Here's the thing, last night before going to bed, I flipped through the Heavenly King's "Oscillation Cycle Theory" for a while.
I bought this book in 2017, so I didn't know it at the time!Catch up with the fashion, reminisce about that famous speech and throw it back on the bookcase.
Somehow last night, the ghost messenger took it out of the bookcase, and began to flip through the catalog, just when he swept to a chapter called "*** under the Kangbo system, I did a podcast show that reviewed the history of ** a while ago, so I watched it, it really is. Tut-tut!
I regret it now that I didn't find this book when I was looking for information for the podcast!Otherwise, the frame of that episode would have been much better.
The main purpose of this article is to introduce the research views of the king of heaven on ** from the perspective of the Kangbo cycle, and it can be regarded as a patch for the podcast.
The three attributes of the gold price
Zhou Jintao divided the fluctuations of the ** into three cycle fluctuations:
Under the long-wave cycle span, the attribute that dominates the gold price is credit hedging.
Hedge whom?Hedging the risks of the US dollar system.
Why the US dollar?Because the US dollar is the dominant country in this round of the Compo cycle.
*, as a stable, super-sovereign, globally agreed, zero-coupon asset is the B side of the dollar system.
U.S. economic growth and the stability of the U.S. dollar system are fundamental factors driving the long-term trend of gold prices.
To put it simply: the first two are stable, and the gold price has little chance. If there is a crisis in the first two, the price of gold will usher in a historic level**.
When will there be a crisis between the first two?
From the perspective of the Compo cycle, the probability of a depression is the highest. More on that later.
In the medium cycle, purchasing power has become the dominant factor driving gold prices. At this time, ** is more of a commodity, which will fluctuate with the global commodity cycle.
A ** commodity cycle is about 30 years, including: about 10 years of upward period, 7 8 years of sharp decline, and the rest of the time sideways.
The peak of the last commodity cycle was in 2011, which was also the year of the gold price.
In the short term, the core attribute of ** is risk aversion. In other words, global risk appetite(Revision of the market's original expectations).It is the core factor affecting the short-term volatility of gold prices.
In fact, it is quite difficult to analyze the price of gold from a short-term perspective – real interest rates, the US dollar, commodities** and the Marshall K-value（m2/gdp）are all factors that affect the short-term volatility of gold prices.
The interaction between the above factors and the gold price can be divided into two groups:
Positive correlation groups: metal**, Marshall k-value, **
Negative correlation groups: real interest rates, dollar index.
It should be emphasized that the B side of the dollar system should theoretically be negatively correlated. However, there are some historical periods where there is a clear synchronicity, such as:
So the question is, under what circumstances does this weird synchronization occur?
The summary of the Heavenly King is:
Stagflation: Inflation is rising and real demand growth is slowing.
It is usually accompanied by some crisis events, such as oil crisis, debt crisis, economic crisis, geopolitical conflict and other risk events, which greatly raise the market's risk aversion.
Treasury yields rose, investors choose the US dollar and ** as safe-haven assets.
Gold price fluctuations in the Compo cycle
Let's start by superimposing the historical trend of gold prices with the Compo cycle, like this:
As you can see, the all-time high of the gold price in 1980 coincided with the recession of the last round of Compo.
The all-time high of the gold price in 2011 occurred during the transition period of the current Compo cycle from recession to depression.
The all-time gold price highs for 2023 occurred during the depression of the current Compo cycle.
The all-time high of the gold price in 1935 is not shown in the chart above, but occurred during the depression of the third Compo cycle, when the Great Depression of 1929 brought the core industrial countries out of the gold standard, and by 1935 the gold price had risen by 100% nominally.
As mentioned in the chart, the price of gold always comes out of the historic ** in the depression phase of the Compo cycle.
The last time I did a **-themed podcast, it was all because of a sentence from @南天师:
Every generation buys **, but only once.Now that I look closely, this sentence is also very informative.
Why do people buy ** once per generation?
Because each generation catches up with the recession of the Compo cycle, chasing after the grand historical narrative**.
Why only buy it once?
Because the injury is too deep, and the next high may have to be in the next round of Compo recession. It's been too long, people are getting old, and the wind is low.
In other stages of the Compo cycle, the economic system operates normally, the pricing mechanism of the first class has always maintained a relatively stable operating state, and the gold price is constrained.
For example, during the recovery and boom period of Kangbo, the first speed of gold prices could not even reach the first speed of the price level in the same period - this means that in the economic stage with solid fundamentals and abundant real growth momentum, holding ** not only cannot obtain excess returns, but also cannot even meet the demand for value preservation.
Strong potential economic growth means that holding** is subject to high opportunity costs and interest losses, and it is not cost-effective to hold**.
When the Compo cycle entered a recessionary period, the ** system began to fluctuate, and the volatility and frequency of gold prices increased significantly.
Only when the global economic system runs to a certain stage, the market credit and monetary system have a significant turbulence, the ancient memory is awakened, the pricing mechanism is fundamentally reversed, the hedging attribute of monetary credit begins to dominate, and the gold price opens a long-term bull market in this high-frequency and wide range, and reaches a climax in the depression period of 5 10 years of super **, and its relative yield far exceeds that of ** type assets.
To sum up: the global economy and the operation of the market system will be affected by the short and medium cycles, but the shock level of these two cycles is not enough to reverse the pricing mechanism.
This also explains why the cyclical volatility of gold prices is only reflected in the long-wave cycle, and only shows the usual ** fluctuations in the medium + short cycle.
Tianwang in 2016 is strategically bullish on the logic of the allocation value
Now it seems that this conclusion back then was also close to the demon. So let's take a look at the logic of the long-term allocation value that Tianwang was bullish on at that time:
Since it is a long-term configuration, it is inevitable to discuss the long-term narrative. As already highlighted above, it is the Compo cycle that drives the historical level, and small fluctuations in gold prices during economic stabilization periods are not unusual.
This round of Compo began after the great inflation in the 80s of the last century, and the long-wave boom began in the 90s, and then ended around 2005 and entered the recession phase. Tianwang believes that 2016 is in the transitional stage of recession and depression, which is obviously marked by the decline of productivity, and long-term slow variables such as technology, population, resource endowment and geopolitical environment determine the decline in the potential growth rate of the economy is inevitable.
If the long-wave cycle from recovery to depression represents the trajectory of economic growth, the trend of ** can be seen as the opposite of economic growth.
As a mirror image of the dollar system, there are several major contradictions within it:
The U.S. dollar is the currency of the United States, a problem for other economies. In particular, when the dollar system is no longer responsible for stabilizing its exchange rate, credibility and international cooperation become extremely fragile.
The Fed has the absolute privilege of liquidity creation, which determines the asymmetry of the international distribution of benefits. The United States has the pricing power to control commodities such as **, and at the same time prints money in exchange for goods and resources from other countries. On the other hand, the United States can rely on financial markets to attract international capital inflows, and the expansion of the dollar crowds out other currencies, making the international monetary system inflexible.
Another feature of the dollar system is that the Fed is the lender of last resort to global financial markets, so the Fed needs to take on the responsibility of regulating market sentiment and liquidity. But booms and busts in both financial markets and the real economy are difficult to quantify, which leads global markets to often switch between excessive liquidity, financial bubbles, and crises. Especially when the economic situation is sluggish and the Fed's resources and balance sheet structure are stretched, the market withering will intensify under the self-reinforcing trend, exacerbating the volatility.
At the same time, the imbalance of economic development under the globalization system is characterized by:
The U.S. dollar is the core of the current account deficit. The surpluses of emerging markets and developing countries increased markedly. ** and investment growth rates far outpace GDP(2016 was the beginning of de-globalization, and this phenomenon is reversing).The financial market is developing faster than the real economy, and the scale of imbalance is expanding. The capital account is another important channel for the United States to export liquidity, and liquidity needs to correspond to safe assets(assets backed by sovereign financial solvency).。This means that US Treasury issuance will expand in tandem with global demand for reserve assets, a paradox that cannot be solved given the size and yield levels of debt in advanced economies.
These problems of the dollar system will continue to unfold over time, and the credibility and solidity of international cooperation, which are key to the maintenance of the dollar system, have declined significantly. Needless to say, the Triffin conundrum that a single country must face to monopolize currencies, the interest imbalance between U.S. and non-U.S. countries, the long-term contraction of the petrodollar, the attempts to de-dollarize the renminbi in Japan and Europe, negative interest rates, high leverage, and high debt are becoming more and more difficult for the Fed to manage expectations.
* has not withdrawn from the historical stage of the currency, at this moment we can't ** when the current dollar system will die, but no matter how it develops in the future, in the context of the gradual arrival of the Compo depression, the mirror relationship between the dollar system and ** is all the issues we will focus on in the future.
Everything is fate, and life is a cycle
The above content is from Zhou Jintao's judgment in 2016.
Now that we are in the depression of this round of Kangbo, looking back at the mysterious judgments that the king said back then, I can't help but sigh: the king is really wise and close to the demon.
Life and wealth depend on Kangbo, and I don't deceive me.
As Zhou Jintao said:
Many things have nothing to do with IQ, this is your life opportunity, it depends on whether you can grasp it.