On the evening of October 21, Beijing time, gold experienced a significant decline, marking its largest single-day drop since April 2013, briefly approaching $4,000 per ounce. However, it subsequently staged a V-shaped recovery, currently remaining in a fluctuating range. This sharp drop was not unexpected.

Why is that? On one hand, there was a rapid short-term surge, with a 30% increase from August 20 to October 20, and net long positions were close to historical highs; this high level of crowding inevitably leads to high volatility. On the other hand, the drivers behind the recent rise in gold prices have been weakening, such as the Russia-Ukraine war reaching a critical juncture, the U.S. dollar stabilizing around 99, and market expectations of rate cuts at the end of October fading, leading many investors to exit early, “selling ahead of the anticipated outcomes”.

However, these changes only affect gold's short-term “value-for-money,” and the factors supporting gold's long-term uptrend remain unchanged: 1. Peace processes in various regions continue to be fragile and unstable, sustaining demand for geopolitical risk hedging; 2. The international order is still in a phase of collapse and restructuring, with diminishing confidence in the U.S. dollar, and central banks’ accumulation of gold reserves is ongoing; 3. While the AI technology revolution is in full swing, it remains uncertain whether it can resolve the global economic low-growth challenge; 4. The ability of major countries like the U.S. and France to repay their massive debts remains questionable, positioning gold as a “non-sovereign currency”, replacing U.S. Treasury bonds as a safe-haven asset.

The unique scarcity of gold, as noted by Bridgewater's founder Ray Dalio, is that it is “the only asset that does not rely on counterparty credit.” He suggests that investors who are indecisive between “zero positioning” and “low allocation to gold” may be making a strategic error. Currently, institutional money has not yet entered on a large scale, indicating that gold is still early in its revaluation process and far from a speculative frenzy.

This revaluation refers to gold's transition from a metal to a currency that is detached from sovereign credit risks, possesses extremely limited supply, and cannot be printed. Until the revaluation is complete and core pricing factors show a turning point, the long-term upward trend in gold prices is likely not finished.

So, should investors consider buying gold? The answer lies in focusing on “strategic asset allocation” rather than “tactical bets.” In simpler terms, setting aside about 10% of an investment portfolio for long-term gold holdings can help to balance systemic risks and uncertainties, enhancing the portfolio's ability to withstand volatility rather than seeking absolute excess returns. This strategy not only improves the experience of holding gold by disregarding short-term fluctuations but also restores gold to its fundamental value as a hedge against risks, inflation, and volatility.

Gold ETF Huaxia is a commodity fund that invests in the domestic gold market, and its net value fluctuates with domestic gold spot prices, thus bearing the risk of gold price volatility. Gold is considered a special asset with financial, monetary, and commodity attributes. Overall, its financial attributes significantly influence price formation, while its monetary and commodity attributes have relatively less impact. Gold has long been regarded as having certain inflation-hedging properties, with a notable correlation between inflation levels and gold prices. The long-term return rates of commodities are less correlated with traditional investments like stocks and bonds, making them effective tools for asset allocation to optimize risk-return structures for clients.

Gold Equity ETF is an equity fund that tracks the CSI Hong Kong-Shanghai Gold Industry Stock Index (Index Code: 931238, Short Name: SSH Gold Stocks). This index selects 50 large-cap publicly listed companies in China and Hong Kong involved in gold mining, smelting, and sales, reflecting the overall performance of the gold industry’s publicly listed companies in these markets.

Zijin Mining China National Gold Group Zijin Mining Western Gold Luoyang Molybdenum have the lowest management and custody fees at a total rate of 0.2% among similar products, assisting investors in participating in the gold market at lower costs.