Table of contents

1. Hot events affecting gold prices in 2022

2. Gold price performance and investment data in 2022

3. Analysis of gold investment in 2023

4. What are the ways to invest in gold in Taiwan?

5. Summary

1. Hot events affecting gold prices in 2022

Event 1: Russia-Ukraine War Conflict

War broke out between Russia and Ukraine over territorial issues.

When the war started: February 24, 2022

Results：

Energy Crisis - Because of concerns that Russia will cut off energy supplies to Europe, the prices of natural gas, oil and other energy sources rose sharply after the outbreak of the war. The impact of high energy prices has since spread to other areas of the economy, pushing up transportation costs and food prices, which eventually led to higher inflation in many countries around the world.

Higher inflation - Ukraine is the breadbasket of Europe, and its corn and wheat exports account for more than 10% of the world's exports. The war situation has caused the export of Ukrainian agricultural products to decrease, the price has soared, and the price of valuable energy has also risen, which eventually caused the inflation level of many European countries to hit new highs.

Gold soared - Due to the sharp rise in crude oil prices and the record highs of inflation, gold has become an important hedging tool.

Event 2: USD Rate Hike 

In order to curb the high level of inflation in the country, the Federal Reserve started raising interest rates.

When to take place: Beginning March 2022

Results：

The three major stock indexes plummeted - After the interest rate hike, US dollars of hot money quickly withdrew from the capital market, causing the three major U.S. stock indexes to plummet.

Soaring U.S. dollar - Rising interest rates lead to higher borrowing costs in U.S. dollars, which eventually causes the U.S. dollar to skyrocket.

Gold plummeted - The interest rate hike led to the scarcity of US dollars in the market, and the price of the US dollar rose. Investors sold gold and invested in US dollars, causing gold to fall.

2. Gold price performance and investment data in 2022

2022 Gold prices so far:

Russia-Ukraine War Conflict

From 1837.73 points on February 17, 2022 to 2070.37 on March 1, 2022, an increase of 10.8% (subsequently affected by the US dollar interest rate hike)

Lowest price on February 17: 1837.73 points

Highest price on March 8: 2070.37 points

Price volatility: $232.64/oz

Cumulative total increase: 10.8%

USD Rate Hike 

Since March 1, gold has fallen all the way from 2070.37 to 1614.73 points, the fluctuation point is 455.64, and the cumulative decline is 22%

Highest price on March 8: 2070.37

Lowest price on September 28: 1614.73

Price volatility: $455.64/oz

Cumulative total decline: 22%

3. Analysis of gold investment in 2023

Fundamental analysis:

1. From a long-term point of view

Since 2020, a series of influencing factors, such as the uncertainty of the impact of the epidemic environment, the intensification of international fringe conflicts, the fragmentation of the globalization system, and the strong dollar policy, all show that the economy has entered a depression stage from a recession. At this stage, gold prices tend to rise in blowout style. And gold will also take advantage of the change in the US economic strategy to rebound again, which is also in line with our operating cycle.

2. From a medium-term point of view

From the perspective of medium-term supply and demand relationship, analyzing from the demand side of gold as an industrial raw material, gold will become the turning point of this financial turmoil. Russia is eager to consolidate the binding properties of the ruble and energy, and will hoard a large amount of gold as the ruble's endorsement. Europe and the United States will also establish a new energy supply chain relationship. Therefore, from a medium-term point of view, the future demand for gold will increase significantly.

3. From a short-term point of view

From the perspective of short-term investment preferences, the conflict of the Russia-Ukraine war has made the currency credit of various countries shaky. We have analyzed before that the essence of the rise and fall of gold is credit hedging. When countries, especially the United States, experience a credit crisis at the currency level, ordinary investors and even the public will take the initiative to convert their currencies into gold to avoid risks, which will directly reflect on the price of gold.

Technical analysis:

From a technical point of view, it is very difficult for the price of gold to break through the 1800 point before the end of 2022. On the one hand, near 1806 was the previous high point, which was also the support level on May 17 and June 14, where a large number of multi-party replenishment orders accumulated, forming a strong pressure level. At the same time, the two points above 1913 and 2075 formed a double top pattern, and there is a high probability that gold will plummet in the market outlook.

Looking ahead to 2023, there is a high probability that the United States will give up raising interest rates due to falling inflation. Even in order to boost the economy, cut interest rates instead. If there will be a depression in the price of the US dollar in the market, investors will abandon gold and invest in US dollars, and the price of gold will drop sharply. Combined with the above technical analysis, the space for gold to fall can reach 30-40%.

4. What are the ways to invest in gold in Taiwan?

1. Investment in physical gold

Physical gold investment refers to gold bars, gold coins and gold jewelry, and gold is held as an investment. As an international hard currency, gold has a strong role in maintaining and increasing value, and the value of gold is inherent and intrinsic.

Advantages: It can be exchanged for physical gold, easy to carry, no need to open an account, and no capital verification.

Disadvantages: High transaction costs and storage costs are required, and because of the low transaction volume, physical gold often has liquidity risk problems. The trading time is short, and you can't use leverage to make big gains, and you can't do two-way trading, so the investment opportunities are reduced by half.

Profit: If the gold price falls by 30% based on the above judgment, it is impossible to make a profit because of the lack of a short-selling mechanism for physical gold investment.

2. Investment in gold passbook

We can think of a gold passbook as a foreign currency passbook. Investors need to spend 100 yuan to open a gold passbook account in the bank, and then use this passbook for transactions. When buying gold, it is also based on the transaction quotation announced by the bank, just like the transaction quotation of foreign exchange. Gold passbooks are more convenient than physical gold.

Advantages: Easy investment, online transactions, easy account opening, and no capital verification required.

Disadvantages: The transaction cost converted from the bid-ask spread is higher than that of physical gold, which is about 1.45% more. The trading time is short, and you can't use leverage to make big gains, and you can't do two-way trading, so the investment opportunities are reduced by half.

Profit: If the gold price falls by 30% based on the above judgment, it is impossible to make a profit because of the lack of a short-selling mechanism for gold passbook investment.

3. Investment in gold ETFs

In addition to physical gold, you can also order gold ETFs through brokerage platforms. The transaction method is basically the same as the general ETF, we need to pay handling fees, transaction taxes, and management fees. Compared with physical gold, the liquidity of gold ETF is relatively better. The only downside is that gold ETFs are not redeemable for physical gold like passbook gold. Therefore, if you have no demand for physical gold, gold ETFs will be a pretty good choice.

Advantages: Liquidity is better than physical gold and gold passbook.

Disadvantages: It cannot be exchanged for physical gold, there are handling fees, transaction taxes and management fees, the transaction time is short, and leverage cannot be used to make a small fortune, and two-way transactions are not possible, and investment opportunities are reduced by half. Account opening is complicated and capital verification is required.

Profit: If the gold price falls by 30% based on the above judgment, it is impossible to make a profit because of the lack of a short-selling mechanism for gold ETF investment.

4. Investment in gold futures

Gold futures investment, like our general futures investment, adopts "margin trading", so the advantage is that it can be traded at a lower cost without paying management costs. But the disadvantage is that the futures contract will expire, so if you want to hold it for a long time, you need to keep renewing it.

Advantages: Liquidity is better than ETF. You can use 5 times leverage to make a big fortune with a small amount of money, and you can short two-way transactions, and there are more opportunities.

Disadvantages: The leverage ratio is low, which leads to high transaction thresholds. At the same time, futures contracts will have expiration restrictions, and long-term holdings need to be renewed continuously. Account opening is complicated and capital verification is required.

Profit: If the price of gold falls by 30% based on the above judgment, and the investment in gold futures is $5000 short (the minimum transaction threshold), the profit can be: principal * profit percentage * leverage = 5000 * 30% * 5 = $7500.

5. Investment in gold CFDs

Gold CFD investment is a new investment method that can buy gold through overseas securities companies, and it is a relatively simple way. It is also an investment gold tool that we recommend. CFD can earn price difference through global gold fluctuations, because it does not involve direct purchase of gold, so there is no quota limit.

Advantages: With reference to the global gold market, the trading time can reach 24 hours a day, and the liquidity is higher than all products. You can use 100 times leverage to reduce investment costs and make big money. You can short two-way transactions and have more opportunities. No handling fee, no transaction time. Opening an account is simple and requires no capital verification.

Disadvantages: Due to the high degree of trading freedom and high leverage ratio, the risk rate is higher than other products.

Profit: If the gold price falls by 30% based on the above judgment, and the investment in gold futures is $300 short (no transaction threshold), the profit can be obtained: principal * profit percentage * leverage = 300 * 30% * 100 = $9000

5. Summary

Looking back at the entire year of 2022, the price of the entire gold market fluctuated violently due to two events, the Russia-Ukraine War and the Fed’s interest rate hike, which also brought huge investment opportunities for gold. At this time, we will analyze 2023 again, and the opportunities for the same investment will be more obvious. And how we can fully benefit from such an opportunity is what we need to consider according to our own situation. There is no distinction between good and bad investment methods, only whether they are suitable for us.