reserve has made a very common "smash"! Bernanke's comments on Powell are also proven by Powell's own speech this week. On May 17, Federal Reserve Chairman Powell said: "We like to work through expectation (management). " Although the words are implicit and tactful, isn't that what it means? "Expectations" means having your own subjective expectations, and also relying on guiding the market's "expectations". The reference to economic data also has more subjective selectivity. As Fed Director Christopher J. Waller said in his speech in early May: The Fed's misjudgment of prices in the second half of 2021 was misled by the personal core consumer price index , which continued to decline from March to September 2021 (selectively ignore the rising CPI, which has been rising significantly).
On May 17, Powell spoke a lot, and his statement about inflation is no longer as wild and confident as the press conference after the interest rate meeting at the beginning of the month:
Federal Chairman Powell said: We are quickly raising interest rates to a more normal level, which will be achieved in the fourth quarter. indirectly expresses the urgency of a rapid and large-scale interest rate hike!
Federal Chairman Powell: Without supply bottlenecks, current inflation will not be possible. is a bit like trashing the epidemic and the government’s taste.
Federal Chairman Powell: The Russian-Ukrainian conflict is pushing up commodity prices. We don’t know how long this situation will last. It seems that the impact of the Russian-Ukrainian conflict may last longer than expected. , on the one hand, expresses the complexity of the continued high inflation in the United States, which exceeds the complexity of the Federal Reserve's regulatory capabilities. In fact, it still has a bit of a blaming the government, which is similar to the nature of the Federal Reserve official last year that "fiscal stimulus is also a cause of inflation..." Subconsciously, it said that the current responsibility for high inflation in the United States cannot be entirely blamed by the Federal Reserve! Moreover, the current conflict between Russia and Ukraine caused by politics is still making high inflation "more lasting". This actually further indicates that the Federal Reserve has no confidence in controlling inflation psychology.
Federal Chairman Powell also said: Reducing inflation without triggering a recession is a challenging task. This is very different from the following rate meeting at the beginning of the month, when Powell said "we have a good opportunity to have a soft landing"! Powell continued: We do not have precise tools. We don't know where the neutral rate is, and we won't hesitate if it needs to exceed the neutral rate.
Powell's speech on May 17 was "no confidence in curbing inflation"! Although it further stated: No one should doubt the Fed's determination to curb the highest inflation in decades, including raising interest rates above neutral levels if necessary.
Determination and confidence are completely different things! You can do it hard (raise interest rates, tighten), and you won’t know whether it is effective (lower prices and do not impact the economy and finance)!
On May 19, the speech of the Federal Reserve Kashkali is still largely filled with the meaning of being at a loss about the current inflation. Kashkali said: We cancel easing measures even faster than adding easing measures at the beginning of the COVID-19 pandemic. I don't know how high interest rates are needed to reduce inflation.
With the sharp turmoil and decline in the US stock market, the hawks are also a little dove! Fed Brad said he supports the Fed's plan to raise interest rates by 50 basis points in the next few meetings, believing that it will help lower inflation at nearly four decades highs. As the most hawkish official of the Fed, Brad has always advocated more powerful measures to curb the surge in inflation, but when asked whether the Fed is considering “more action in the short term”, he did not mention the 75 basis point rate hike. In recent weeks, market concerns that the Federal Reserve's interest rate hike in may trigger an economic recession have caused sharp turmoil and declines in stocks.
, especially in the second half of the week, the US dollar fell sharply on Thursday, without any change. US stocks are weak. Whether the Federal Reserve or the US economy in the first half of the week, JPMorgan Chase and Goldman Sachs, which are underestimating the US stock market, have all come forward to comfort the market:
Kansas City Fed Chairman George said in an interview on Thursday that the Fed's inflation blocking war is not targeting the stock market, but the stock market will be one of the "fields" that feel the impact of tightening monetary policy. She said she thought a 50 basis point hike in a single rate hike was appropriate at the upcoming Fed meeting, downplaying the view that it might turn to a larger rate hike. Currently, a 50 basis point hike in a single rate is appropriate, and I have to see something very different to say we need to step up.
David J. Kostin of Goldman Sachs and JPMorgan Chase's Marko Kolanovic both believe that investors' concerns about the imminent recession in the United States are exaggerated - which leaves room for stocks to rebound this year. S&P 500 has fallen 18% from its record high in January, approaching a bear market.
The stock market is often a reaction to market sentiment expectations, and it is not just right to follow the economic logic! US stocks reflect the market's indifference to the US economic trend. At the same time, if US stocks react too aggressively, they will deteriorate the seemingly undeteriorated US economic fundamentals. U.S. stocks have fallen sharply this year as high inflation and signs of hawks in the Federal Reserve have exacerbated the possibility of an economic downturn. According to the latest fund manager survey of Bank of US , concerns about stagflation rose to its highest level since 2008, prompting investors to hoard cash and allocate stocks.
This week, the Fed, who are good at telling stories, all showed no confidence in defeating inflation. As for the financial market, it is obvious that we should not have confidence in the long-term anti-inflation financial attributes of gold, and the adjustment of gold prices in the medium term is likely to have a bottom.
Regarding the strong US dollar, Goldman Sachs' view is "the grasshopper after autumn - it can't jump for a few days." Zach Pandl, co-head of global foreign exchange and emerging market strategy at Goldman Sachs, and others believe that although the US dollar usually strengthens when the recession approaches, once it enters a recession, betting on the US dollar strengthening will not work. The historical data they cite shows that the US dollar has performed more complexly during the economic contraction. Goldman Sachs believes that the US dollar is currently "significantly overvalued" by about 18%. Goldman Sachs expects two possibilities for the U.S. dollar to move in the coming weeks: if the global economic growth outlook improves, the U.S. dollar will weaken as investors turn to high-risk assets; if the world economy does fall into recession, the U.S. dollar will lose its outlook. Analysts predict that the yen could rise as much as 20% if the recession arrives. "The US dollar's performance during and before and after the recession is not as clear as other assets." It depends on factors such as the relative performance of the US asset market and other markets. The author deeply agrees with Goldman Sachs' judgment logic on the US dollar in this paragraph.
3 Gold is in the strategic long signal area
Is it surprising that the sharp drop in gold prices in recent weeks? Not surprising us at all. In the early stage of adjustment after the gold price peaked at $2,070.42 in early March, we gave customers a deduction that was generally consistent with the current situation. Our rough derivation results at that time are as follows: In the next two months, we may see five wave adjustments in the gold market, which should bottom out in May. $1,860 is the basic adjustment target. Even if the second wave rebounds and pulls around $1,998, it has not changed the basic judgment of and . It is also possible to see 1830/1840 further, and even more extreme situations may see around $1,800.
From the current actual situation, gold prices have seen the most extreme situation we judge. However, beyond expectations, this extreme price appeared in the third wave of adjustment, so it is difficult for us to judge whether there is still a fourth wave rebound and a fifth wave adjustment. The time period of the second wave consolidation and rebound also exceeded our expectations. We originally thought that when the gold price bottomed out in mid-May, the corresponding adjustment of the five waves had been completed. If there are still five waves of adjustment, the gold price will break through the third wave bottom around $1,786.5, and the adjustment will be deeper. But there is also the possibility that this round of adjustment is only three waves.
No matter what the gold price at the stage, from the current global macro inflation pattern, economic and financial trends, it should constitute a favorable gold market. The strong US dollar is an important factor in curbing the bullish price of gold. However, according to Goldman Sachs' view that the author agrees with, the US dollar is too strong, which means that we should always pay attention to allocating gold on dips.
Regarding the strategic allocation opportunities under the macro bull market setting of the gold market, the author often recommends that investors pay attention to the gold price html April line Bollinger channel indicator signal. The following dynamic monthly gold price line Bollinger index chart was formed on Thursday morning, which does not affect our observation of the strategic opportunities of the gold market:
We have long emphasized that when the gold market is in a macro bull market setting, the gold price falls below the Bollinger central line, and we should pay attention to strategic long opportunities. If gold prices test or even break through the Bollinger middle track, it will create a better strategic long opportunity.
Recently, gold prices not only broke through the support of the Bollinger central line, but also broke through the support of the Bollinger mid-rail near US$1,820, which is to face the strategic allocation opportunity we defined.Of course, the premise is that you need to recognize that the current gold market is set by the macro bull market. As for tactical opportunities after strategic long opportunities appear, each has its own measurement methods. Most investors can only focus on the technical level, and we not only need to emphasize technology, but also need to be verified by information such as the related financial markets and the flow of funds of hedge funds .
looks at the Bollinger index pattern of the monthly gold price line. Since the gold price peaked at US$2074.87 in August 2020, the Bollinger channel has been in a horizontal -oriented closing consolidation state, with a strong macro relay consolidation meaning. Even though the gold price in March was stimulated by the geopolitical crisis in Russia and Ukraine, the pulse hit the Bollinger upper track, it did not change the macro-relay sorting pattern and technical meaning of gold prices in the past 20 months. Therefore, the sharp rise in gold prices in March is not the beginning of the gold bull market, but just a stage pulse under the background of geopolitical crisis. The new round of real bull market after the macro-relay of gold prices has not yet begun, but the pace may be approaching.
If we agree with the setting of the tone of the macro bull market in gold, the current monthly KD indicator that has fallen back to the median level also reminds us that we should consider long gold on dips. If you remain suspicious of the macro bull market of gold, and even think that the bull market after the end of the inflation cycle is over, then it is safe to go long gold when the monthly KD indicator touches the ground line. Judging from the current indicator status, the monthly KD indicator touches the ground line, either extending the adjustment time for more than ten months to exchange for adjustment space, or the gold price directly falls sharply by hundreds of dollars, which is not in line with our current judgment logic.
4 Gold ETF and hedge fund positions overview
In recent weeks, with the sharp adjustment of gold and silver price prices, gold and silver ETFs have also corresponding positions reductions, especially gold ETFs have more obvious reductions. Regarding the history of holdings of Weierxin Consulting , the world's largest gold listed trading fund (ETF) and the world's largest silver ETF fund iShares Silver Trust (SLV), the world's largest silver ETF fund, the market attention of gold and silver ETF has continued to cool down in recent weeks:
, the latest holdings of SPDR Gold Trust, the world's largest gold listed trading fund (ETF) SPDR Gold Trust, is 1049.21 tons, equivalent to a market value of US$61.26 billion. The holdings of gold ETFs are 100% physical, which is different from the value of the margin contract of hedge funds in the COMEX futures market. The current holdings of hedge funds in the COMEX futures market will be further announced later.
According to the data and chart observation, it can be found that the top position of gold ETF-SPDR in recent months appeared near April 20, with a position of 1,106.74 tons. Since then, the holdings have been reduced by about 57 tons, an increase of about 5%. The maximum adjustment rate of gold prices after peaking at $2,070.42 in March was 13.7%, which seems to mean that gold ETF-SPDR is somewhat reluctant to sell. However, compared with the gold ETF-SPDR stage holdings peak and valley , you can feel that the gold ETF-SPDR movement in recent months is obviously slower than the market, which is more similar to the mentality of retail investors chasing the rise and selling the fall.
The latest world's largest silver ETF fund iShares Silver Trust (SLV) holds a position of 17517.279 tons, equivalent to a market value of US$12.03 billion. Judging from the changes in the holdings of the entire silver ETF-iShares, although the relative adjustment of the silver price is greater, the holdings of the silver ETF-iShares are really small, and the bank's adjustment is not afraid of a significant adjustment in the stage.
Looking at the silver price K-line pattern in the past year and the changing pattern of silver ETF-iShares holdings, it is not difficult to find that silver prices are in an absolute low area for more than a year, while silver ETF-iShares holdings are in an absolute high area for more than a year. Therefore, we may not be too pessimistic about the medium-term silver market.
Another example is the world's largest gold and silver ETF's historical position change diagram:
On the historical observation of the evolution of silver ETF-iShares' positions in more than ten years: the relative increase of silver ETF-iShares and the overall position lock-in in the past two years is far better than the adjustment of gold ETF-SPDR to gold positions, which shows that investors do not need to worry too much about medium- and long-term silver. In 2020, ten years later, silver ETF-iShares' holdings hugely set a record in 2010, but gold ETF-SPDR holdings did not exceed the position record set in 2010, and are currently only at the upper level in more than a decade, far behind the historical relative position of gold prices.Is it because investors have no confidence in the macro prospects of gold, or their lack of understanding of gold in this round of economic and inflation cycle, I believe it will be announced this year.
compared and observed the change pattern of silver price K-line and silver ETF-iShares holdings. Silver ETF-iShares holdings have already hit a huge record high, while international spot silver prices are still below the top waistline in 2011. Does this mean that the world's largest silver ETF-iShares is too blindly optimistic about the silver market? not necessarily!
What is the latest COMEX gold futures market and hedge funds’ positions distribution in the COMEX gold futures market? As shown in the figure:
The market value of open contracts in the gold futures market is US$215.25 billion. The market value of hedge funds' long and short positions in the COMEX gold futures market is US$109.4 billion (the arbitrage positions with equal long and short positions of funds are included, so the calculation is more accurate). Hedge funds had net holdings of US$36.41 billion.
Observe the positions A and B in the comparison chart. The gold price has been pulled back to roughly the same position, but the capacity of COMEX gold futures open contracts and the capacity of fund holdings has changed significantly. The total positions of long and short positions in the fund position B in the figure are significantly higher than those in the A position, while the difference in net positions in the corresponding funds is not that big. What is the reason? This shows that the recent sharp decline in gold prices is due to the obvious factors that funds actively increase their positions in and short .
However, according to the actual data, hedge fund long positions reduction seems to be more obvious in recent weeks. This is just the data appearance of the past few weeks. In fact, compared with the previous increase in holdings and the total holdings of long funds, the fund has not been afraid of. The short actions of fund are the highlights. fund short actions and intentions are the fund behavior content we have focused on analyzing for clients in recent weeks. Looking at the chart below, the proportion of long positions in funds in COMEX gold futures open contracts is basically horizontally running without ups and downs. The proportion of short positions of funds has increased rapidly, resulting in the proportion of long and short positions of funds in both directions, which is very contradictory to the direction of fluctuation of gold prices.
In terms of specific positions distribution and proportion, the total two-way positions of funds gold futures long and short accounts for 50.8% of the open contracts in the entire COMEX gold futures market, and the high point in the past year was 51.6% at the beginning of the year. The current total positions of funds long and short positions are at an absolute high in the past two years, and the short positions of funds have contributed considerable contributions to the increase in short positions.
net long positions of hedge funds account for 33.8% of all long contracts (also equal to all short contracts) in the entire COMEX, with a high of 52.7% in late March 2020. The low in the past two years was 33.4% in early February this year. Currently, the net long position of the fund is at an absolute low in the past two years, and the upward elasticity is far greater than the downward elasticity.
Fund long positions account for 67.7% of the long positions in the entire COMEX gold futures market (including 17.2% of the long positions in fund arbitrage), and the high in the past year was 72% at the beginning of 2021. Currently at the median level in the past two years, it can be up or down. Even if the fund arbitrage data is excluded, the proportion of fund long positions exceeds 50% of the entire open contract, which is why fund data is so effective in the gold market. If it is replaced by the crude oil futures market, the proportion of fund long positions will be much lower, and the value of fund data to the market's reference guide is much lower.
fund short positions account for 33.9% of the short contracts in the entire COMEX gold futures market. (The proportion of longs = net longs + shorts), the low in the past two years was 12.3% at the end of March 2020, and the high was 33.9% of this period's data (including 17.2% of the longs in fund arbitrage). Even though the current proportion of short positions in funds has hit a two-year high, it seems that the short positions in funds are strong, but after excluding 17.2% of short positions in funds, the proportion of short positions in funds with real speculative significance is only 16.7%, which is less than 1/3 of the long positions in funds. Who is responsible for the ups and downs of the medium-term gold market? Isn’t it clear! A more reference value analysis of the meaning of fund market meaning, only enjoy the food of Weilxin customers.
From the perspective of the proportion of positions of commercial institutions that mainly hedge in the COMEX gold futures market, short positions of commercial institutions account for 63% of the entire COMEX gold futures shorts, with a high of 83.13% in late March 2020; the low since June 2019 is 62.4% at the beginning of the year, that is, the current proportion of short positions in commercial institutions is at an absolute low for more than two years, which corresponds to the absolute low for commercial institutions hedging intentions in more than two years, and the mentality of gold merchants being reluctant to sell is extremely obvious.
net short positions in commercial institutions account for 39.86% of the short positions in the entire COMEX gold futures market, the high in the past decade was 58.63% in April 2020, and the low since mid-June 2019 was 39.07% in early February this year. That is, the current shortage of commercial institutions is also at an absolute low for more than two years. Just like the proportion of short positions in commercial institutions, the mentality of reluctance to sell is obvious.
The latest open contract for the entire COMEX gold futures market is 1777.40 tons of gold, and the latest COMEX gold inventory is 1120.90 tons.
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