Gold(GLD) and crude oil(USO) plunge and lose their value?

Recently, the stock market has experienced ups and downs. During the financial crisis, gold, bonds, and even bitcoin, which have been regarded as value-preserving, have depreciated. Can't help but make many investors confused, why is it like this?

gold

Gold On February 24, due to the stock market crash, a large number of institutions sold gold to make up for the losses of these institutions in the stock market and to increase margin. The price of gold resumed its rise in early March and then fell to a lower level again on March 9. Many investors were confused. Should n’t gold be a hedge? Should n’t gold and the stock market rise in the opposite direction? All of this has nothing to do with the shortage of funds in the repo market.

The Fed ’s bailout ceiling is far from enough, and then the Fed issued an emergency statement on March 12. "Starting on March 12, 500 billion bailouts will be provided. Tomorrow the Fed will provide another 500 billion three-month repurchase loans and 500 billion one-month repurchase loans. In the remaining three months, each week will provide a total of 1 trillion bailout funds. "I do n’t know if you are stunned by this pile of numbers. In other words, the Fed will provide a total of $ 1.125 trillion in bailout funds every week. Some friends may say that the repurchase of market loans needs to be repaid and cannot be accumulated like this, but let us consider that this week ’s 1.125 trillion loans, most of the long-term repurchase loans have a term of 1 month and 3 months. In other words, at least until April 13, the Fed will not receive any refunds.

Before all the bailouts, is this just bare money, and then the huge bailouts in the repurchase market have anything to do with the depreciation of gold we see? Not just gold, but many other financial products that should be kept. Like Bitcoin, it fell from the US $ 12,000 to the US $ 7,000. Low-risk corporate bonds, plus 10 years of the national debt, interest rates both soared. All of this is because, even though the Fed provides a lot of liquidity to solve the shortage of funds, the problem is that all these institutions go to buy back market loans and need to provide collateral. The problem in the market now is that although the Fed provides liquidity, everyone has no collateral! Therefore, when many institutions need a lot of liquidity, many institutions have the problem of lacking original repo collateral. If there is no collateral, even if the repo market is rich, they will not borrow it! This has led various institutions to start selling their gold, 10-year Treasury bonds, corporate bonds, and even bitcoin. After cash, they will use cash to buy Treasury bills.

crude oil

After analyzing the reasons for the depreciation of gold and other value-preserving financial assets, let's take a look at the latest situation of crude oil. The price of crude oil plunged by 24% on March 8, 2020, making it the worst day since 1991. This incident came from cruise ships around the world, and airlines began to stop operating. Therefore, global crude oil consumption has been greatly reduced. If demand is low and supply remains unchanged, then crude oil prices will be greatly reduced. Therefore, OPEC, headed by Saudi Arabia, negotiated with Russia, another major oil producer.

What Saudi Arabia means is that demand is very low now. Let us reduce production together. This prevents prices from falling. The problem is that oil and natural gas account for 30% of Russia ’s GDP. Of course, Russia is not willing to reduce production. This not only lowered the price of crude oil, but also issued a statement saying that it would substantially increase crude oil production, and crude oil fell directly to $ 33 per barrel. As a result, Trump saw an opportunity. Many countries have internal oil reserves. To prevent certain major disasters from disrupting the supply of crude oil, the U.S. oil reserves may reach 727 million barrels. The U.S. oil reserves are sufficient. On March 13, 2020, Trang Pu also ordered that the current crude oil prices are really good and the United States will replenish its oil reserves. In other words, 90 million barrels of crude oil will be purchased. With this order, the price of crude oil rebounded by 5%. Trump bought a lot of crude oil at a low price. In addition to stabilizing crude oil prices, it is estimated that political factors will not decrease. Then Saudi Arabia and Russia will We will wait and see what kind of turbulence it will bring to the crude oil market.

Comments

Coinbase stock forecast 2025: Negative for two consecutive days

For investors in the currency circle, these two days are destined to be an uneasy day. First, the Republic of El Salvador officially regarded Bitcoin as a legal currency for trading, and then Bitcoin experienced a wave of flash crashes. The price once plummeted from $52,800 by 19% to $42,900. Finally, the Bitcoin exchange Coinbase was negative for two consecutive days. Let me talk about the fact that El Salvador uses Bitcoin as a legal currency. To attract more foreign investment and provide lower-cost financial and foreign exchange services, the Salvadoran government-approved Bitcoin as a legal currency as early as June this year and decided to officially implement this currency on September 7, which is yesterday. policy. The government plans to distribute $30 worth of bitcoin to residents who have registered for e-wallets, with a total investment of up to 75 million U.S. dollars. But yesterday’s implementation results showed that the start of this plan was not smooth...

4 George Soros advice to investors!

Who is George Soros? George Soros is a Hungarian-born Jewish businessman. It is one of the most influential investors in the world. In 1969, the Double Eagle Fund was established for Arnhold & S. Bleichroeder, an investment management company. In 1973, Soros and his assistant Rogers left Bleichroeder to co-found Soros Fund Management. In 1979, the well-known Quantum Fund was established and continued to make profits. In the Asian financial turmoil in 1997, George Soros sniped the Thai baht and the Hong Kong dollar, which was frightening. Learning from the experiences of successful people can benefit a lot. Here are 4 tips George Soros gave investors. First, to be successful, you must have ample free time. Most people want to be rich, but not everyone realizes the importance of free time. Many people spend a lot of time working to accumulate wealth, sleep, and forget. Set the goal to complete the work indicated by the superior, or the needs of business partners. But they hav...

Shopify stock forecast 2025：Is it worth buying?

In the last year, the stocks rose relatively well. Another sector is e-commerce. Whether it is Amazon, Alibaba, JD.com, Pinduoduo, SEA or vertical e-commerce platforms Etsy and Chewy, all of them have experienced huge gains, while another category has benefited from the e-commerce sector. The company is a website building tool company such as Shopify BigCommerce Holdings. Today I will talk about shopify, the leader of website building tools. First, let's briefly talk about shopify's business model. To put it simply, shopify is a fool-like website building platform. In the past, when a company wanted to build a corporate website, it generally needed to find a dedicated person to design and maintain the website. If you want to add shopping functions to the website, the cost of building the website will also increase. This is true for many small businesses and individual businesses. A very difficult thing. Shopify uses the SAAS model to provide websit...

Will the Great Depression make a comeback?

the Great Depression On March 21, 2020, the United States already had initial unemployment data. Exceeding market expectations, the number of applicants reached 3.28 million, a record high. The current unemployment situation in the United States. Before March 7, employment in the United States was not affected by the epidemic. In the week of March 7, the number of people applying for unemployment benefits for the first time in the United States was 211,000, a decrease of 4,000 compared to the previous week. It is still healthy. This shows that the United States is in a good employment track range. The actual data began to fluctuate, that is, the data for the week of March 14, the number of people applying for relief reached 282,000, a slight increase. On March 21, the number of people applying for unemployment benefits soared to a record high this week. 1.7 million people have far exceeded expectations, and market expectations are about 1.5 to 1.7 million people. It can be said...

Palantir stock forecast 2025: What kind of company is PLTR?

PLTR introduced today may be the most controversial company in the current market, not one of them. As a stock, he is the faith stock of many retail investors. Those who believe in it generally believe that its stock price can double at least ten times in the future. Catherine Wood, the president of the ARK Fund, nicknamed "the light of retail investors," continues to buy the stock, which is also highly sought after on the WSB forum; on the contrary, most analysts on Wall Street are not optimistic about its development. The average target price at the end of 2021 is still 10% lower than the current stock price. As a company, its revenue is growing steadily and rapidly, with an annual growth rate of about 30% per year. However, the company has never achieved profitability in the past 20 years since its establishment. As a high-tech enterprise, the company is full of various genius ideas and the top talents in the industry, but they are mostly engaged i...

Investors have begun to switch back to traditional growth stocks

On Thursday, the stock prices of Cisco, Alphabet, and IBM hit new highs. But more importantly, the previously unpopular speculative growth stocks, including stocks bought by many ARK funds, have now begun to rebound. How is this going? Investors' perspective on the market is changing. In the first quarter of this year, mainstream voices in the market believe that the economy will restart strongly, bond yields will rise, and inflation may become a problem later this year. After the end of the first quarter, these expectations were only partially fulfilled. The U.S. economy has indeed restarted strongly, but bond yields fell in the first quarter instead of rising because investors began to believe: 1) Inflation and supply chain disruption may indeed be "temporary", as the Fed insists; 2) The second and third quarters will be the highest points of stock returns and economic growth. Alec Young, a chief investment officer of Tactical Alpha, said: “...

Many companies will China close in 2020?

Starting in March, all walks of life in China began to resume work. People stayed at home for more than two months. Many people's moods changed from tension to leisure, and now they are anxious. It's not just the bosses who are anxious. Many employees find that their rents and mortgages are still being paid, the holidays are extended, they can't go to work, and their salaries aren't. Whenever there is no money it is a big problem. More than 700 companies closed down in February, but getting fewer wages is also better than the company suddenly closing down. In February, more than 700 companies have closed down, and this number should be exceeded. Statistics show that more than 55% of catering businesses in China have resumed work, but compared to the same period last year, affected by the epidemic, 78% of catering companies have lost more than 100% of their operating income, and another 16% of them have lost over 70%. This year's sudden outbreak, the impact...

The Federal Reserve implements interest rate hikes or cuts？

Generally speaking, the Federal Reserve implements interest rate hikes or cuts. Interest rate rises are austerity monetary policies, and interest rate cuts are a loose monetary policy. When the rate hike cycle begins, it indicates that the Federal Reserve is optimistic about the future economic outlook, economic data shows a positive outlook, and market sentiment is optimistic. To avoid excessive economic growth, the Federal Reserve has implemented austerity monetary policy and implemented interest rate hikes. When the interest rate cut cycle begins, it means that the Federal Reserve is bad on the future economic outlook, the economic data shows a bad trend, and the market is pessimistic. To stimulate economic growth, the Federal Reserve has implemented a loose monetary policy and implemented interest rate reductions. Correlation between the S & P 500 and Federal Reserve interest rates Historical data from the S & P 500 shows that when the rate hike cycle begins, the sto...

TSMC VS Nvidia, AMD, Intel. How to choose semiconductor stocks?

The general pattern of the semiconductor industry, the overall trend and target price of TSMC in 2021, how the Nvidia(NVDA), AMD, and Intel(INTC) semiconductor stocks are laid out, what is the decisive factors, and whether there is a predictable time point, we conducted a more systematic discussion. The big picture of the semiconductor industry The semiconductor industry is cyclical. Since the second half of 2019, global semiconductors have entered a new round of the business cycle. This is very important. Only when you understand this reason can you hold stocks with peace of mind. The following analysis is based on the time dimension. In the short term, looking at one to three months now, with the outbreak of the epidemic again, the production capacity of 8-inch wafers are in short supply, the semiconductor industry chain is out of stock, wafer foundry, packaging, and testing links have seen price increases, and production capacity is in short supply. High economic situation, In ...

Bitcoin will eventually lose its king status! Replaced by Ethereum

Considering many factors such as real use, user base, technological iteration speed, etc., Ethereum is likely to replace Bitcoin as the mainstream cryptocurrency. In terms of market trends, the key difference between the current cryptocurrency market and the 2017-2018 bull market is the participation of institutional investors. However, with the recent slowdown in the participation of institutional investors, the inflow of cryptocurrency ETFs has decreased, alternative currencies have emerged one after another, and the market has once again been dominated by retail investors. This shift from institutions to retail investors is increasing the possibility of a market crash. The current high volatility in the market will continue until cryptocurrencies have potential real economic uses independent of prices. Etherfang has huge potential The Ethereum system supports smart contracts and provides developers with a way to create new applications. ...

FinanceLinkway

Search This Blog