Where the opportunity lies
Global gold prices have surged sharply recently. Not long ago, the international gold price fell to a low of $3,800 per ounce. At that time, I noted that below $4,000 per ounce is a "golden pit," where investors could take positions in gold-related assets. This is because the long-term factors supporting gold price increases have not changed: de-dollarization remains an unstoppable trend, and the high level of US government debt also supports the upward trajectory of gold prices.
Why the fundamentals still support gold
Earlier this month, the US Labor Department reported that July non-farm payrolls unexpectedly decreased by 23,000, far below market expectations and marking the first negative growth since February of this year. This weakened expectations for further rate hikes by the Federal Reserve, providing strong support for gold prices and driving them significantly higher. At the start of this year, the international gold price broke through $5,000 per ounce, reaching an all-time high of $5,600 per ounce. However, after the outbreak of the Middle East conflict, the blockade of the Strait of Hormuz pushed international oil prices sharply above $100 per barrel, reducing expectations for Fed rate cuts and increasing speculation about hikes, which caused gold prices to plummet. Combined with excessive earlier gains, profit-taking also contributed to a substantial pullback in gold prices.
Federal Reserve policy remains a key variable
At 8:30 PM Beijing time on August 12, the US Labor Department will release July's Consumer Price Index (CPI). The market expects both the overall CPI and core CPI year-over-year growth to continue slowing, but month-over-month growth may turn positive from negative. This has focused attention on potential shifts in the Fed's future monetary policy. The Fed currently faces a dilemma: if Fed Chair Kevin Warsh chooses to raise rates, it could burst the US tech stock bubble, which would be a major blow to support for Trump ahead of the November midterm elections, given that more than 50% of US household assets are in stocks and funds. However, Warsh cannot easily cut rates now, as that would fuel inflation, severely impacting US residents' living costs. It is likely that the Fed will stay on hold in September, deferring any policy changes until the end of the year. The Fed acts as the "world's central bank," and its policy adjustments significantly influence global central banks. Therefore, US stocks have maintained a strong performance until a clear policy shift occurs.
Global market ripple effects
Overnight, US stocks saw a brief decline, mainly due to investor skepticism about whether US-Iran negotiations can reach a more comprehensive solution. The reopening of the Strait of Hormuz remains highly uncertain, keeping international oil prices in a range-bound pattern. In Asian markets, South Korea's KOSPI index posted a sharp gain today, with major stocks like Samsung Electronics and SK Hynix rebounding strongly. This suggests that after the recent de-leveraging and significant sell-off in the South Korean stock market, a bottoming and rebound are gradually taking shape. Earlier, when the South Korean market experienced consecutive circuit breakers, I advised maintaining low positions and patiently waiting for stabilization. Once South Korea's market stages a significant rebound, A-share tech stocks are also likely to follow suit, and that moment is now approaching. Today, the KOSPI expanded its gains to 5%, with SK Hynix and Samsung Electronics both rising over 8%, which is a strong positive signal for A-share tech stocks.
Tech stocks: From fear to opportunity
At the end of May, when tech stocks were booming and many retail investors were chasing highs, I urged caution: overcome greed and take timely profits to avoid the sharp corrections that follow excessive gains. By the end of July, when tech stocks had corrected by nearly 30% or even 50%, I advised investors to overcome fear and buy undervalued leading tech stocks to prepare for the next wave of recovery. This strategy has proven effective. Now that the riskiest phase in South Korea's market has passed, with a strong rebound underway, the chip and semiconductor sector is entering a new rally. This is a major boon for A-share chip, semiconductor, and computing power sectors, which could drive sustained gains, create strong profit-making effects, and boost investor confidence. Given that many ordinary investors hold significant positions in small and mid-cap indices, their stabilization and recovery are undoubtedly positive, helping to fuel the next market upswing.
The bull market is not over; it's a process of consolidation
Recently, some prominent investors on platforms like Xueqiu and other financial influencers exclaimed that a "bear market has arrived." I firmly disagree. I believe that with policy support and the backdrop of a major shift of household savings into financial assets, this rally will continue; it is not a short-term spike. The recent sharp decline in tech stocks should be viewed as a process of deleveraging and price correction, not a bubble burst. Therefore, investors should remain confident that the tech rally will persist, and sectors benefiting from economic transformation—such as tech innovation—are poised for sustained performance. Recently, sectors like innovative drugs and robotics have also begun to show alternating gains, indicating a rotation in market leadership. The first-half pattern of chip stocks outperforming alone is changing, with profit-making effects likely to spread to more sectors. This is a healthy development, as a long-term bull market typically sees various sectors take turns leading, rather than being concentrated in one area, which also helps diversify risk. Ultimately, adhering to value investing, being a shareholder of quality companies, and appropriately diversifying to mitigate risk while steadily recovering net asset value is a sound investment strategy. The MACD golden cross signal has formed, and these stocks are performing well!