|
On Friday, US President Biden proposed a $6 trillion fiscal budget. Once passed, the scale of money injection will be no less than this year. It seems that the US government has no intention to restrain its monetary easing efforts and has become addicted to this method of drinking poison to quench thirst. As soon as the news came out, US stocks soared. In addition, the precious metals market is also quietly starting up. In my opinion, a very important indicator is the trend of gold. In this massive money injection, gold hit a record high of nearly $2,100 in August last year, and then began to adjust significantly, falling to below $1,700 in March this year. There is a voice in the investment market that believes that gold has lost its safe-haven and anti-inflation properties, and cryptocurrencies such as Bitcoin are quietly replacing gold. However, since March, gold has begun to rise slowly again, and this rise has begun to accelerate recently. If we combine this with the reaction of the U.S. stock market, we can see that this shows that funds in various markets have begun to see a fact that is probably becoming increasingly difficult to refute: that is, the U.S. government's money printing may not be able to stop. Recently, officials of the Federal Reserve have made different statements on different occasions, which has caused the market to speculate whether the current loose policy will change. However, considering the new budget proposed by the US President and his increasing mention of competing with China in infrastructure, scientific research, and manufacturing, I think it is difficult for the loose policy to change in the short term. Even if there is a change, the monetary policy may be tightened at most, but the fiscal policy will continue to be loose, and the combined effect of the two is still loose. Since it is loose, the US dollar will inevitably continue to seek various investment channels. I don’t know if you have noticed two recent trends. One is that the exchange rate of RMB against the US dollar continues to rise, and the other is that A-shares have quietly reached 3,600 points. As of the time of writing, the USD/RMB exchange rate has reached 6.37. Many people believe that this is a hedging strategy launched by the country to counter the printing of US dollars - to let the RMB appreciate. On the one hand, it protects my country from being cut off, and on the other hand, it transfers inflationary pressure back to the United States. Because at this moment, only our country can well control the epidemic and ensure the normal operation of the manufacturing industry, which is the capital for the continued appreciation of the RMB. In my opinion, in addition to the above reasons, there is another important reason for the continued appreciation of the RMB: foreign capital is also pouring into the domestic market in search of investment targets. The most obvious is that the A-shares, which have been criticized by stockholders, have quietly reached 3,600 points. After reaching the high point of 3,731 points in this round of market in February this year, the A-shares began to fall all the way and hovered between 3,300 and 3,400 points for nearly three months, and then began to accelerate their rise recently, reaching 3,600 points. Foreign capital is significantly increasing its holdings in A-shares. Therefore, no matter from the recent trends of the US stock market, gold, RMB, A-shares and other markets, I believe that the market is quietly starting to respond to a new round of money release. Although everyone knows that this money release game is unsustainable and will cause disasters, before the game ends, everyone can only do their best to find targets in various markets and protect their assets. As for digital currency, I think it is even more impossible for it to be absent from this game. Even the investment targets with serious bubbles like the US stock market have been flooded with money, so how could digital currency be let go by capital? The problem now is not whether there is a bubble in the market, but that funds with close to zero cost have to find ways out by all means and crave returns. I believe that the second half of the digital currency market is just beginning. But will it come so quickly? I don’t think so. Judging from the trend of gold and A-shares this year, the two markets have experienced nearly three months or even longer of bottoming out before they have the current upward trend. So the digital currency market may also need some time to digest the previous sentiment, and then it will be lightly equipped and show its strength again. |
