I. Gold possesses the attributes of a commodity, financial asset, and currency. As a financial asset, it differs from stocks and bonds in that it does not generate fixed interest, and investment returns depend on the fluctuation of gold prices. Looking at the historical prices of gold, firstly, there is a long-term upward trend. Secondly, gold prices have gone through different phases, with each phase typically starting with a rapid increase, followed by a possible price drop, and then maintaining a period of consolidation on a platform for an extended period before entering the next phase of increase. The pricing of gold ultimately depends on two fundamental attributes: inflation resistance and safe-haven status. The credit risk of currencies, regional conflicts, and international political events often support the rise in gold prices. The impact of geopolitical conflicts on gold prices mainly has two micro-level transmission mechanisms: First, in the short term, the continuous rise in commodity prices, the advancement of inflation trading, and the upward movement of gold prices are actually related to gold's "inflation resistance" attribute.Second, in the medium to long term, Europe and America have imposed sanctions on some countries, including but not limited to sanctions on payment system settlements. The international monetary system has experienced fluctuations, and some countries have sought other reserve currency assets, leading to an increase in gold reserves and a rise in gold prices, reflecting the safe-haven attributes of gold.

II.

In the past year and a half, gold prices have skyrocketed. The biggest beneficiary of this round of gold price increase is the People's Bank of China (PBOC), which has earned 33 billion just by increasing its holdings.

If we consider the PBOC's gold reserves, in this year and a half,

the central bank has made a staggering profit of 360 billion just from gold,

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which is close to the market value of Xiaomi, just to give you an idea of how significant it is.

The most important lesson for the average person from this is to remember one thing:

Every time the PBOC buys gold, the gold price inevitably soars, without exception.

From 2000 to the present, over a span of 24 years, the PBOC has bought gold six times,

each time at the lowest point of gold prices at that time.For instance, in December 2002, following the establishment of the Shanghai Gold Exchange, the People's Bank of China (PBOC) made its first purchase of 99.8 tons of gold. The gold price at that time was only 92 yuan per gram, which also became the lowest global gold price point in nearly 20 years. After that, the PBOC continued to buy gold, and the gold price kept reaching new highs. Among these purchases, the heaviest was in June 2015, when the central bank bought 604 tons in a single month, setting a record for the PBOC's monthly gold purchases in history. The gold price at that time was 230 yuan per gram, and as you may know, the gold price has been on an upward trajectory ever since. Then, in November 2022, the central bank started another round of purchases, continuing for 17 months regardless of the gold price fluctuations, just buying steadily without pause.

Then, at the beginning of this year, the gold price skyrocketed to an astronomical 588 yuan per gram. The central bank's approach to buying gold can be viewed in two phases:

Phase One: From the subprime crisis to 2021, the central bank's motivation for buying gold during this period was more focused on the performance of gold during times of reduced sovereign currency credit value and rising inflation.

(Note: The translation is done to the best of my ability, but please note that the prices and dates mentioned are based on the original text provided and may not reflect actual historical data.)Phase Two: From 2022 to the present, there has been a divergence between the credit of gold and the US dollar currency (real interest rate framework). This phase may also take into account the long-term pricing scale of gold (the stability of the global credit system).

With the changes in the global economic landscape and the relative decline in the status of the US dollar, central banks have been enhancing the robustness and credibility of their own monetary systems by increasing their gold reserves.

III.

To be honest, when it comes to playing with gold, China is the real ancestor.

Even if Chinese people do not understand it when they are young, once they reach a certain age, they will automatically awaken their bloodline and start to like gold. They no longer think it is tacky but rather feel that it provides a great sense of security.

With the significant increase in gold prices, one would think that Wall Street in the United States must have made a fortune, right? After all, isn't the US a nation built on finance?

However, upon checking the data, the outcome is exactly the opposite.

This time, Wall Street has collectively missed out on the bull market in gold.

According to data released by the US Commodity Futures Trading Commission,

The long positions in gold held by Wall Street hedge funds have hardly increased since May 2022, which is equivalent to the US not buying gold for nearly two years.And the world's largest gold ETF fund, managed by State Street Global Advisors in the United States, is even more outrageous.

Gold prices have been soaring, yet the shares of this fund have been consistently sold off.

The performance is simply eye-catching, and it is not an exaggeration to say that Wall Street has completely missed the mark this time.

IV.

Why has this happened? The answer is also very simple,

Wall Street believes that the United States may not fall into a recession this time, so they are complacent and do not need to consider hedging.

However, the United States has been trying to suppress inflation but has been unable to do so, and now prices are soaring.

The prices of commodities like cocoa, oil, and copper have been surging, with no signs of improvement to this day.

Adding to this, potential extreme weather in the second half of the year may lead to widespread crop failures,

People may not speak of it, but they are compelled to make other preparations in their actions.If the United States suddenly cuts interest rates again, gold could experience another significant surge. Consequently, even the European Central Bank, while publicly praising the strength of the US dollar, has begun to collectively buy gold in secret, leading to an extraordinary bull market. In contrast, China, from its citizens to its central bank, has been steadfastly increasing its gold holdings. Over a span of 10 years, the People's Bank of China has accumulated an additional 1,200 tons of gold, doubling its gold reserves and ranking sixth in the world. This is twice as much as Switzerland, three times that of Japan, and seven times that of the United Kingdom. For our country, the value added by gold is actually insignificant. What's more important is that gold provides a backing for the renminbi. China is already the world's largest producer of gold. Now, with the United States burdened with debt, continuously printing money, and consuming its own credit, the gold we have in our vaults has become a trustworthy guarantee, a substantial credit endorsement. With this gold reserve, the renminbi's path to internationalization in the future,We can also walk faster and more steadily,

China's global influence will also be greater and stronger,

The world is becoming more and more magical, what do you think about how long this round of gold's rise will last? Share your thoughts in the comments section.