Amidst the backdrop of gold prices continuously setting new historical highs, gold stock ETFs have demonstrated a strong market appeal. Among them, the gold stock ETF under Huaxia has been wildly speculated upon by funds. As of now, this ETF has achieved three consecutive daily price limits, with a premium exceeding 30%.

Driven by the surging international gold prices, gold stock ETFs have been "bought out."

On April 3rd, the gold stock ETF under Huaxia Fund, after a one-hour delay in opening, once again experienced a violent upward surge, leading to a price limit. It is understood that this ETF has hit the price limit for three consecutive days, with a premium rate as high as 30%, setting a historical record.

In contrast, the performance of the Yongying Gold Stock ETF, which tracks the same index as Huaxia's gold stock ETF, is much more moderate, with a daily increase of 4.29% and a premium rate of only 0.72%.

The market's fervent speculation on gold stock ETFs is inseparable from the rapid rise in gold prices. Since April, gold prices have been continuously setting new historical highs. On April 2nd, the COMEX gold futures contract at the New York Commodity Exchange broke through $2,300 per ounce. On April 4th, London's spot gold also broke through $2,300 per ounce, reaching a historical high.

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Gold stock ETFs "take the lead"

Following the explosive purchase of cross-border ETFs, small-cap gold stock ETFs have also embarked on the path of speculation.

In recent times, gold futures and spot prices have been continuously rising,刷新ing historical highs every day. Affected by this, gold-themed ETFs have surged, with gold stock ETFs in particular accelerating.

It is understood that there are currently 16 gold-themed ETFs in the market, with 14 of these products' underlying products being the "gold spot contract" of the Shanghai Gold Exchange, which is the Renminbi gold.

Directly benchmarking gold stock index ETFs are even rarer. It was not until October 2023 that the first batch of funds investing in the gold stock index in China was approved. Currently, only the gold stock ETFs of Huaxia Fund and Yongying Fund are officially in operation.Compared to ETFs with gold spot contracts as their underlying assets, gold stock ETFs exhibit greater elasticity. Statistics show that when gold prices rise, the beta of gold stocks compared to spot gold over the past three years is about 1.3 times, and the beta in the upward range is 1.5 times.

As of April 3, the year-to-date returns of gold-themed ETFs are mostly distributed between 10% and 12%, with only two gold stock ETFs having returns exceeding 20%. Among them, the return rate of the Yongying Gold Stock ETF since its establishment is 28.17%, while the Huaxia Gold Stock ETF is even more outstanding, with a return of 79.49% since its establishment.

Specifically, the Huaxia Gold Stock ETF was established on January 11 of this year. Compared to the Yongying Gold Stock ETF, which was established slightly earlier, this ETF has a smaller scale, with only 39.13 million shares remaining, corresponding to a scale of 56.89 million yuan.

Perhaps influenced by speculative capital, in recent days, the increase in the Huaxia Fund's gold stock ETF has far exceeded that of the Yongying Gold Stock ETF. From March 28 to April 3, it soared by 47.32% in just five trading days, achieving a "three consecutive board".

However, high returns also correspond to high premiums. Data shows that as of the close on April 3, the premium rate of the Huaxia Gold Stock ETF reached 30.03%, leading the market.

At the same time, in response to the high premiums of the products, fund managers are urgently issuing announcements to remind investors to pay attention to the premium risks of secondary market transaction prices, "If investors invest blindly, they may suffer significant losses", and at the same time, to protect the interests of investors, temporary suspension of trading is implemented.

Generally speaking, when the market demand for a certain ETF increases sharply, it is often reflected in a high premium state. However, as market sentiment declines and more and more arbitrageurs join, this premium will gradually converge, allowing the ETF price to return to normal.

For example, at the beginning of this year, some cross-border funds, the premium and discount rates of some ETFs also once climbed to over 20%. However, as the subsequent overseas market weakened and the arbitrage army joined, the previously ultra-high premium ETFs also generally fell sharply, with some funds being "halved" in a few days.

So why can the Huaxia Fund's gold stock ETF continue to form a high premium this time?

In addition to the speculative sentiment expected to drive up gold prices, another main reason is that the current gold stock ETF asset pool not only includes A-share listed companies but also includes gold stocks listed in Hong Kong. Due to the Hong Kong stock market being closed on March 29 and April 1, stock swaps were suspended on these two days. Even though swaps were possible on April 2, the subscription quota had to be controlled at 20%, so there is not much room for investors to arbitrage.Gold Prices Soar, Boosting Gold Stocks

The surge in gold stock ETFs is ultimately due to the stock market's heightened sensitivity to the future trend of gold prices. Therefore, when there is an expectation of further upward movement in gold prices, the market will lift the valuation of gold stocks, thereby forming a "double play" effect.

Taking Shandong Gold as an example, behind the rise in gold prices, the company's performance has also shown an accelerated growth trend since 2023. In the first three quarters of 2023, Shandong Gold's net profit has already exceeded the level of the whole year of 2022, with a year-on-year increase of 94.12%. According to the company's forecast, the net profit attributable to the parent company for 2023 is expected to reach 2 billion to 2.5 billion yuan, a year-on-year increase of 60.53% to 100.66%.

In terms of output, Shandong Gold's self-produced gold sales scale is also expected to grow year by year. It is estimated that the self-produced gold sales volume for 2023 to 2025 will be 39.8 tons, 44.6 tons, and 50 tons, respectively.

Overall, at present, there are many listed companies in China's gold industry, but the number of large mining enterprises is relatively small. According to the 2022 gold production output, there are 2 enterprises with gold output greater than 30 tons, namely Zijin Mining and Shandong Gold. The output of Zhaojin Mining, China Gold, and Chifeng Gold is between 10-30 tons, and the gold output of other enterprises is less than 10 tons.

For the future trend of gold stocks, securities firms have also expressed optimistic expectations. Among them, Tianfeng Securities believes that excluding the impact of inflation, the gold price may operate above 2400 US dollars per ounce. The historical trend of gold stocks and gold prices is consistent, and the profit release time of gold companies lags behind the performance of commodities. Therefore, there is a stage-by-stage deviation between the performance of the equity market and the commodity market. However, as gold prices continue to rise, after the balance sheet of gold stocks is repaired, profit release will be more smooth.

However, after gold reaches above 2300 US dollars, there is some resistance. As of the close on April 4, COMEX gold again set a historical high during the trading day, reaching 2325.3 US dollars per ounce and then falling back. London gold also fell after reaching a new high of 2305.61 US dollars per ounce and returned below 2300 US dollars.

In this regard, CITIC Construction Futures believes that the Federal Reserve has not confirmed the timing of interest rate cuts, bringing uncertainty to the future path of interest rate cuts. However, the market's trading of interest rate cut expectations is very strong, bringing strong support to gold. Excessive early trading of expectations may also accumulate some risks, and gold prices may experience a short-term correction.

"Master Hand" Bridgewater's Early LayoutBehind the exceptional rise of gold stock ETFs, fund holders are undoubtedly the most direct beneficiaries.

Looking at the issuance announcement of Huaxia Gold Stock ETF, the proportion of institutional positions accounts for 57.79%. Among them, Shanghai Dongzheng Futures Co., Ltd. holds the most, reaching 20 million shares. Calculated based on the closing price on April 3rd, the holding income of Shanghai Dongzheng Futures Co., Ltd. will exceed 14 million yuan, while the remaining nine investors are all securities firms.

In contrast, in the issuance announcement of Yongying Gold Stock ETF, the top ten holders include six private equity funds and four individual investors. However, it is interesting to note that within half a year after the listing of the fund product, there has been a significant adjustment in the holders, with the proportion of institutional investors rising sharply from 16.84% at the beginning of the listing to 60.29%. Among the top ten holders, there is only one natural person, while private equity funds have "disappeared".

In addition to these two recently popular ETFs, overall, securities funds undoubtedly occupy a key position among institutional investors in gold-themed ETFs. Among them, CITIC Securities appears in the top ten holders of eight gold-themed ETFs and ranks first among four of them. CITIC Securities also appears in the top ten holders of seven gold-themed ETFs. In addition, Guangfa Securities, Founder Securities, and Huatai Securities appear in 6, 5, and 4 gold-themed ETFs, respectively.

It is worth mentioning that among the "smart money" investing in gold-themed ETFs, the presence of the well-known hedge fund Bridgewater is particularly eye-catching.

It is understood that Bridgewater's private equity in China - Bridgewater (China) Investment Management Co., Ltd. (hereinafter referred to as "Bridgewater China") - has been among the top ten holders of Huaan Gold ETF, Yifangda Gold ETF, and Bosera Gold ETF since the first half of 2022.

By the end of 2023, Bridgewater's All-Weather Enhanced No. 1, No. 2, and No. 3 funds were all among the top ten holders of Bosera Gold ETF and Yifangda Gold ETF. Bridgewater All-Weather Enhanced China No. 3 is also the third-largest holder of Huaan Gold ETF.

In terms of holding shares, in Yifangda Gold ETF, Bridgewater's All-Weather Enhanced No. 3, No. 2, and No. 1 products hold 31.5935 million shares, 5.7018 million shares, and 4.681 million shares, respectively. In Bosera Gold ETF, the above three products hold 46.6248 million shares, 8.7106 million shares, and 9.2942 million shares, respectively. In Huaan Gold ETF, Bridgewater's All-Weather Enhanced No. 3 holds 82.6646 million shares.

Since public funds only disclose the top ten holders of ETFs, it is not ruled out that Bridgewater China still holds more gold ETFs. If only looking at the disclosed data, as of now, Bridgewater China's holding market value in gold ETFs has reached 980 million yuan, compared to a market value of 880 million yuan at the beginning of the year. In the first four months of 2024, Bridgewater China has already made a profit of 100 million yuan in gold ETFs.

In fact, as the world's top hedge fund, Bridgewater's performance in the just-ended 2023 was not optimistic. The total loss for investors during the reporting period was 2.6 billion US dollars, and the flagship product Pure Alpha's loss last year reached 7.6%.However, perhaps due to its early investment in gold ETFs, Bridgewater's private products in China achieved commendable positive returns in the volatile market environment last year, and its asset management scale has also been steadily increasing.

It is understood that Bridgewater China's all-weather strategy products, led by gold ETFs, achieved a return rate of 10% in 2023, and from its launch in 2018 to the end of 2023, the annualized return rate reached 15.3%. At the same time, Bridgewater China's asset management scale has doubled in the past year, surging to 40 billion yuan.