Why did gold Plumb and slump?

In 2013, the price of gold plunged three times. The reason is not so much the impact of other factors as being defeated by the dollar. Gold and dollars are the two ends of the seesaw. One end is pressed down and the other end is easy to jump up. Gold, as a tool to combat inflation and an important "Sea of things", has never been before in the case of quantitative easing and massive currency flooding ", in the recent contest with the dollar, it has been defeated.

From the historical trend of gold over the past few years, countries in the subprime mortgage crisis have used the magic of quantitative easing to stimulate rapid economic recovery in the short term, leading to surging inflation pressure, however, as the currency illusion gradually subsided in countries, the economic growth of countries other than the United States has resumed and inflation is under pressure. Why did the price of gold go down three times in a year? Why?

1. Per capita consumption

According to statistics, China's per capita gold consumption is only 0.2 grams, there is a big gap compared with the world's largest gold consumer. India's per capita gold consumption is 0.85 grams, which is more than 4 times that of China's per capita gold consumption. According to China's economic development and per capita income, China is much higher than India. Therefore, China has a great potential for gold consumption and a promising prospect.

2. hedging needs

Gold reserves have always been used by the Central Bank as an important means to prevent domestic inflation and regulate the market. For ordinary investors, gold investment is mainly aimed at hedging in the case of inflation. In the economic downturn, gold is more secure than monetary assets, leading to an increase in demand for gold and a rise in the price of gold. For example, in the three dollar crises after the second world war, due to the serious trend of the United States balance of payments deficit, the amount of dollar held by countries increased significantly, the market's confidence in the dollar value was shaken, and investors snapped up gold in large quantities, it directly led to the bankruptcy of the braver forest system. In 1987, due to the devaluation of the dollar, the US deficit increased, and the unstable situation in the Middle East also prompted a sharp increase in the international gold price.

3. speculative demands

Speculators use gold price fluctuations in the gold market, coupled with the trading system of the gold futures market, to put a lot of money or fill in the gold market according to the international and domestic situations, to artificially create the illusion of gold demand. Almost every major drop in the gold market is related to hedge fund companies borrowing short-term gold to sell off in the spot gold market and building a large number of empty warehouses on the COMEX gold futures exchange.

When a large number of stop losses are triggered, the price of gold decreases, and the fund company takes the opportunity to make up for the profit. When the price of gold rebounded slightly, the price of gold from the manufacturer's hedging Long-term sale of disks is further increased, at the same time, the fund company was given a new opportunity to re-establish a short position, forming a decline in gold prices below a wave. Gao Jin, R & D center of gaosel gold and silver, said: the current price trend of the gold market is not simply determined by the supply and demand of the market, nor by the simple game between central banks, among them, speculative factors also account for a large proportion of the price.

Why did gold Plumb and slump?