How long can the thousand dollar gold age

Gold Price:how long it can stay over 1000$/ounce/Hanli Guo Meng into the October 2009, the International market gold price repeatedly more than 1000 U.S. dollars per ounce, and domestic gold prices in 230 yuan per gram, This caused the industry and ordinary investors of great concern.　　In fact, since the 2007 financial crisis, gold prices have been rose, and volatility has intensified. The price of gold in New York has surged in the last year, rising from $700 trillion to $1060 trillion (Figure 1). The New York Mercantile Exchange (COMEX) October gold futures created a record high of 1072 dollars in recent months ' delivery contracts. So what does the sharp swings in gold prices mean?　　In the long run, does it mean entering the thousand-dollar era of gold? The price change of financial assets always reflects two signals of fictitious economy and real economy.　　The interpretation of gold prices from long-term development trends and short-term speculative factors to analyze, and in the global financial and economic crisis today, must also be combined with the crisis of the sovereign authorities of the response measures and investors psychological expectations.　　The Arbitrage riders analysis of the price changes of any financial asset cannot forget the motives and actions of the short-term arbitrage. In the 10 years since the 21st century, we should also keep an eye on the international hot money. Among them, the hedge fund is the force and the representative strength. Global hedge funds have grown 10 times-fold in 10 years, with a steady volume of around 10,000, with the United States accounting for 60%, with a total capital of around 2,000,000,030,000 dollars.　　Before and after the subprime crisis, hedge funds in the main securities market, the real estate market and commodity market movement, in turn, pushing up the asset bubbles, left a very deep impression on people. In fact, international hot money will never stop. Since December 2008, hedge funds have moved up from the bottom into a new round of investment. They stared at the gold.　　As a result, the current surge in gold prices should be attributed to hedge funds first. Let's take a look at the dynamics of SPDR Gold shares, the world's largest Gold Exchange trading fund. By the end of May 2009, the fund had seen a huge increase in its institutional positions, from 28.3% in the fourth quarter of last year to 45%, with hedge funds holding more than 100% per cent and hedge funds taking a 10.8% stake in SPDR Gold shares at the end of 2008, By the end of May 2009, the proportion of positions rose to 22.24%.　　The growth of the first-ever investment consultancy was also striking, with a share of its holdings rising from 14.7% at the end of 2008 to 18.82% at the end of May 2009. In sharp contrast, the proportion of commercial banks ' positions is only 2.87%, and the positions of insurance companies, pensions and mutual funds are lower to 0.64%, 0.32% and 0.09%. Therefore, as a representative of international hot money in the first half of 2009, the international gold price to attack the main pushing force. Paulson &co, the famous hedge fund that once accurately foresaw the subprime crisis and shorting profits, became a hit on the gold price. Before December 9, 2008, the hedge fund held SPDR Gold shares in the number of 0, but by the end of the first quarter of 2009, its holdings in real gold equivalent to about 98 tons, accounting for the SPDR Gold shares total gold holdings of 8%.　　Gold holdings in SPDR Gold shares have remained at a high level of more than 1100 tonnes since March 2009, becoming the decisive force in the world's gold trading. The risk aversion of sovereign authorities the full outbreak of the 2008 financial crisis has triggered the incentive for central banks to increase their gold reserves.　　For a long time, the reserves of the developed countries remain between 30% and 60%, and the gold reserves of the European Central Bank, which is the legal reserve of the euro system, are even as high as 60.8%. Since the financial crisis, the US and European countries have launched a huge fiscal stimulus package, resulting in a weaker dollar expected to increase. Notably, since 2009, the US Fed has pledged to buy 300 billion of dollars in government bonds, 1.25 trillion of billions of dollars in mortgage securities and 200 billion of dollars in corporate bonds, while the United States projected fiscal deficits of $1.84 trillion trillion in 2009 and US government bonds in 2009 to $3.25 trillion trillion.　　In the medium term, the dollar-denominated foreign exchange reserves face the risk of a substantial devaluation, so gold has become the best hedge. The proportion of the gold reserves of the developed countries in Europe and America is obviously rising, and the gold reserves of the top four countries in the United States, Germany, France and Italy in the world are 78.9%, 71.5%, 72.6% and 66.5% respectively, while the international average is 10%. The gold reserves of China, Japan, Russia and India are significantly smaller and the gold reserves in Japan, Russia and India are about 5% per cent.　　China's foreign exchange reserves, which ranked first in the world and more than one times the second, have taken the most prominent foreign exchange risks and steadily implemented a strategy to increase their holdings of gold. On April 2, 2009, Ms. Hu, then director of China's State administration of foreign exchange, announced that China's gold reserves were 1054 tonnes, adding 454 tonnes in 20,032,009 years, up 75.6%, and ranking fifth in the world. But the gold reserves also account for only 1.6% of China's foreign exchange reserves, which is much smaller than the developed countries ' ratio.　　If you want to achieve 5% of the ratio, the need to increase the 20002500 tons of gold, to reach the 10% international average, to increase the increase of 6000 tons of gold. It should be noted that countries with high gold ratios are typical free exchange countries, while the more heavily managed economies are in dollar reservesMainly, the proportion of gold is below 10%. But given the long-term high foreign exchange reserves, it is reasonable for China to raise the gold ratio to 5% 10%, but it is unlikely to be achieved in the short term and will be a long-term process.　　Therefore, China will form a sustained demand for gold reserves. Also see is that as the renminbi enters the international trade settlement system, China's RMB internationalization process has taken a strategic step. Taking into account the international status of China's economic growth and total foreign trade, the renminbi will remain stable for a long time, so the pace of international settlement will accelerate, and it must become the reserve currency of the trading partner countries.　　Drawing on the history of the development of the dollar and the euro, China is bound to increase its gold reserves in the process of RMB internationalization. To sum up, from the perspective of national economic security, all countries in the near future gold reserves as the first choice for national strategic reserves, and China's RMB internationalization strategy is to aggravate the weight.　　This is a significant bullish forecast for the gold market. The World economic recovery is dawning as China takes the lead out of the crisis and the US economy stabilises at the bottom. But the negative effect caused by the strong intervention of macro-policy has aroused people's concern. The dollar is a dilemma for policy instruments to revive economic recovery because of the risk of inflation and the inevitable weakness lurking in the dollar's excess distribution.　　As a result, developed markets in Europe and the United States may be under inflationary pressure to slow down demand stimulus, so it is possible to create a stagnation without economic growth and inflation coexist. Thus, given the long-term and volatile nature of the recovery, investors with cautious expectations dominate, and gold becomes the preferred investment. In fact, in March 2009, when the Federal Reserve announced that it would buy $300 billion trillion in government bonds, the market reacted violently, inflationary expectations strengthened, causing the dollar index to fall sharply; under hedge funds, gold bulls increased their positions and gold prices rose by more than $60 a day March 18, 2009.　　In combination with the current debt overhang and the continuing extreme easing of monetary policy in the United States, this fear of a real economic recovery and speculative cash-induced gold sentiment will dominate the 2009-year gold market. On the other hand, the strength of crude oil has also given impetus to gold's rise. In the international capital market system, gold has always been a traditional tool to hedge inflation, which is positively guided by the price of oil.　　As the global energy demand recovery has sparked optimism in the capital markets, oil prices have been on the rise for more than $70 a barrel, and in the light of China's economic good signal, oil prices will remain at around $80 trillion, prompting investors to maintain gold holdings in the short term. Not long-term stability in the thousands of dollars so the long-term trend of gold prices? Looking at the 5-and 10-year price curve shown in Figure 2 and Figure 3, we find that the gold price trend is all the way up. From 1999 to 2005, gold prices rose in stability, rising from 2005 to 2007-year subprime crisis before the outbreak of the 650750 dollar equilibrium price.　　This is 1.3 times times higher than the 1999 price. Back to the 1973, when the dollar was decoupled from the gold price. With the adjustment of the Bretton Woods system, the exchange rate of the dollar and the main western currency is floating, the gold price is marketization, which arouses investors ' pursuit.　　Gold prices have gone through two long bull markets, the first of which rose from $35 trillion in 1968 to $850 trillion 1980 years ago, where America's long stagflation has cemented the price of gold, which is thought to be a long-term equilibrium for gold. However, with the effect of the adjustment of industrial structure and the heat of financial innovation in the 1980 's, the yield of US capital market is much higher than that of investment gold, the international hot money and long-term investment capital withdraw from the gold market, so that the gold market has gone through the last 20 years of the 1990.　　Gold reached a 20-year low of $251.9 per ounce of gold on August 26, 1999, and its bottom state lasted for exactly two years during the new economy. The second bull market, which has developed since 2001, began with the economic crisis caused by the bursting of the dotcom bubble. Gold prices here three times each ounce 1000 U.S. dollar mark, respectively, March 17, 2008 of the 1032 U.S. dollars, February 20, 2009 of 1006 U.S. dollars and September 8, 2009 heavy 1000 dollar mark. Since then, despite falling below 1000 dollars on September 24, and fluctuating around $990 trillion, it soon returned to $1000 per ounce.　　That's 850 dollars more than 30 years ago, and it just grew by 17%. But we still have no reason to say: this is the long-term equilibrium price of gold in the future. We should see a rapid rise in gold prices after 2005, when the highs of the financial bubble have heralded a crisis, smart hedge funds have entered the game, and many followers are changing their investment strategies. This phase of the real economy also shows unprecedented uncertainty, the United States large trade deficit, huge foreign debt, the very low savings rate and China's high surplus and higher savings rate to form such a sign of uncertainty, the two economies are so high degree of dependence, the global economy is at a very precarious peak.　　In fact, in the new century, unprecedented globalization development requires a global balance structure, before its formation, the high price of gold is a concern for uncertainty. From the relationship between supply and demand, the world gold industry is generally in a balanced state.　　China's gold consumption needs to maintain a certain growth, exceeding its own supply, the world market to form a net, but worldwide consumption demand has slowed down. From the perspective of investment demand, the world's official gold reserves of 32700 tons, approximately equal to the current world's annual gold production of 13 times times, of which the U.S. gold reserves up to 8100 tons, accounting for the world's official gold reserves of 24.9% of the total. So investment demand will determine the goldLong-term equilibrium price. In fact, according to the World Gold Association's estimates, the real demand for gold in the world was reduced by 24% in the first quarter of 2009, while investment demand increased by 248%;　　This fully demonstrates that strong investment demand is the main reason to support the continued high gold prices hovering. Take into account the relationship between the price of gold, the dollar index and the price of oil. In the next two years of a global economic recovery, gold prices will hover around $1000 a ounce, as the dollar moves and oil prices fluctuate by $80 per barrel. But when the economy enters a new growth cycle, especially after the Chinese market enters a new period of development, the revival of world capital markets is bound to lead to a fall in gold prices.　　If we have confidence in the future of the global economy, especially the development of China's economy, there is no reason to think that the price of gold will skyrocket, and there is no reason to believe that gold will stabilize for a long time over $1000 per ounce. (Hanli, professor, Ph. Guo Meng, School of Economics and Management, Beijing Aerospace University)