Gold shop owner
In fact, many investors like "Chinese housewives" are not the only victims of gold price’s decline, even some operators in gold market cannot avoid the doom.
Mr. Zhang, an owner of a gold shop in Haidian, Beijing, runs gold repo operations, in addition to normal gold sales.
He recycles different styles of gold which meet professional certifications at the price that according to Shanghai Gold Exchange. He sells gold to processing enterprises in Guangdong and normally, he can earn a profit of 10-20 yuan per gram. Sometimes, when gold price rises, Zhang usually hoards gold for one to two months before selling it. More and more consumers would like to change gold for cash through this way. As a result, earnings from gold recycling even exceeds normal selling.
Zhang said that even though he has run the operation for more than 10 years, he did not meet such a market this year. Formerly, he used to add the supply of gold or improve the recycling gold price after a big fall of gold price, because he was sure that the price would go up within a month. Unfortunately, this time, things went opposite.
After the slump of gold price in April, many processing enterprises as well as consumers were eager for hoarding gold. Obviously, in seller market, Zhang did not sell it. Instead, he even bought more from consumers’ hands. Nevertheless, the gold price did not rise gradually as before. Zhang therefore lost money inevitably.
Since experiencing the thrilling recent months, Zhang dare not easily start his former recycling career. It’s dangerous for investors to be held up by gold and it is detrimental for liquidity of cash in the market.
Financial experts: gold price can hardly rise in the five years to come.
A famous expert, deputy manager of Hua Xia Bank, Huang Jinlao explained that generally speaking, gold is a good choice for investment. Gold usually will not get depreciated as much as currency will when meeting social unrest and depression. In 2008, the gold price soared after the international financial crisis; in 2011, the golf price jumped again with the global regional instability; while since 2012, stability returned after the bust, the drop of gold price was inevitable.
He also said that there will be a high risk for the elderly to invest in gold. It’s necessary for investors to have a comprehensive understanding of global economic, financial trend, regional situation, and dollar rate movements, while obviously; it is beyond the elderly’s ability. Huang also asserted the constant increase of gold price would not reappear like before in the five years to come.
A macroeconomic analyst of Hua Xia Bank, Zhao Yurui emphasized that risk-free interest is impossible. Investors should be careful when buying financial investment products, including not only gold, but also stocks and funds. Zhao argued that “Chinese housewives” swarming into gold stores in April across China seems to be a more mature investment behavior compared to the situation before: they always bought and sold blindly. In conclusion, investors can still participate in gold investment as long as they change initial concept that gold maintains valuable all the time.
A senior metals analyst of Xing Ye Bank, Jiang Shu said that a short-term fluctuation of gold price is associated with the inburst of capital into gold market. Since 2009, the demand for hoarding and investment intentions of gold accounted for 3040 percent of the whole gold demand has also contributed to the short-term fluctuation of gold prices.
Jiang also said that it’s important for ordinary investors to abandon the unilateral thoughts formed in bull market over the past 12 years. Buying gold at a lower price and then hoard it seems to be hard to achieve profits as expected. What’s more, under current situations, turning to short sell of gold may be an ideal choice.
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