5月15日，我院副院长朱宁教授接受China Radio International《People in the Know》栏目专访，就黄金价格的未来走势和投资时机，朱宁教授进行展望和解读。

Can Gold Regain Its "Luster"?

Well, I think it has a lot to do with what the economy is going through in the entire world, I mean look at the appreciation of gold prices in the past decade, that is, closely related to the large amounts of quantitative easing measures that have been issued by the US government to the Japan government and the European government. So I think the quantitative easing sets the back drop for the appreciation or the depreciation in the gold prices. And now I think I’m seeing a little bit hope that the US economy seems to be rebounded and the US federal reserves have been indicating that it may take away some of the excessively liquidity it has launched into the global economy. So, I think that is a sort of reducing the hedging demand for gold against further quantitative easing or further prevision of excessively quantity into the global economy. And I think there is also one more thing, that is, the gold prices have been closely related to the commodity prices and the commodity prices have becoming down, also probably reflect the slowing growth of the global economy. So, I think it also has some indirect impact on the drop in the gold prices.

Well, I think gold has remained and will remain to be a very important asset class. It is a very special in the sense that it is a very good hedge against the social turmoil. It is also a very good hedge against the deep depreciation of the paper money based on the quantity released out by the very government. However, I think we also have to keep in mind a few things. One is, gold, as a class, it does not generate use, it doesn’t generate interests, it does not pay dividends. So, it does not have any returns except for its own appreciation. And the second thing is, we have to keep in mind that gold has been a very warranted tool as a class historically. If you look at the past one hundred years, in the past century, gold has only been appreciated for 20 to 25 years. In the remaining three quarter of the time, gold has not been very attractive and an asset. And thirdly, I think even from a technical or from an investment perspective, gold has appreciated five times in the past ten years, even though there are a few other assets classes that appreciated this much. So, after such prospective run up, I think that investors want to ask themselves well, how much potential per year for the gold to run up to in the next years.

I tend to be bearish even though I don’t think there will be another very sudden drop in gold prices. I don’t see a lot of upside in a very short term either.

I personally do not think the dumping by Central Banks especially the dumping by Central Banks secretariats is the major driven for behind the sharp drop of gold prices in the past month or so. There are probably two reasons. One is the fine of Central Banks is very small compared to other major economics. At the very same time, I think other Chinese Central Bank have been considering increasing their holdings of the gold. So, I don’t think there is a clear indication that the Central Banks are acting collectively in dumping gold at this moment.

Well, I think there may be some connections between the recovery of the gold prices and the Chinese buyers buying. But I think people should not over interpret these connections. For one thing, I don’t think it is not very clear how much Chinese consumers have bought the gold in the past two weeks or three weeks which is attributed to the recovery of the gold prices. I mean the rumors that the Chinese buyers have bought over 3 hundred tons of gold which seemed to a little bit unbelievable because that is about one third of the total consumptions of gold in China in 2012. So, I think the number must be smaller than that. And secondly, I think, most of the Chinese consumers are buying spot gold or gold as a real necklace or as a gold ring or as the price of gold in the international market being sad by the future market which is continuous and international. But I think the future price is definitely affected by the demand from the Chinese consumers. However it is a little bit incorrect to say that it is the Chinese buying that is pushing up the recovery of the gold prices.

I think there are probably several reasons. I mean Chinese have a traditional appetite for gold. I think that is probably the duty circle reason. But more recently, I think there are two major reasons why Chinese favor gold as an investment. One is, I think in light of the inflation that has been going on in the past one year, I think Chinese consumers or investors that come to realize that holding something concrete or something real is probably going to be more wealth preserving than holding paper money or putting the money into the bank. So, I think that is one major reason why Chinese are very fond of buying gold at this moment. Another I think is, in China, due to the limitations in the growth in the capital markets, there are not too many investment vehicles or investment targets for Chinese investors especially households to investing. So, due to the lack of investment objectives, Chinese are changing more of their attentions towards gold, which in my personal view, is non-necessary the best investment tool even at this price level. For one thing, I mean, the gold has appreciated five times in the past decade, so even if you take out the 30% drop in the past one year or two, gold has already gone up by three times in the past decade which is still a very prominent run up. And secondly, I think, in China, many investors are buying gold in the real term in buying a gold necklace or buying a gold ring. And for buying those physical gold, if you have to incur an amount of formality fee and transaction fee, and that is included into the net investment returns. I personally do not think gold maybe a very good duplication choice but it should not be a very big part of someone being fond of investment in my personal opinion.

Well, I think, according to a case that everything is possible in the market. I think there is definitely such possibility although I think it is important to point out that given the quantitative easing, given the large amount of liquidity that has been injected into the global monetary system, I think it is hard for gold to fall back to its 200 to 250 dollars per Ounce level, just because everything else has been going up. Relatively speaking, gold should go up as well.

I don’t think any major economies hold in more than 10% of the fortune reserve in gold. I think there probably are two major reasons. One is, gold is not a very liquid asset and tends to seem very warrantable; prices run up or run down. So, that is not a very good investment candidate for fortune reserve. Another is, gold is a very slim market compared to the said US future or the US equity market. So, it was incurred a lot of price impact, one the Central Banks change to buy or sold gold. And finally, as mentioned earlier, the gold does not generate any interest or use. So, it is a very uncertain and very risky investment for the appetite of the Central Banks. So, I don’t think any major economies will be heavily buying gold at this moment, either.

Can Gold Regain Its "Luster"?