Hong Kong Stock Concept Tracking | Strong Surge! Gold prices rise above the $3,000 mark, institutions bullish on the future up to $3,500 (including concept stocks)

According to the Zhitong Finance APP, influenced by multiple factors such as geopolitical issues and U.S. tariff policies, safe-haven funds have surged into the gold market, causing gold prices to rise steadily. On March 18, the main gold contract on the Shanghai Futures Exchange broke through the 700 yuan mark, setting a new historical high. By the close, the Shanghai gold 2504 contract rose by 0.81%, reporting 700.7 yuan per gram, with a cumulative increase of 13% year-to-date; London spot gold surpassed the 3,000 USD mark, with a cumulative increase of 15% year-to-date. The gold futures price breaking through the 700 yuan mark is an unprecedented historical breakthrough, marking gold's entry into a new price range and surpassing an important psychological threshold.

Guosen Securities pointed out that the strong performance of gold prices year-to-date is mainly due to: 1) Geopolitical risks and U.S. tariffs boosting safe-haven sentiment; 2) Risks of short squeezes in London gold, as concerns about U.S. tariffs on gold and scrutiny of the Fort Knox gold reserve have led to a significant premium of Comex gold over London gold, resulting in large amounts of London gold being shipped to the U.S.; 3) The ongoing U.S.-China rivalry, with significant breakthroughs in domestic AI technology innovation weakening the dollar, and the decline of the dollar index also benefiting gold; 4) The dovish stance of the Federal Reserve Chairman.

Specifically, regarding dollar credit, the dollar's share in global foreign exchange reserves has been on a long-term downward trend, driving the gold price center to continue rising. Year-to-date, the dollar index has quickly adjusted, with major influencing factors including: 1) Recent poor performance of some macroeconomic data in the U.S., triggering market concerns about recession risks, while the Federal Reserve remains in a rate-cutting cycle, leading to a downward trend in U.S. Treasury yields; 2) Continuous pressure on the U.S. fiscal system, with the U.S. Treasury stating that the federal budget deficit has expanded to a record 840 billion USD in the first four months of this fiscal year; 3) U.S. tariffs gradually raising doubts about the dollar's safe-haven attributes in the market.

Regarding central bank gold purchases, global central bank gold purchases have exceeded 1,000 tons for three consecutive years, far exceeding the average of 473 tons from 2010 to 2021. Looking ahead to 2025, geopolitical risks and economic uncertainties are likely to lead central banks to once again consider gold as a stable strategic asset.

In terms of geopolitical risks, the U.S. trade war is escalating, which may continue to trigger safe-haven sentiment. Additionally, the outlook for the Russia-Ukraine conflict and the situation in the Middle East remains unclear, which may continue to disturb market sentiment.

In terms of interest rate frameworks, expectations for interest rate cuts by the Federal Reserve have increased this year. The U.S. manufacturing PMI for February was 50.3, below the expected 50.8; the February CPI increased by 2.8% year-on-year, below the expected 2.9%; the unemployment rate for February was 4.1%, higher than the expected 4.0%; and the non-farm payrolls increased by 151,000 in February, below the expected 160,000. Recent U.S. economic data has shown some fluctuations, with the market trading in anticipation of three total rate cuts of 75 basis points this year.

It is worth noting that as gold prices and gold stock prices have diverged, the latter's valuations are expected to recover.

From a one-year perspective (from the beginning of 2024 to March 14 of this year), Shanghai gold has risen by about 41%, the Shenwan Nonferrous Metals Index has risen by about 19%, and the gold stock index has risen by about 27%, with gold prices performing better, mainly due to: Production: In the first two years, production growth slowed down, but it is expected to accelerate in the next two years. According to statistics and forecasts, the gold production of five core gold mining companies in the A-share market is expected to be approximately 85.98 tons in 2023, a year-on-year increase of 2.54%. In 2024, production is expected to be approximately 92.27 tons, a year-on-year increase of 7.32%. In 2025, production will reach 108.30 tons, a year-on-year increase of 17.37%, and in 2026, production will reach 122.30 tons, a year-on-year increase of 12.93%.

Performance: Corporate profits have fluctuated, but the realization rate is expected to continue to improve steadily. Since the beginning of 2020, gold prices have generally shown a trend of quarterly average increases, which should also reflect a trend of quarterly profit increases for gold mining companies. However, this has not been the case in actual operations, as various obstacles have caused overall profit fluctuations. With gold prices remaining strong and companies achieving high profit levels for several consecutive years, balance sheets and asset quality have continued to improve, leading to a steady increase in future performance realization rates.

Valuation: The valuation of gold stocks has continued to decline, with high cost-performance ratios expected in 2025. According to statistical data, the valuation of gold stocks in the A-share market has been declining since the beginning of 2020, with the dynamic PE (TTM) dropping from about 50 times at the beginning of 2020 to the current 25 times. It is expected that the average gold price in 2025 will still show a significant increase compared to 2024. If calculated based on an average gold price of 650 yuan per gram, the PE of mainstream gold mining companies in 2025 is expected to be between 10-15 times.

Looking ahead, the factors supporting gold prices continue to exist and have not dissipated. For example, geopolitical conflicts, debt pressures, and constraints on gold supply. The logic behind the rise in gold prices has shifted from being driven by past cyclical factors to being driven by whether the traditional US dollar monetary system framework is being reset. Therefore, gold prices are expected to gradually rise in the long term.

Australia and New Zealand Banking Group (ANZ) has raised its three-month gold price forecast to $3,100 per ounce and its six-month gold price forecast to $3,200 per ounce, citing escalating trade tensions, loose monetary policy, and strong central bank buying.

Macquarie's head of commodity strategy, Marcus Garvey, stated that he still believes gold may experience some substantial bullish trends, and he has not seen any signs indicating that this rebound is in a frenzy or excessive territory. He raised his high-end target for gold from $3,000 to $3,500 last week.

Related concept stocks:

Zijin Mining (02899): The CAGR of gold production from 2020 to 2024 is 12%, ranking among the top in global major gold mining companies; from 2024 to 2028, it continues to plan for a CAGR of 8-10% for both copper and gold production; and it has a good realization capability, with an average completion rate of 104% for copper and 96% for gold production planning from 2014 to 2023. The company also has strong high-cost performance acquisition and endogenous resource fission capabilities, with copper and gold resource quantities in 2023 increasing by 6 and 3 times compared to 2014.

Zhaojin Mining (01818): The company possesses exceptionally excellent gold resources, with existing mines operating steadily. The acquisition of Iron Tuo and the commissioning of overseas projects provide continuous momentum for the company's future performance growth. Currently, the escalation of geopolitical risks has increased the demand for safe-haven assets, and factors such as the Federal Reserve's direction of interest rate cuts and the weakening of US dollar credit suggest that gold prices are likely to maintain an upward trend in the medium to long term Enhance the overall profitability of the company.

Shandong Gold (01787): Considering the company's inventory situation and the ongoing multiple new construction and expansion projects, as well as the rich gold resources of the parent company Shandong Gold Group, there is also an expectation of asset injection in the future. Meanwhile, there is still room for gold prices to rise. It is predicted that the company's net profit attributable to the parent company for 2024-2026 will be 3.030 billion, 5.083 billion, and 5.938 billion yuan, respectively.

Lingbao Gold (03330): As of the end of 2023, the company's total gold reserves and resources both domestically and internationally are approximately 137.40 tons, with an average grade of 5.44g/t. Among them, about 103.5 tons are domestic, mainly in Henan, Xinjiang, and Inner Mongolia, while overseas (in Kyrgyzstan) there are about 34.0 tons. The company's Laowan Gold Mine in Tongbai County has rich reserves and significant potential for increased storage. From 2011 to 2019, a total of 166 drill holes were completed in the Laowan Gold Mine exploration area, with a drilling length of 115,800 meters and a discovery rate of 94%, resulting in a reported gold resource of 208 tons. At the same time, the company is looking globally and implementing a "going out strategy," with plans to establish an overseas division in the first half of 2024 to focus on high-quality overseas resources