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there is no doubt that gold is the most profitable investment in 2024. however, as the price of gold fell below the $2,500 mark again, and the global hedge fund giant bridgewater (china) was confirmed to have withdrawn a large amount of gold etfs, what will happen to the price of gold next?

after the fed’s interest rate cut expectations were overdrawn, the market was excited but also fell into “recession expectations”. the commodity market experienced an overall correction, dragging down the gold price. however, industry insiders believe that bridgewater’s operations are more about the company’s tactical considerations and short-term changes in allocation needs. there will be no escape from the top, and the long-term allocation price of gold will always exist.

bridgewater fund sells gold etf

according to the disclosure of the semi-annual report data, bridgewater (china) sold a large number of gold etfs in the first half of this year and has withdrawn from the list of top ten holders of the three gold etfs it held.

in the 2023 annual report, three bridgewater all weather enhanced china private equity securities investment funds under bridgewater (china) hold three gold etfs, namely e fund gold etf (159934), gold etf (518880), and gold etf fund (159937), with a total holding of nearly 190 million shares. by the end of the second quarter of this year, in the 2024 semi-annual report, the company's products had withdrawn from the top ten holders of the three gold etfs it held.

the first bridgewater china fund had an annualized return of 15.3% from its launch in october 2018 to the end of 2023. by the end of 2023, bridgewater china, a wholly-owned subsidiary of bridgewater, had assets under management of approximately rmb 40 billion (us$5.56 billion).

bridgewater (china) first appeared on the list of the top ten holders of the above-mentioned gold etf in the first half of 2022. it has been two years since it quietly bought it. the income from gold investment has also become an important source of excess income for bridgewater (china).

according to relevant sources, bridgewater has achieved good returns through diversified investments in commodities and bonds. commodity investments, led by gold etfs, generated double-digit returns last year and were the biggest contributor to its overall performance.

as a large global hedge fund, bridgewater fund has sold gold etfs at high prices many times in history. in the second quarter of last year, bridgewater fund released its quarterly holdings report showing that the two assets it sold the most were spdr gold etf (gld.us) and gold trust etf (iau.us). in retrospect, although the gold price was slightly adjusted in the third quarter of last year, it hit a record high in the fourth quarter of last year.

money is still flowing into the gold market

"for bridgewater investments, the mission of allocating gold etfs is far from over." a senior industry insider in beijing said that judging from the operations of bridgewater international fund in the gold market, it is more about the company's tactical considerations and short-term changes in allocation needs. there will be no talk of escaping the top, and the long-term allocation price of gold will always exist.

in early july this year, dalio, founder of bridgewater fund, publicly supported gold. he said that gold deserves to occupy a considerable part of the investment portfolio, and even at a record high, gold is still attractive. gold is an effective diversification investment tool. if investors hold a neutral view on the market, gold should account for more than one-tenth of the investment portfolio.

gold prices have continued to hit record highs since july, with a year-to-date increase of more than 20%. index funds tracking gold have also performed outstandingly. the gold stock etf (159562) has risen 27.90% in the first eight months of this year, ranking first in the year-to-date increase in stock etfs.

according to the first half of the year data of listed companies in the chinese gold sector, the domestic gold investment boom is still continuing. according to the semi-annual report of china gold group, the total sales volume of the company's investment gold products doubled in the first half of the year, and the subsidiary china gold refining, which specializes in gold recycling and refining, achieved operating income of 12.14 billion yuan, a year-on-year increase of 46.2%. according to the semi-annual report of caibai shares, the company achieved revenue of 10.989 billion yuan in the first half of the year, a year-on-year increase of 31%; the company's e-commerce subsidiary achieved revenue of 2.299 billion yuan, a year-on-year increase of 50%.

in addition, according to the latest data disclosed by the world gold council, although bridgewater (china) is withdrawing from the gold market, a large amount of funds are still pouring into gold etfs. in july, global physical gold etfs inflows reached us$3.7 billion, which was also the strongest monthly performance since april 2022.

short-term adjustments may be a good opportunity to get on board

regarding the adjustment in the prices of precious metals such as gold, guotai junan futures analyst wang rong believes that it is mainly because the market's optimism about the fed's interest rate cut at the end of august was overdrawn. with the release of a series of important economic data such as the us pmi, job vacancies, and non-agricultural data, the market began a "recession trade" and the commodity market saw an overall correction.

hua li, chief analyst of the nonferrous industry at galaxy securities, believes that gold is an ideal asset allocation choice during the us economic recession, with significant comparative advantages in winning rate and yield: reviewing the seven nber us economic recessions since 1973, gold has obvious winning rate and yield advantages over other nonferrous metal commodities or other assets during the recession.

during the seven actual recessions in history, the median yield of gold reached 6%, which is 33pct higher than that of us treasuries, s&p 500, copper, crude oil 5, crude oil 8, and crude oil 18, and the winning rate is as high as 71%. except for the two recessions in 1980 and 1990 (the historical background corresponds to the federal reserve's aggressive interest rate hikes and a mild economic recession, respectively), gold's performance has outperformed the s&p 500 index.