Wednesday, October 9, 2024

The continued bull case for gold

Most people, especially those in the West, mostly perceive gold as an inflation hedge. After some increase in gold prices when inflation rate was high, gold prices continued its path up even faster even when inflation rate dropped to levels before the big jump since the pandemic. I was bullish about gold in the long term since at least early 2022. Here is what I said in February 2022 in my blog.

 

Gold will slump from this level too but will get out of the slump before all the other assets. The time of its bottom could be in 2023. It will likely have a strong bull market from there, appreciating many times. Gold companies will take longer to bottom, say another year after gold bottoms.”

 

Gold prices have fluctuated in most of 2022 and 2023. Since late 2023, it has gone up by 50%. Many gold producers see their stock prices more than double. Gold prices may experience some retrace and adjustment. But is this the peak of gold prices?

 

I don’t think so, because my initial bull case about gold was about much more than inflation.

 

1.       Gold is an inflation hedge. In the near term, inflation rate is likely to drop even further. But unless the supply chains have been largely friend-shored from production in China, the potential huge inflation shock from a confrontation between China and the US about Taiwan is still there. As the friend-shoring is going on, a lot of production will experience cost increase with new production bases, infrastructure, and supply chains. needing to be built. Producing in China in the first place is because it is cheaper to produce there.

 

2.      West governments, especially the U.S. government, have increased the spending substantially during the pandemic, and have largely kept the spending level even if the pandemic has passed. If there is any weakness in economy, more spending increases are likely. This inflation impetus will be there in any foreseeable future. Some of the spendings, like those under the CHIPS Act or Inflation Reduction Act, will eventually have some effect on reducing inflation. But any of such effects will be uncertain and far away.

 

3.      Such spendings have raised government deficit substantially, especially in the US. As a result, the Federal Reserve have not had 2% inflation as a hard target as before. The Fed have to tolerate somewhat higher inflation rate to erase the deficit a bit more over time, as long as the inflation rate is not much higher than 3%.

 

4.      Chinese economic decline is a story that I have declared since 2011. This decline has started exactly when I declared it. It means that there is a lack of investment options because all the other investment options would be losing money. The low trust in Chinese government means that more and more people will choose gold as the main investment option.

 

5.      India’s economic rise is a story that I have declared at least 10 years ago. This rise started exactly about the time I declared it. As Indian households become more affluent, they will buy more gold given their strong preference for gold. Note that China and India are among the five largest economies in the world with about 35% of world population.

 

6.      After the sanctions on Russia after its illegal invasion of Ukraine, many developing country governments realized the length the US and West would go using US dollars as a weapon. It is only natural that they will increase gold’s proportion in their reserves.

 

7.      Emerging markets have been in a funk, especially compared to the US, since 2011, also the time that I predicted this funk. The recent inflation surge since pandemic also hit them the hardest even if the Western media don’t usually pay much attention in its coverage. The households in these markets would increase their gold holding as well.

 

8.     The world has become much more uncertain and has many more conflicts. These involves the confrontation between the West and countries like Russia, Iran, China, and North Korea in the remapping of the Pax Americana system since the end of World War II. These also involve the tectonic political shift within the Western countries. For example, many people don’t think the period after this coming US election will be peaceful. This uncertainty will increase gold buying from everyone.

 

9.      In the very near term, in November, there could be two potential inflation shocks. One is for sure, the other depends on the election outcome. The first is the inevitable attack of Israel on Iran’s nuclear facilities and maybe even destabilize the Iranian regime. Israel now have achieved overwhelming military advantage over Iran and its affiliates. The sky of Iran is almost all open to Israel fighter jets. It would be stupid not to press this advantage and eliminate or at least set back Iran’s nuclear program and related infrastructure. But Israelis must have been told that they should wait until the election is over, and they probably will do that. The second is a Trump win. He pledged an across the board tariff increase. Even if he is not able to deliver as much as he pledged, it will still lead to a one time big inflation shock.

 

I mentioned in my initial predictions in early 2022 that I thought gold will appreciate many times. I had the target of about 10,000 an ounce in my mind and I still believe so. I always hate the people who give a pie in the sky forecast. There are many such people during the 2000 tech bubble for example. But if I am honest, that is the gold price target in foreseeable future.

 

Gold producers could see their stock prices increase a lot more than gold price. They are a natural leveraged play on gold price increases as their reserves will be revalued. Silver prices and silver producers could see crazy price increases too. The most conservative bet and maybe also the best bet of a buy and hold strategy may be Agnico Eagle Mines (AEM). Some of the silver producers like First Majestic Silver have shown very clear double bottoming pattern even on quarterly price chart. Even gold and silver related plays may go down by a good percentage in the near term, buying on the dip would still be the right approach.


黄金牛市的持续

 大多数人,尤其是西方人,大多认为黄金是一种通胀对冲工具。在前段时间通胀率高企时,金价曾上涨,但即使通胀率已降至疫情爆发前的水平,金价仍继续更快上涨。至少从 2022 年初开始,我就对黄金的长期前景持乐观态度。这是我在 2022 2 月博客里说的话。

 

“黄金也将从这个水平下跌,但会比其他所有资产更早走出低迷。黄金触底的时间可能是在 2023 年。从那时起,黄金可能会迎来强劲的牛市,升值很多倍。黄金公司需要更长的时间才能触底,比如说在黄金触底一年后。”

 

黄金价格在 2022 年和 2023 年的大部分时间里都在波动。自 2023 年底以来,黄金价格已上涨了 50%。许多黄金生产商的股价上涨了一倍以上。黄金价格可能会经历一些回撤和调整。但这是金价的顶峰吗?

 

我不这么认为,因为我最初看涨黄金的理由远不止通胀。

 

1. 黄金是一种通胀对冲工具。短期内,通胀率可能会进一步下降。但除非供应链在很大程度上与中国的生产挂钩,否则中美在台湾问题上的对抗可能带来的巨大通胀冲击仍然存在。随着供应链的不断转移,许多生产将面临成本增加,需要建立新的生产基地、基础设施和供应链。在中国生产首先是因为那里生产更便宜。

 

2. 西方政府,尤其是美国政府,在疫情期间大幅增加了支出,即使疫情过去,支出也基本保持不变。如果经济出现任何疲软,支出可能会进一步增加。这种通胀动力在可预见的未来都会存在。一些支出,如《CHIPS法案》或《通胀降低法案》下的支出,最终会对降低通胀产生一定影响。但任何这种影响都是不确定的,而且遥不可及。

 

3. 此类支出大幅增加了政府赤字,尤其是在美国。因此,美联储不再像以前那样将2%的通胀率作为硬性目标。美联储必须容忍略高的通胀率,以便随着时间的推移进一步消除赤字,只要通胀率不超过3%

 

4. 中国经济衰退是我自2011年以来就宣布的故事。这种衰退正是在我宣布它的时候开始的。这意味着缺乏投资选择,因为所有其它投资选择都是亏钱的。对中国政府的低信任意味着越来越多的人将选择黄金作为主要投资选择。

 

5. 印度经济崛起是我至少10年前就宣布的故事。这种崛起正是在我宣布它的时候开始的。随着印度家庭变得更加富裕,他们将购买更多的黄金,因为他们对黄金有强烈的偏好。请注意,中国和印度是世界五大经济体之一,两个国家人口也约占世界人口的 35%

 

6. 在俄罗斯非法入侵乌克兰后,和西方对其实施制裁后,许多发展中国家政府意识到美国和西方国家会使用美元作为武器。他们自然会增加黄金在其储备中的比例。

 

7. 2011 年以来,新兴市场一直处于低迷状态,尤其是与美国相比,这也是我预测这种低迷的时候。尽管西方媒体通常不会过多关注疫情的报道,但疫情爆发以来的近期通胀飙升也给它们带来了最严重的打击。这些市场的家庭也会增加黄金持有量。

 

8. 世界变得更加不确定,冲突也更多。这涉及到西方与俄罗斯、伊朗、中国和朝鲜等国家在博弈以达到一个二战结束以来映射美国治下的和平体系中后的新的平衡。这还涉及到西方国家内部的政治结构转变。例如,许多人认为即将到来的美国大选之后的时期会有暴力出现。这种不确定性将增加所有人的黄金购买量。

 

9. 在近期,即 11 月,可能会出现两次潜在的通胀冲击。一个是肯定的,另一个取决于选举结果。第一个是以色列不可避免地袭击伊朗核设施,甚至可能破坏伊朗政权。以色列现在已取得对伊朗及其盟友的压倒性军事优势。伊朗的天空几乎全部向以色列战斗机敞开。如果现在不利用这一优势消除或至少挫败伊朗的核计划和相关基础设施,那将是愚蠢的。但以色列人一定被告知他们应该等到选举结束后,他们可能会这样做。第二个是特朗普获胜。他承诺全面提高关税。即使他无法完全兑现承诺,部分增加关税也会导致一次性的巨额通胀冲击。

 

我在2022最初的预测中提到,我认为黄金会升值很多倍。我心中的目标是每盎司差不多 10,000 美元,我仍然相信这一点。我总是讨厌那些给出不切实际的预测的人。例如,在 2000 年的科技泡沫期间,就有很多这样的人。但如果我说实话,那就是可预见的未来的黄金价格目标。

 

黄金生产商的股价可能会比黄金价格上涨得多。由于他们的储备将被重新估值,因此它们是黄金价格上涨的自然杠杆投资。白银价格和白银生产商也可能会经历疯狂的价格上涨。最保守的标的,也可能是买入并持有策略的最佳标的可能是 Agnico Eagle Mines (AEM)。一些白银生产商,如 First Majestic Silver,即使在季度价格图上也显示出非常明显的双底模式。即使黄金和白银相关的股票在短期内可能会大幅下跌,逢低买入仍然是正确的做法。

Thursday, January 4, 2024

A check and update of the long term predictions made in February 2022 two years later:Everything playing out exactly as predicted

 

1.       Nasdaq and S&P will drop 40-50% from its recent peak over the next few years. The other global markets will also drop a similar amount. Maybe the bear market could eventually end around the 2025 inauguration. But if the US falls into a civil war kind of panic and reality, hell will be in sight.

 

5/25/2023 Update: Nasdaq already dropped by more than 35% and S&P by more than 25% at some point in 2022. They are in a bounce right now. If this bounce last until at least the end of Q3 2023, or even the end of Q1 2024, Nasdaq could eventually drop by about 70% and S&P by about 50%.

1/4/2024 Update: 2023 turned out to be exactly as I expected on January 22, 2023, with a run up to potentially Q1 2024, and large swings. My last view was a comment on October 6, 2023 to a good friend in the industry: “today should be the start of a bounce that could last till early January in the best case scenario.” We are approaching the final stage of the bounce. January will definitely be pretty bad for equity. There is a possibility of strong rebound in February and March but the market could also continue to drop. We either have a very volatile fluctuating market for the rest of the year, or a downtrend bear market in which Q2-Q4 will see negative equity returns each quarter. The bear market case is more likely.

 

2.      US is likely to have a recession in late 2023 or 2024. The recession will be relatively mild in terms of employment and output.

 

5/25/2023 Update: So far the recession hasn’t come yet, as I predicted, despite of most everyone having predicted the recession happening in 2022!

1/4/2024 Update: My recession watch has finally started. But it could be that we won’t have recession until the end of 2026 or even 2026. Note that for everyone else, this would be their third recession watch from the start of 2022.

 

3.      Some of the current darling stocks will drop very substantially. For example, can you imagine Tesla at around or below $200 again?

 

5/25/2023 Update: at the adjusted prices, my prediction was that Tesla would have dropped to about $65. Tesla has dropped to about $100 from more than $400 already, surprising most people. I stand by the $65 target.

1/4/2024 Update: Ideally I would short Tesla at $300. But it may not go back there before reaching around $65.

 

4.      USD has not peaked yet but is close to its peak. After peaking, it will fluctuate at a high level for a couple years before a very significant leg down lasting many years. So don’t bet that it will go down or go down soon.

 

5/25/2023 Update: USD rallied by more than 15% in 2022, as I predicted, which surprised most people. It has dropped a lot from the peak but I expect it to rally at least once more, exactly as I have been predicting.

1/4/2024 Update: It is another time that everyone wants to write off USD and predicts a cyclical drop from here. But USD will surely have another run up this year, potentially reaching the cycle high.

 

5.      Gold will slump from this level too but will get out of the slump before all the other assets. The time of its bottom could be in 2023. It will likely have a strong bull market from there, appreciating many times. Gold companies will take longer to bottom, say another year after gold bottoms.

 

5/25/2023 Update: Gold has dropped about 20% from 2000s to 1600s in 2022, as predicted, but has bounced to close to the all time high in 2023. It will probably drop again to at least 1800s and maybe even 1600s before the long term rally.

1/4/2024 Update: Gold behaved exactly like I predicted. I think there could still be another drop of gold price to 1800s or even 1700s this year. That would be a good and final opportunity to buy gold at that level, even if gold may drop to 1600s.

 

6.      US housing bull market from 2011 is only about half done. It will go up slowly for a few years and then up sharply for some more. So prepare for about another 10 years of US housing bull market and a price appreciation of a similar amount of what we had since 2011.

 

5/25/2023 Update: US housing market did not tank at all and let’s wait for its eventual sharp upturn as predicted.

1/4/2024 Update: US housing market is fluctuating while going up slowly, exactly as I predicted.

 

7.      Chinese housing market and stock market will hold up a bit better than the rest of the world for a little longer. Just holding on there, unlikely to go beyond its prior peaks. Then they will likely have a very serious slump that will not end until say 5 years later.

 

5/25/2023 Update: Chinese housing market and stock markets are fluctuating but haven’t gone beyond the prior peaks as predicted. Let’s wait for their long term slumps.

1/4/2024 Update: The serious and long term slump in Chinese housing and stock markets have started. To drop to even the 2015 level, the housing prices need to drop by about 75% and by at least 60% even in the first tier cities. I have always said to never consider Chinese stocks until the index reaches at least the 2500 level.

 

8.     Hong Kong stock markets look extremely cheap to most people but will drop at least 50% from its peak in 2018. It could drop 2/3 from that peak too in extreme cases. If it does drop that extremely, it is probably wise to load up the assets if it still has a somewhat independent future.

 

5/25/2023 Update: HK stock market already dropped by more than 50% from its peak. After the current sharp bounce, Hang Seng will drop by about 2/3 from that peak, which will be close to 11,000 to 12,000.

1/4/2024 Update: HK market is marching to my predicted price target month by month.

 

9.      Commodities will also be among the last to slump in this cycle but it will have a pretty bad slump too. It could be the most lucrative investment opportunity among all for the many years after the slump is over.

 

5/25/2023 Update: Commodities have been holding up very well but have started the slump somewhat. The slump will continue and the buying opportunity hasn’t started until they are much lower.

1/4/2024 Update: Some commodities could bottom this year but commodity producers’ stocks may not.

 

10.  Value will significantly outperform growth in the next 10 years. Quant funds will do relatively better too.

 

5/25/2023 Update: Value has already outperformed growth significantly in 2022. This trend will continue as predicted.

1/4/2024 Update: Value will again outperform growth significantly in 2024.

对未来几年的预测以及对长期市场的一些思考(2/2022的预测): 2年之后的回顾;所有都如预测的演绎

1.       未来几年,纳斯达克和标准普尔将从最近的高点下跌 40-50%。其他全球市场也将下降类似的幅度。也许熊市最终可能会在 2025 年美国总统就职典礼前后结束。但如果美国陷入内战的那种恐慌和现实,地狱才是底。

 

5/25/2023更新:纳斯达克指数在 2022 年的某个时候已经下跌了 35% 以上,标准普尔指数已经下跌了 25% 以上。它们现在正处于反弹之中。 如果这种反弹至少持续到 2023 年第三季度末,甚至 2024 年第一季度末,纳斯达克指数最终可能下跌约 70%,标准普尔指数最终可能下跌约 50%

1/4/2024更新:2023 年结果与我在 2023 1 22 日的预期完全一致:反弹可能会持续到 2024 年第一季度,并且波动较大。我去年关于股票的最后一个观点是2023106日对一位业内好朋友的评论:今天应该是反弹的开始,在最好的情况下,反弹可能会持续到一月初。我们现在正在接近反弹的最后阶段。一月份对于股市来说肯定会非常糟糕。 2月和3月市场有可能强劲反弹,但也可能继续下跌。今年剩余时间里,我们要么面临一个非常大波动非常小回报的市场。要么进入一个下降趋势的熊市,其中第二季度至第四季度每个季度都会出现负回报。熊市的可能性更大。

 

2. 美国很可能在2023年底或2024年出现衰退。衰退在就业和产出方面将相对温和。

 

5/25/2023更新:到目前为止,经济衰退还没有到来,正如我预测的那样,尽管大多数人都已经在2022年预测经济衰退会在 2022 年发生!

1/4/2024更新:我终于开始留意经济衰退了。但我们也可能要到 2026 年底甚至 2026 年才会出现衰退。但是请注意,对于其他人来说,这将是他们自 2022 年初以来的第三次衰退观察。

 

3. 一些当前的投资宠儿将大幅下跌。例如,你能想象特斯拉回到 200 美元左右或以下吗?

 

5/25/2023更新:按照调整后的价格,我当时的预测是特斯拉会跌至 65 美元左右。 特斯拉已经从 400 多美元跌至 100 美元左右,这已经让大多数人感到惊讶。 我继续跌到 65 美元的目标。

1/4/2024更新:理想情况下,我会以 300 美元的价格做空特斯拉。但在达到 65 美元左右之前,它可能不会回到这个水平。

 

4. 美元尚未见顶,但已接近见顶。在达到顶峰后,它将在几年内处于高位波动,然后开始持续多年的非常显著的下跌。所以接下来一两年不要打赌它会下跌或很快下跌。

 

5/25/2023更新:正如我预测的那样,美元在 2022 年上涨了 15% 以上,这让大多数人感到惊讶。 美元已经从峰值下降了很多,但我预计它至少会再次反弹,正如我一直预测的那样。

1/4/2024更新:这是又一个每个人都想预测美元从这里开始周期性下跌的时刻。但美元今年肯定会再次上涨,有可能达到周期高点。

 

5. 黄金也会从这个水平下跌不少,但会在所有其他资产之前摆脱低迷之前重新上涨。它到底的时间可能在 2023 年。从那里它可能会开始一个强劲的牛市,升值很多倍。黄金公司将需要更长的时间才能触底,比如在黄金触底后一年。

 

5/25/2023更新:正如预测的那样,黄金在 2022 年从 2000多下跌了超过20% 1600多,但在 2023 年反弹至接近历史高位。在长期反弹之前,它可能会再次跌至至少 1800 多甚至 1600多。

1/4/2024更新:黄金的表现与我的预测一模一样。我认为今年金价仍有可能再次跌至1800甚至1700即使金价可能跌至 1600 美元,这个价位也将是最后买入黄金的绝佳机会。

 

6. 2011 年开始的美国房地产牛市到现在只完成了大约一半。它还会在接下来几年内缓慢上升,然后再急剧上升好几年。因此要为美国还有 10 年的房地产牛市做好准备。接下来的涨幅可能与 2011 年以来类似的涨幅一样大。

 

5/25/2023更新:美国房地产市场基本上没有下跌,让我们等待它最终如预期的上涨。

1/4/2024更新:美国房地产市场在波动中缓慢上涨,正如我预测的那样。

 

7. 中国房市和股市接下来一年可能会比世界其他地方好一点点。但是只是坚持在那里波动,不太可能超越之前的价格高点。然后他们可能会经历一次非常严重的熊市,从现在起至少 5 年后才会结束。

 

5/25/2023更新:中国房地产市场和股市仍在波动,但像预期的那样没有超过之前的峰值。 让我们等待他们的长期低迷。

1/4/2024更新:中国房地产和股市严重且长期的低迷已经开始。房价至少要下降到2015年的水平,至少需要下降75%左右。即使是一线城市,也至少要下降60%。我一直说,在指数至少到2500点之前,不要考虑股票。

 

8. 香港股市对大多数人来说看起来极其便宜,但将从 2018 年的峰值下跌至少 50%。在极端情况下,它也可能从峰值下跌 2/3。如果它确实大幅下降,而且如果它仍然有一个稍微独立的未来,那么它可能是一个非常明智的投资选择。

 

5/25/2023更新:港股已较高峰下跌逾50% 经过本轮的大幅反弹后,恒指将从原来高位回落约2/3,最终底部接近11,00012,000点。

1/4/2024更新:香港市场正逐月向我预测的目标价格迈进。

 

9. 大宗商品将是这个周期中最后一个开始下跌的,而且也将出现相当糟糕的下跌。但是一旦经济衰退结束后,这可能是那之后的许多年里最赚钱的投资机会。

 

5/25/2023更新:大宗商品一直表现良好,但开始有所下滑。 下跌将继续,直到价格低得多,买入机会才开始。

1/4/2024更新:一些大宗商品今年可能会触底,但大宗商品生产商的股价可能不会。

 

10. 价值型股票将在未来 10 年显著超过成长型股票。量化基金也会相对比基本面投资基金做得更好。

 

5/25/2023更新:价值在 2022 年的表现已经显着优于成长。这一趋势将如预期的那样继续下去。

1/4/2024更新:2024 年,价值股将再次大幅跑赢增长股。