Gold Prices Hit A 7 Year High: What Are The Investment Opportunities Of Thematic Funds?

When the global stock market downturn, hedge gold prices hit a 7 year high, it seems to ignite the enthusiasm of global investors, a large influx of funds into the gold fund.

Twenty-first Century economic news reporter learned that domestic fund companies are stepping up the layout of gold thematic funds.

From the data point of view, this year's gold theme fund won most of the funds. As of April 16th, all gold thematic funds rose by more than 9.5%.

Influx of funds

On the day of April 14th, spot gold prices stood at the $1700 mark; gold futures on the New York Mercantile Exchange (COMEX) once rose to nearly $1800.

This means that gold spot and futures both hit a new high of over 7 years, breaking the record since December 2012.

From a point of view, from March 20th to April 16th, COMEX gold futures rose from the lowest 1460 U.S. dollars / ounce to the highest close to 1790 U.S. dollars / ounce, or over 20%.

When gold prices soared, investors in recent years pursued gold ETF, increasing their holdings of gold ETF. This quarter saw a record increase in the market for gold ETF, which in turn supported the rise in gold prices.

Publicly available data showed that the iShares gold ETF (IAU) of BlackRock won $486 million in April 14th, setting the largest single day inflow of funds ever recorded.

In April 16th, SPDR gold ETF (GLD) of the road bank also had 11 consecutive days of inflow, totaling about $3 billion. SPDR Gold gold ETF holds over 1000 tons, the longest consecutive record increase since 2004.

According to the World Gold Association report, global gold ETF holdings increased by 151 tons in March this year, accounting for about 8 billion 100 million US dollars (i.e. 5% of assets management scale), resulting in a total record size of 3185 tons.

Against this background, domestic fund companies are also stepping up the layout of the gold ETF business.

According to Wind data, there are 18 gold thematic funds in China (A/C class and field field separately).

Moreover, a number of fund companies recently issued gold ETF and gold ETF connection fund. In April 13th, Huaxia gold ETF connection fund was launched. In addition, ICBC Credit Suisse gold ETF and ICBC Credit Suisse gold ETF connection fund, Qianhai open source gold ETF and Qianhai open source gold ETF connection fund has also been opened for collection.

They will be finalized at the end of April. From the public information, the domestic gold ETF is tracking the gold spot contract price of the Shanghai gold exchange.

When the international gold price rose sharply, the recent gains of domestic gold funds also rebounded sharply.

From March 20th to April 16th, less than a month ago, domestic gold funds had more than 11% returns.

In fact, this year's gold theme fund won most of the funds. As of April 16th, all gold thematic funds rose by more than 9.5%.

In contrast, other commodity funds in the same period generally fell, and the energy chemical fund fell by the most, or more than 20%.

It is worth mentioning that this year's international gold price trend is quite "magic". At the beginning of 2020, spot gold continued its upward trend in the previous year, rising from 1462 US dollars / ounce. However, by the impact of the epidemic, global asset prices almost fell across the board and spot gold prices plummeted.

In particular, the global market plunged in March and the panic stage of the four time of the US stock market faltered. Gold also plummeted. At that time, the domestic gold theme fund also fell sharply.

Wind data show that in from March 6th to 19th, less than half a month, domestic gold theme funds all fell by more than 8%.

Since then, with a series of easing policies such as the US Federal Reserve's interest rate cut and QE, the gold price has rebounded after the market liquidity tension has been reversed.

Perspective of mechanism

People wonder if the gold price will continue to rise.

For the time being, the epidemic is still spreading globally, and countries have implemented loose monetary policy and large-scale fiscal stimulus plan. Under this background, funds continue to pour into gold to avoid risks. The continuous influx of funds shows that the market still sees much gold. In fact, agencies generally believe that gold still has room for growth.

"For the allocation of gold stocks and gold funds, I think we can continue to increase our position now." In April 16th, Yang Delong, chief economist of Qianhai open source fund, said.

His reason is, on the one hand, the global central bank's big flood to cope with the impact of the epidemic will bring inflation expectations, which is a support for gold. Because the purchasing power of paper money after water release is reduced, in turn, it will increase the gold content of gold.

On the other hand, IMF has sharply reduced the global economic growth this year. Due to the rapid spread of the overseas epidemic, the number of confirmed cases of the new global crown has exceeded 2 million and the number of deaths is rising. This will further increase the panic among investors and push up risky assets such as gold.

Cathay Pacific Fund researcher Huang Yue also said that the long and medium term is very optimistic about the performance of the entire gold.

Similarly, Wang Xiang, manager of ETF fund, said that since the outbreak of the US outbreak in March, the Federal Reserve has launched a relaxed move, and its balance sheet has risen by 1 trillion and 600 billion US dollars in just two weeks. In contrast to history, the expansion speed of credit money itself keeps close to the price center of gold, but unlike 2008, the global credit market which is at the edge of zero interest rate and negative interest rate is becoming more and more obvious in the new round of expansion. Its stability and the scarcity of bidding are becoming more and more obvious. Gold, as the ultimate currency, attracts the attention of market funds. In addition, the number of applications for unemployment benefits in the United States has increased rapidly, approaching 17 million people in just three weeks. If the economic vitality is hard to repair quickly, the cumulative impact on the real economy will continue to expand. This should be one of the reasons why the Federal Reserve again launched a heavy blow this week.

Xia Fengguang, the future star fund manager, said that in the golden year of US dollar valuation, it is possible to break through the historical nominal price high point, and the middle term is likely to rise to 2500 US dollars. The volatility of gold this year is historically high, and even the bull market is likely to show relatively large fluctuations. The short-term trend of gold does not need to be speculated too much. The medium term gold ETF is still worth configuring.

Suddenly, it seems that there is a bullish consensus on the trend of gold, but whether this consensus can match the market trend is still unknown.

"On the whole, the Federal Reserve's successive strong stimulus easing has laid a long-term trend of gold assets based on monetary attributes. However, with the financial market's changing expectations of the inflection point and the fluctuation of inflation expectations brought about by the uncertainty of the international crude oil market, gold assets will continue to maintain a relatively high level of volatility in the short term. Therefore, the strategy of buying dips may be more stable relative to the rising trend. Wang Xiang said.

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