Gold and bitcoin, who is the new “king of safety”?

“The safe haven demand of gold will be partly replaced by bitcoin, and there is such a trend. However, from the perspective of public acceptance, gold is still better than bitcoin, and the price volatility of bitcoin is far greater than that of gold, which means that its hedging function is defective. ” He zhuoqiao, senior macro researcher of CCB futures, analyzed the reporter of “daily economic news” that bitcoin would not completely replace gold. According to the website of China Gold Association, contemporary gold is mainly used in two fields: one is used as a commodity to produce industrial raw materials. Second, as financial assets for investment. Since the 1970s, gold’s monetary function has been weakened, but it still maintains a certain monetary function. At present, gold still plays an important role in the international reserves of many countries, including major western countries. At the beginning of 2020, the epidemic, geopolitics, loose global monetary policy and uncertain factors are all aggravating the turbulence in the capital market. The market demand for assets that can effectively combat the inflation expectation of the US dollar has further strengthened. The gold price has broken through the historical high this year, but it has started a correction after the historical high. Data source: at the end of wind, the rapid growth of bitcoin also partially squeezed the demand for gold to avoid risks, becoming a strong “competitor” of gold. Gold has experienced the most historic year, and the coming year of 2021 will bring new support for gold? Gold and bitcoin, who will be the new “king of safety”? After gold price broke through 2000 US dollars, the callback trend started. Judging from the trend of spot gold price this year, the outbreak of the new crown epidemic in January 2020, gold’s hedging attribute was highlighted, and the spot gold rose by 4.73% in January. Data source: from January to March 2020, Xinguan epidemic began to spread all over the world. In the middle of March, the epidemic broke out in Europe and the United States and other countries. The market fluctuated sharply. Under the situation of tight US dollar liquidity, gold was sold off, and gold prices and US stocks fell together. Gold began to fall sharply on March 9. Data source: from the middle and late March of 2020 to the beginning of August, the global epidemic situation has not improved, global loose monetary policy, geopolitical changes and other unstable factors exist, the bull sentiment is still dominant, and the gold price trend has been rising all the way, and constantly breaking new highs in recent years. At the end of June, the gold price broke through 1770 US dollars and impacted on 1800 US dollars; in July, uncertainty and ultra loose monetary liquidity environment still provided support for gold price, and gold price broke through 1900 US dollar barrier at the end of July. Until August, gold ushered in the high light moment. The more serious secondary epidemic in the United States has seriously affected the short-term economic output and long-term potential growth rate of the United States. The sudden big explosion in the capital of Lebanon on August 4 and other factors boosted the rise of gold price. The gold price broke through the $2000 mark in early August and reached a new historical high. It is worth noting that after breaking through the historical high, the gold price started the callback trend. In mid August, the price of gold fell below 1900 US dollars, until the end of November, the gold price hit a new five month low. Hua’an futures believes that this is mainly affected by the following factors: the U.S. data is better and the economic recovery is expected to be strengthened; the good news related to vaccines has boosted investor confidence and the preference of financial market investors has increased; compared with the previous period, the decline of the US dollar has slowed down, and some uncertain factors have been eliminated due to the settlement of events such as the US election. In addition, gold ETFs increased significantly throughout the year, but fell back in November. Data show that the world’s largest gold etf-spdr position on November 27 was 1194.78 tons, falling from the high level for a month and a half. According to the world gold association, global gold ETF positions fell 107 tons in November (about US $6.8 billion, 2.9% of total assets under management), the first decline in the past year. The World Gold Association believes that the main reason behind this may be due to the gold price’s worst monthly performance since November 2016, with a monthly decline of 6.3%. Gold ETF asset management in North America and Europe both declined by nearly 3% in November, with net outflows of 62 tons (US $3.7 billion) from North America and 43 tons (about US $2.9 billion) from Europe. Photo source: the official website of the world gold association, the US dollar real interest rate is the most important factor affecting gold. Generally speaking, there are various factors affecting gold price, including political situation, economic expectation, US dollar policy, inflation, gold mining volume, supply and demand of gold, stock market, oil price, etc. However, many analysts believe that the dollar’s real interest rate is the most direct factor affecting gold. Since March this year, affected by the new crown pneumonia epidemic, the international financial market has fluctuated frequently. Many countries, represented by the United States, have taken measures such as substantial interest rate reduction and quantitative easing. Earlier, the Federal Reserve announced that it would maintain the target range of the federal funds rate between zero and 0.25%, which most Fed officials predicted would remain unchanged until 2023. The chief fixed income analyst of CITIC Securities clearly pointed out in his research report that the Federal Reserve’s monetary easing is a long-term variable that affects the price of gold. As a special commodity, gold’s holding and reserves are relatively stable. According to the wealth effect, its price should be affected by the global total wealth (measured by the total amount of major currency issuance). With the continuous increase of global total wealth and total amount of currency issuance, China CITIC Securities Co., Ltd In the long run, the price of gold in credit currency should be on the rise. In addition, Mingming team believes that the core factor affecting gold price in the medium term is the real interest rate of US dollar. This core role is reflected in two aspects: first, other factors such as the Federal Reserve’s monetary easing should also affect the real interest rate of the US dollar to push the gold price upward. Second, when other factors affect the gold price direction contrary to the impact of US dollar real interest rate, the impact of US dollar real interest rate is more significant. Xie Yaxuan’s team of China Merchants Securities also believes that the gold price has the highest correlation with the real interest rate in the United States, mainly showing a synchronous change relationship. As a non return asset that does not generate cash flow, the real interest rate level is the opportunity cost of holding gold, which affects its current value discount. The level of real interest rate is affected by the relationship between nominal interest rate and inflation. In the final analysis, we should compare the power of economic growth and inflation brought by loose monetary policy, which is stronger. Under the current monetary and fiscal policy environment, the rise of generalized inflation is more likely to exceed its pull effect on real economic growth. In fact, the gold price has a negative correlation with the real interest rate in the United States for a long time. At present, the Federal Reserve keeps the interest rate close to zero, and the nominal interest rate is very low. In order to boost the current depressed economy, it has to stimulate inflation and achieve the goal of stable growth by adjusting the high inflation target. Zhang Hao of Guangdong Branch of the Bank of China once said that the recent trend of gold is closely related to the loose policies of central banks around the world. This is a double-edged sword. At present, the global stock market, especially the US stock market, is at a high level, which has accelerated the asset bubble. If the epidemic situation can be alleviated, it will be the time for the bubble to burst. Qi Ding, chief analyst of non-ferrous metals industry of Anxin securities, once analyzed that the Federal Reserve raised its forecast of real GDP and inflation level in 2020 at the meeting on September 17, and said that it would not raise interest rates until 2023, which is actually implementing the program of inflation overshoot. It is worth noting that gold, as a hedge fund, is generally regarded as “hard currency”. When there are negative expectations of the economy, panic due to rising prices, and the unit purchasing power of money declines, the function of gold to maintain value will be reflected, and the price of gold will rise accordingly. Wan Tao of Soochow Futures Research Institute, when analyzing the recent performance of gold prices, said that the development of vaccines stimulated risk appetite, leading to a decline in demand for safe assets. Gold ETF encountered further capital outflows, suggesting that gold’s low-level buying is weak, and the current gold price has stabilized at $1800. CITIC futures pointed out in a research report that gold has established its top in the short term, and there is a risk of callback in the short term. However, judging from the current situation of the U.S. economy, even if the economy recovers, the U.S. will not change its low interest rate monetary policy in the coming year, so gold will not show a trend decline. In the long run, gold will rise with other commodities. Major banks are cautious about precious metal trading. The reporter of daily economic news noted that since the event of Bank of China’s crude oil trading in April this year, banks that opened this personal trading business linked to international commodity futures and precious metal targets have become more cautious, and have suspended the opening of accounts for precious metals for many times. Specifically, ICBC took the lead in issuing an announcement, announcing that, from 24:00 on November 28, it would suspend the opening of trading accounts for new customers of gold and silver business of individual accounts in all channels of the bank, as well as the application of new clients for precious metal auction trading business on behalf of individual customers, so that the normal transactions of opened customers will not be affected. Subsequently, CCB, Bank of communications and other banks have also “stopped” precious metal trading account. Among the joint-stock banks, China Merchants Bank and Ping’an bank have made risk tips on precious metal transactions, and have suspended new customers from opening relevant accounts. As of December 4, 17 banks, including six major state-owned banks, have announced the suspension of new account opening for precious metals. At the same time, banks also remind customers to pay close attention to market risks, carry out transactions prudently and reasonably control positions. On November 2, BOCOM and bocom issued announcements to remind customers of the risks in foreign exchange and precious metal markets during this period. Bocom said that it might suspend the quotation of relevant products in a short time, while bocom said it might adjust the trading point spread and restrict trading. As early as July this year, when the gold price rose sharply at that time, ICBC, BOCOM, Minsheng, ABC and other banks also issued risk warning announcements, and successively suspended the opening trading of all products of platinum, palladium and precious metal index in their accounts; Shanghai Gold Exchange also issued a notice to remind relevant trading risks. At that time, every reporter learned from the Bank of communications, ICBC and other banks that they had suspended or were about to suspend the opening of new positions in platinum and palladium accounts. ICBC said that it would suspend the opening trading of account platinum, account palladium and all products of the account precious metal index (including opening orders), at the same time, the fixed investment plan of investors’ account platinum and account palladium would not be implemented, and the closing transaction of open position would not be affected for open customers. Some market analysts pointed out that since the “crude oil treasure” incident, domestic banks have been more cautious in responding to the fluctuations in the bulk commodity and precious metal markets. Banks suspended precious metal trading business on the one hand because of the banks’ concerns about the risk control of their customer groups. Different from investors who participate in gold futures and options trading, investors in precious metal business of commercial banks account for, The general risk awareness is not strong, and the anti risk ability is relatively poor. Gold vs bitcoin: who is the “king of safety”? This year’s economic situation has also led to another safe haven asset, bitcoin. Recently, bitcoin has broken through the $20000 barrier, which has triggered heated discussions in the market. In the early morning of December 20, bitcoin continued its strong trend, breaking through the $24000 round mark in one fell swoop and hitting a record high, with an increase of more than 200% in the year. Many analysts believe that this is related to institutional investors entering the cryptocurrency market. Prior to this, PayPal, an internationally renowned payment company, announced that it would support the sale and payment of cryptocurrencies such as bitcoin and Ethereum, which also brought great confidence to bitcoin. The market is driven by institutional investors in North America, according to chief economist chainalysis. North American exchanges have received a net inflow of bitcoin from the rest of the world, with a 19% increase in the number of transfers worth $1 million or more sent by exchanges this year, and the size of investors is large. Seth ginns, managing partner at coinfund, a New York investment firm, said he saw a strong interest in hedge funds, and it is likely that institutional investors will continue to adopt this approach generally next year. According to Ethereum world news, the price of grey Ethereum trust (ether) has nearly tripled in the fourth quarter of 2020 since October 1. On December 18, Beijing time, the U.S. Treasury proposed new regulatory requirements for cryptocurrency, requiring some cryptocurrency dealers to provide information about their identities, so as to curb the anonymous asset transfer by criminals using this new technology. Many analysts believe that bitcoin will partially squeeze the demand for gold as a safe haven. However, in the view of Goldman Sachs, although bitcoin has some alternative properties for gold, the status of gold does not seem to be easily shaken. Goldman noted that large institutions and wealthy investors were largely away from bitcoin due to the “transparency problem” of cryptocurrency. The speculative trading of retail investors makes bitcoin an excessive risk asset. Goldman said it had not observed “evidence that the rise in bitcoin eroded the bull market in gold and believed that the two could coexist.”. In the early morning of December 17, Beijing time, the US Federal Reserve announced that it would keep the target range of the federal funds rate at 0-0.25%, and expected to maintain a loose monetary policy position until inflation rose to 2% and employment maximization. In fact, since this year, in order to hedge against the economic recession caused by the epidemic, central banks and governments around the world have adopted large-scale easing and stimulus policies. Interest rates in many parts of the world are in the state of zero or negative interest rates. Maria smirnova, portfolio manager at sprint asset management, a well-known precious metals investment company, said the global economy was in the worst recession in modern history, so there was the biggest response from various policy aspects. TD Securities believes that inflation expectations, Federal Reserve policy, dollar weakness and concerns about the global economy will continue to drive gold prices higher in 2021. According to the strategists of the agency, assuming that everything goes smoothly after the vaccine is put into use in Europe and the United States, the time required for this process and the possibility of the second wave of outbreak in Europe and the United States will still keep economic activities in Europe and the United States and even the world at a long time, which will support the gold price to stay above US $2000 per ounce. More importantly, more fiscal stimulus from governments in the global economy will raise inflation expectations and benefit gold throughout 2021. CCB futures he zhuoqiao: the demand for gold hedging will be partially replaced by bitcoin. So, what will be the support point of gold price in 2021? He Zhuojiao, senior macro researcher of CCB futures, said: 2021 is the shock consolidation period after the gold price reaches a new high. The synchronous recovery of the global economy will weaken the demand for safe haven of precious metals. After the Xinguan epidemic is controlled, the monetary policy of the European and American central banks will also be tightened marginally. Therefore, the pattern of short gold price in the medium term will remain until the anti inflation brought about by the rise of crude oil price The increase in demand exceeded the decrease in demand for safe havens. However, as the end of the year is the peak season for gold consumption, and there is still great uncertainty about the new crown epidemic situation and the new crown vaccine, we expect the gold price to rebound in the first quarter of 2021. As for the status of bitcoin and gold, he Zhuojiao believes that both gold and bitcoin are hedging tools against the French currency system, and the supply of bitcoin is relatively less than that of gold, and the price rise space is larger than that of gold. Therefore, the demand for safe haven of gold will be partially replaced by bitcoin. At present, such a trend has emerged. However, from the perspective of public acceptance, gold is still better than bitcoin, and the price volatility of bitcoin is far greater than that of gold, which means that its hedging function is defective. Therefore, bitcoin will not completely replace gold, and gold will still occupy an important position in institutional allocation. He zhuoqiao said that in 2021, there are several major events that will affect the gold price. One is how the new crown epidemic develops; the other is how the central banks of Europe and the United States tighten their policies; the third is how Sino US relations evolve; and fourth, whether the debt crisis will repeat. Daily economic news

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