Chronicle - April 19, 2024
Gold Charts You should Know
Gold is quietly shattering records again, with little fanfare. Here are some facts about gold you should know.
Gold is at a Record High
Surprisingly, gold has been shattering historical records in recent weeks. This is odd because gold is seen as a defensive asset, while other risky assets such as stocks and cryptocurrency are also experiencing record highs.
Riskier asset classes, such as QQQ (Nasdaq ETF) and Bitcoin, have reached all-time highs this year, up 9% and 66%, respectively. However, gold has reached an all-time high too, climbing by 14%.
Something needs to give. One should maintain its upward trajectory, whether with gold or riskier assets. So far, it appears that the market prefers defensive assets for a variety of reasons, including increased geopolitical tension, a hawkish Fed stance, sustained inflation, and other unthinkable causes.
PBOC Keeps Adding to Its Gold Reserves
For the past 17 months, the People's Bank of China (PBOC) has been steadily accumulating gold. This sparked concerns about the increasing likelihood of a geopolitical war encircling China. One can learn from the 2014 annexation of Crimea and the ongoing Ukrainian war. In both cases, Russia accumulated gold in anticipation of economic sanctions that would prevent it from using the U.S. dollar.
Other Central Banks are also Accumulating Gold
But the gold buying spree is actually a global trend. Since the Global Financial Crisis (GFC), central banks have increasingly embraced gold as a reserve asset. Although this appears to be modest progress, it breaks the prior 5-decade trend of gold’s falling role as a central bank reserve.
There are several reasons why central banks are increasing their gold holdings. First, gold is considered a safe haven during times of economic turmoil, and the GFC served as a stark reminder that economic instability can occur again in the future. Second, gold is considered a desirable asset when countries are subjected to financial sanctions or when financial investments are frozen or seized. Some countries, including Russia and Iran, are well aware of this risk. But, perhaps most importantly, many countries are concerned that the dollar will gradually lose value as a result of the Fed's unlimited supply.
Gold Remains Unpopular among Investors
Despite the central bank's buying spree, investors are not interested in purchasing gold. Since 2020, investors have been fleeing SPDR Gold Trust, an ETF that holds actual gold bullion. It became obvious lately as gold prices rose, but investors continued to withdraw from gold ETFs. Maybe gold has lost its attractiveness as an investment and is becoming a common industrial metal? Time will tell.
Gold Miners, the Forgotten
Typically, during a gold bull market, gold miners outperform physical gold due to operational and financial leverage. However, such is not the case in the current gold-bull market. VanEck Gold Miners ETF (GDX) and VanEck Junior Gold Miners ETF (GDXJ), both of which hold various gold miner equities, underperform the physical gold ETF (GLD).
It could be an opportunity since gold mining companies may catch up with the gold price. However, it could also be proof that gold has become irrelevant to today's investors.
IPO — New Listing
JUNE 0.00%↑ Junee Ltd, a holding company with no business operation and uses a structure that involves an operating subsidiary based in Hong Kong.
TWG 0.00%↑ Top Wealth Group Holding Ltd, headquartered in Hong Kong, a fast-growing supplier of luxury caviar products.
ULS 0.00%↑ UL Solutions Inc., a global safety science leader that provides independent testing, inspection and certification (TIC) services and related software and advisory (S&A) offerings to customers worldwide.
PACS 0.00%↑ PACS Group, Inc., a leading post-acute healthcare company primarily focused on delivering high-quality skilled nursing care through a portfolio of independently operated facilities.
MNDR 0.00%↑ Mobile-health Network Solutions, providing a seamless healthcare experience from start to finish, which is affordable, accessible and easy to understand to both users and healthcare providers.
CTNM 0.00%↑ Contineum Therapeutics, Inc., a clinical stage biopharmaceutical company focused on discovering and developing novel, oral small molecule therapies that target biological pathways associated with specific clinical impairments for the treatment of neuroscience, inflammation and immunology (NI&I) indications with high unmet need.
MAMO 0.00%↑ Massimo Group, a leading company in the mid-tier band of the powersports vehicles and boats industry which is considered to be those manufacturers that produce a wide range of ATVs, UTVs, and Pontoon Boats cater to customer needs.
ZBAO 0.00%↑ Zhibao Technology Inc., a leading and high growth InsurTech company primarily engaging in providing digital insurance brokerage services through Zhibao China Group in China.
IPO — Performance
