Recently, the rising threat of inflation has triggered some obvious bullish sentiment in the gold market. The rise in U.S. bond yields may indicate that inflation expectations are becoming uncontrollable. Inflation is currently driven by continued disruptions in global supply chains. The supply shortage may last longer than initially expected, which means that inflation will remain high. As the shortage problem has intensified, commodity and energy prices have fluctuated sharply, and the problem of inflation has been spreading. The market is more worried about inflation than the Fed's reduction in debt purchases.

Gold is a safe-haven asset and a zero-coupon asset. When the economy is up and investors are optimistic, gold will be abandoned, and its price tends to languish. Conversely, when risks are frequent and the prospects are worrisome, investors will allocate more gold assets to realize the hedging function. At this time, the performance of stocks is generally poor.

The risk of stagflation continues to increase, which will benefit gold and all commodities. Gold has good stability and rarity. As of the end of 2020, the world's total gold reserves that have been mined are about 200,000 tons, and the proven underground gold reserves are about 50,000 tons. Considering people's search for gold for thousands of years, the possibility of a substantial increase in reserves is very small. According to the total stock of 200,000 tons, the global average per capita is only 26 grams.

Since 2008, especially since 2020, the three central banks of the United States, Japan and the European Union have rapidly expanded their balance sheets. The three major central banks have turned additional currency issuance into a conventional means to solve economic problems, and the value of currency will inevitably continue to dilute. In this case, holding gold can be a way of coping.

Gold jewelry is not the first choice for allocating gold assets because of the high transaction costs. Better methods include: exchange gold bars, paper gold, gold ETFs, and gold stocks.

The Contracts for Difference / CFD is a contract between investors and the settlement of transactions. 

Investors do not actually have the target assets stipulated in the contract, but only forecast the future of the target assets.

In addition to the advantages of CFDs I mentioned, any investment method has its own risks, and CFDs are no exception. The first is that CFDs implement a leverage mechanism. Under the effect of leverage, profits or losses will multiply. Therefore, I suggest that investors must assess the losses they can bear before establishing a position. Secondly, in addition to the price difference, overnight fees will be incurred for holding positions overnight. This fee changes in real time. Although the fees are not high, traders also need to take them into account when calculating the cost. Finally, some CFD trading platforms charge high handling fees. Therefore, it is best for investors to choose a platform with formal supervision and transparent fees.

As a well-known broker, with an experienced financial team, JRFX is committed to providing customers with the highest quality service, technical support and trading experience. JRFX is subject to the supervision of the authoritative financial institution BVIFSC and the Dubai Multi-Commodity Exchange Center (DMCC). Since our establishment in 2010, a total of 3.8 million account registrations have chosen JRFX. Your choice is the choice of most people, and we will Efficient response to give back to every customer is one of our values, because we only want you to be one step ahead of others. If you want to trade Bitcoin in the form of CFDs, JRFX is a very recommended trading platform for you.

The JRFX account opening process is also very convenient, all can be completed on the Internet.

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

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