As of August 12, 2020, at 10:30am, the value of EGU per unit was US$0.6250. At 10:30pm, it rose to US$0.6450. In the case where our users purchase 2000 EGU, they will be paying US$1250. And if they sell 2000 units at US$0.6450, they will be selling at US$1290. Instant profits of US$40 (US$1290 – US$1250) or 3.2% will be achieved.
The recent rise and fall in gold prices are actually in line with the laws of economics. Due to the severe global economic downturn caused by the epidemic, the risk aversion in the market is high. Gold is seen as a safe haven, leading to a surge in prices as investors start investing in gold. When investors start to buy gold, the global capital flows decline. In this case scenario, investors who had made profits by selling at high prices would have resulted in the gold prices to experience a sharp fall.
Unfortunately, at this point in time, the gold price volatility has the greatest impact on contract users, such as users with leveraged futures gold. As Everest Gold users are physical gold investors, the risks are manageable. Therefore, users may consider buying when the gold price falls instead of selling them at low prices. When the gold price is high, users may choose to cash out. Conversely, when the gold price is low, users may consider continuing to hold or add positions. In other words, physical gold investors will not suffer losses by the fluctuation of the gold prices. Instead, they can make a profit if they choose to buy more EGU when the price is low.
In the future, the international gold price will rebound and continue rising higher. Historically, gold prices have fluctuated briefly but have always risen eventually. Furthermore, in the context of the current environment, the most pressing risk is devaluation. Combined with loose liquidity from Central Banks around the world and geopolitical uncertainty, gold’s future remains bullish.