Industry: long-term bullish on the domestic price of gold below the international valuation of the company

Source: Yangcheng Evening News


At present gold prices remain high, the price of gold from the impact of factors, the growing problem of global inflationary pressures, high oil prices, U.S. economic prospects of the uncertainty, central banks in foreign exchange reserves in gold reserves in the proportion of Historical status (especially China), the gold mining costs rising, and so on the gold price factors have provided a strong support, and the only negative factor the price of gold potential rebound in U.S. dollars only possibility. Long-term bullish on gold, while the current domestic gold industry valuation lower than international counterparts.

At present the domestic gold industry listed companies have increased the reserves of gold resources for the next few years, Zijin Mining, Gold, Shandong Gold-gold reserves are likely to increase substantially. And affect the company's performance the most important factor is the company's production for the volume and cost control. In production for the increment in Shandong Gold and Gold in a more pronounced growth. In the Gold and Shandong Gold-performance this year will be significantly improved, has obvious advantages of the valuation, the proposed purchase. Zijin in previous years and because of their good performance, the company's operating flexibility, industry-leading technology and cost advantage, thickening the future the possibility of gold reserves, as a long-term investments held varieties. Chenzhou mining industry's performance also raised for the project pending the acquisition of Kuangquan progress and results.

Gold: the best varieties to resist inflation

By the world situation in the uncertain future, to curb terrorist activities, increase the risk of local conflicts; obvious signs of U.S. economic recession, the dollar continued to weaken; crude oil prices rising gold and other external factors that lead to preserve and increase the functions of the more apparent, as well as gold jewelry consumer demand increases , A limited supply of gold and other internal factors have led to the needs of tension, taking into account the adjustment of foreign exchange reserves of central banks to increase the possibility of gold reserves, gold prices in the medium to long term will show a rising trend. The international gold has broken through the 1980 set of 850 U.S. dollars / oz historical high, reaching 950 U.S. dollars / oz. However, inflation and other factors will be converted to gold, 1980 of 850 U.S. dollars / oz gold equivalent to the current 1,500 U.S. dollars / ounce, gold is still greater growth potential. Although the short-term dollar rally, the European Central Bank and the IMF to sell gold on gold movements to a certain extent, but the long term, gold can still maintain a high level. A conservative estimate 2008 average price of gold can be maintained at 200 yuan / g above.

The current price of gold, down from a high level. However, the factors affecting gold prices, the increasingly serious global inflationary pressures, high oil prices, U.S. economic prospects of the uncertainty, central banks in foreign exchange reserves in gold reserves in the proportion of the historical status (particularly China), the gold mining costs rising, and so on the gold price factors have provided a strong support, and the only negative factor the price of gold potential rebound in U.S. dollars only possibility.

At present the Federal Reserve on April 30 to the Federal Reserve funds rate will be reduced 25 BP, which is the Federal Reserve in September 2007 since the 7th cut the federal funds rate from 5.25 percent down to 2.0 percent. As CPI has been for five consecutive months above 4 percent, the United States has in fact entered the state of negative interest rates. Given the risks to inflation worries and low level of interest rates situation, the market expected the current round of Fed rate cut may be the last rate cut cycle. This also triggered a dollar a short-term rebound.

Currently the federal funds rate only 2.0%, from the absolute level of the already relatively low, and certainly room for a rate cut is limited. Delay in the monetary policy in effect, pre-cut substantially in the next period of time may have an effect, the Fed also need time to observe the effects of policy. In addition, energy and agricultural prices also rose sharply increased risk of inflation caused by the United States. Several from this point of view, the United States has relatively limited room for a rate cut, the Fed lowered interest rates will also became more cautious. However, from another perspective, the U.S. economy still in decline access, the real estate market continues to deteriorate, the U.S. economy to recover in the fourth quarter before.

From the United States the economic situation worse, because even if the dollar by the end of the cycle of interest rate rebounded, but their efforts will not be too great, and the United States is expected that the future will be at the bottom of the oscillation, the specific movements to further Western Europe, Japan and other countries The relative economic status than with the United States. It is expected that short-term rebound in the United States will not cause sharp price drop.

Domestic valuation below the international peer

The face of "Die Die endless," the A-share market, the central down to the valuation industry downturn, we have been thinking about a problem, in the bear market, the existence of a valuation of the border security »Of course, this issue could be from a macro-economic trends, National economic sectors, metal supply and demand status, the future price movements and so on in-depth analysis of the past, but most can only give qualitative judgement and the judgement of quantitative is difficult to estimate at the bottom of the still of no avail. The simplest method is feasible with the international market developed in line with international practice.

1, the international stock market experienced more than 100 years, experienced several rounds of Niuxiong conversion replacement for mature industries (such as steel, nonferrous metals, etc.) valuation relative stability of maturity, the bull market, bear market under the valuation is relatively reasonable, 2, the current inflationary pressure Is global, foreign and domestic inflationary pressures, relatively more severe, 3, non-ferrous metals, the basic price of globalization, countries in the valuation of the stock market are considered the world's macroeconomic development, metal supply and demand prospects, price fluctuations The impact of factors such as performance, 4 to economic growth in 1996, China is expected this year although the growth rate of GDP from last year's 11.9 percent drop to 10 percent, but still far higher than the developed countries 3 percent to 4 percent economic growth; , Non-ferrous metals industries in developed countries is being viewed as a sunset industry, the development of limited growth, while in China's nonferrous metals industry in the national economy still occupy an important position can not be replaced, but maintained a rapid growth momentum of 6, relative Kuang Caixuan mature gold in foreign countries, fewer and fewer of its resources, mine have dug about 2,000 meters underground to the level of domestic and mine are more than 1,000 meters underground in the depth, the depth of prospecting is still great potential to tap.

Therefore, the valuation of the domestic gold industry can secure borders and the international convergence of valuation, at least not lower than the international market. Judging from the current international and domestic gold industry valuation comparison, the domestic non-ferrous metal or even slightly higher than the valuation of the international valuation standards. Therefore, the current valuation level of non-ferrous metal industry has basically been at a reasonable interval. (Guangfa Securities Huang Yong)