Chapter 49 2. What is gold investment

Nowadays, it has become a part of people's life to maintain and appreciate the value of money through financial management.However, with the changes in the global economic situation, the property market, stock market, bank deposits, etc., as financial products, have become less investable.At the same time, the price of gold in the international market has risen strongly for seven consecutive years, which is an eye-catching performance. More and more domestic investors regard gold as a safe haven. On November 21, 2008, the Shanghai Gold Exchange opened up personal physical gold trading, and China's personal physical gold trading finally had a legal channel using the exchange as a platform.China has a tradition of gold hedging.So, under the situation of the global financial crisis, will gold become an ideal safe-haven financial management product?

If you invest in gold through a bank or other investment institutions, you may have to charge a 2%-3% handling fee.If you go through the gold trading center, its fee is only a few thousandths, which is very low, but your minimum withdrawal amount must be 3 kilograms, and 3 kilograms are very heavy, like the weight of two old hens.So at this moment, many people ask me what attitude we should take towards gold investment when there are problems in the property market, stock market, and bank deposits.Let me tell you, I'm quite nervous. Although I have a Ph.D. in finance myself, I can tell you frankly that at the Walton School, from the first day of my education, we have been constantly misled. Gold is not important to mislead us, gold has no currency properties, gold is not currency.What did I study for so many years at the Walton School of Business?Most of my time is spent on derivative financial instruments.

What are derivative financial instruments?That's extremely complicated.Let me give you an example.Let me take bank loans as an example to explain to you.A person borrows 1 million dollars from the bank to buy a house, and the bank lends him 1 million dollars to get 1 million dollars of claims. These are called bank claims, which are financial instruments, but they are not derivatives.What are derivative financial instruments?It is all this that starts after the bank obtains the creditor's rights, which is called a derivative financial instrument.For example, a bank converts a real estate claim worth US$1 million into real estate mortgage bonds, each with a face value of US$1,000. When it is sold to investors, it is called a derivative financial instrument.In the same way, car loans, refrigerator loans, and computer loans can all be like this. For example, a $10,000 car loan can still be cut into 10 consumer mortgage bonds. What is the face value of each?It must be $1,000.Regardless of the variety of American bonds, its face value must be $1,000.Therefore, we can still divide consumer loans, including car and refrigerator loans, into consumer mortgage bonds worth 1,000 yuan each.So what are consumer mortgage bonds?It is a derivative financial instrument.That is to say, from the bank, after the normal loan is replaced by a bond, as long as it is replaced by a bond, everything is a derivative financial instrument.

So what do we spend a lot of time doing?We spend a lot of time deciding what the market price of derivative financial instruments should be.It's as simple as that, and that's what I'm studying for my Ph.D.The mathematical model was extremely complicated, and I was relatively stupid. Really, those three years were the most painful for me. For example, mortgage-backed auto loan, mortgage-backed real estate loan, isn't its face value 1,000 yuan?There is nothing wrong with the face value of 1,000 yuan, but what is the market price when it is sold on the market?In the process of selling mortgage bonds with a face value of 1,000 yuan to investors, it took me three years to learn at what price to sell them to investors. You see, I am not pitiful, wasting so much of my time, talking about love How nice, isn't it.I spent three years learning countless mathematical models, and only did one very small thing, how small is it?That is, how much should I sell the 1,000 yuan bond to investors, 998 yuan?Or 1002 yuan?Just do this stupid thing.In order to learn whether it is 998 yuan or 1002 yuan, there is such a small difference, I have to learn several very complicated mathematical models, including stochastic calculus to answer this question.

So, we all thought at that time that this is our future.But do you know what's wrong?When we are committed to this kind of mathematical model derivation and mathematical model pricing, we think that in the future, what our PhDs in finance and the entire financial industry should do is to launch more and more derivative financial instruments to create social wealth and let The common people are a little richer.In fact, we are all wrong, do you know where we are wrong?In the end, we believed too much in the mathematical model, and we made a basic mistake, that is, when we pushed all this to the mathematical model, the result made things very complicated, so it couldn't solve the problem.What do you mean it can't solve the problem?For example, I sold the bond to you at a price of 998 yuan, and finally found that the market price was not 998 yuan, but 975 yuan.How to do it?We will spend a lot of time to solve this problem.But there are so many problems that I cannot solve them alone, so we need more people to learn finance to solve this small problem.

But after more people came in, they found that the problem is still very big. Maybe the price will drop to 965 yuan, then we need more people to solve this problem, so our whole finance is to create our own supply.This is the reason why so many people study finance, because we can't solve the problem.The more the problem cannot be solved, the more people are needed to solve the problem.In fact, I was thinking, if those of us who study finance are kicked away or killed, the world might be better.Why do you say that?Because then go back to the most basic position.Why didn't we learn the pricing of gold at the beginning?I think we are all misguided.We have never learned the pricing of gold, because the teacher told us that gold is useless, you can buy jewelry for your wife, and it is okay to buy an Olympic gold medal, it is not a currency.If you want to learn currency, you have to learn complex pricing. Sell ​​998 yuan to others, and you get back 998 yuan when you sell it to others, that is currency.Other than that, it's not a currency.

So from that time on, I have been resistant to gold.Please pay attention to this matter.In fact, I think we have all been fooled.Why was it fooled?You can notice a phenomenon from the trend of gold prices in the past 30 years. In 1968, the price of gold was 35 US dollars per ounce. Since 1986, when I graduated from my Ph. D., the price of gold reached its peak, and it cost more than 800 US dollars. ounce.However, in 1998, the price of gold was suppressed to $250 an ounce.Why? At that time, we were thinking, since gold has no currency value, since it is not a currency, how could the price be so high. I was stupid at the time and didn't understand.In 1998, although I was a little wiser at that time, I still didn't understand how the price of an ounce of gold fell from $800 to $250.This is an unreasonable phenomenon for us. You can see that the trend of the US stock market has basically shown a steady rise.But gold is not, there are several peaks, how do you explain it?Moreover, at the first peak (in the 1980s), the price of gold rose from $35 an ounce in 1968 to more than $800 an ounce, and in 1998, it fell back to $250 an ounce.It suddenly dawned on me that gold was a manipulated currency, and everything understood.In order to answer this question, I checked a lot of information.I found that at this moment in 1998, I discovered a very interesting phenomenon.

Listen clearly, when the central bankers got together to discuss how to sell gold, that's what they did in 1998.Why?Because at that time, including gold mine owners in various countries, they believed that 10 years later, that is, after 2008, the price of gold would drop to the same level as copper.So the price of gold has been falling since then, falling to $250 an ounce, and at this time it has fallen to the lowest level, which is unimaginably low.