Big opportunities often arise from divergences: To understand gold and copper, first understand who is trading

Thank you very much for the opportunity to meet with everyone here today.

I would like to take two or three minutes to briefly explain what I hope to achieve in today's class. Frankly speaking, I don't consider myself to be a particularly good teacher, but I hope that after a few hours today, everyone will understand one very important thing:

No one comes to the market intending to lose money.

No institution comes to the market claiming they are here to lose money.

When faced with the same set of data, everyone interprets the information differently due to varying capital attributes and institutional structures. But that doesn't mean anyone is wrong.

Let me give an example from the commodity market.

If you are a producer and prices are high, you might choose to open a short position for hedging to lock in profits. But that doesn't mean you are bearish on prices. You could very well be bullish, just thinking— for example, that earning 500 million this year is already great, so you want to lock in that profit.

There is no right or wrong in this.

Another example is some CTA strategies. When the trend is strong, they will continue to go long. You might ask: the price has already risen by 30%, why still open a long position?

But they would tell you: 70-80% of my strategy is trend-following, so in this case, I won't go short.

So many times, there is no absolute right or wrong.

It is hard to find a professional institution that would admit they are "completely wrong." Different groups of traders are inherently positioned in completely different places.

Therefore, we hope that after a few hours today, everyone will have a basic understanding of the main trading groups for gold and copper. Because among commodities, these are the two I am most familiar with.

If we can achieve this, that would be great.

In the future, when you see the prices of gold and copper every day, I hope you can do two things:

First, roughly judge whether this price is at a relatively high or low level.

Second, understand what different traders are thinking when faced with this price.

The truly difficult decisions lie here.

From my experience, there has hardly been a time when you see the market and are 100% certain that you will make money.

Most of the time, you are hesitating: there may be three or four different logics here, which one should I believe? Which type of investors should I align with?

This choice is difficult.

But many times, this hesitation itself is precisely a precursor to great opportunities.

Because if there is no disagreement in the market, there won't be large positions; without large positions, there won't be significant volatility; without significant volatility, there won't be major market movements.

Thus, it is this seemingly tangled disagreement that creates many excellent investment opportunities.

Therefore, understanding the disagreement itself is more important than judging who is right or wrong at the moment.

In today's class, I will also share many past experiences of success and failure, from which everyone can draw some lessons.

If there is one thing I am very grateful for about Wall Street News, it is that they provide a platform for us to share the mistakes we have made in the past Because personally, I don't really like the kind of "absolutely correct person."

If someone tells me that they have hardly made any mistakes in their life, or that their investments have always been right, I would actually feel a bit repulsed.

So I also don't want to become that kind of person.

In today's sharing, I will talk about some cases from the past few years. Some judgments had very complete logic at the time and seemed quite reasonable, but in the end, we still made the wrong choices. I will also explain, in hindsight, what caused these mistakes and how we were thinking at that time.

The above is roughly the basic purpose of this course.

In terms of course structure, we have also made a simple design.

The morning will be more theoretical and relatively dry; the afternoon will focus more on case analysis. This is also considering everyone's attention distribution.

Since the course is relatively long, I will try to control it within the scheduled time. If we finish a little early, we can also discuss some current market views or future outlooks.

This is the general arrangement for today's course.

Next, I will take two or three minutes to briefly introduce myself.

I first entered the commodity industry from 2015 to 2016. At that time, it was precisely a difficult period for the industry.

What I was doing then was related to mining mergers and acquisitions. Looking back now, it can be said that it was a blessing in disguise.

The good side is that doing mergers and acquisitions during the worst time in the industry makes it easier to come into contact with truly excellent companies.

For example, in 2015 and 2016, some active merger and acquisition cases in the market included: Zijin Mining's acquisition of the Kamoa Copper Mine and Zhongjin Resources' attempt to acquire a gold mine. Through these projects, we got to know many excellent mining companies that could do counter-cyclical mergers and acquisitions.

But the downsides were also obvious—at that time, the prices in the entire industry were very low. Doing mergers and acquisitions during the industry's worst times often meant that asset prices would also be very low, so the overall environment was quite difficult.

After those years, we went to a brokerage research institute to do macro and commodity research. This actually makes sense because, in 2015 and 2016, a large number of commodity mergers and acquisitions occurred in copper and gold.

My first task was to persuade the boss of a state-owned enterprise. At that time, the boss spent at least 30 minutes making us prove one thing: that gold could rise by $50 in a year.

At that time, our predicted price was $1,150. His logic was very simple: the all-in production cost of gold is about $700, and he said, if the cost is only $700, why can the gold price rise from $1,000, $1,050 to $1,100, and then to $1,150?

I give this example not to comment on that leader but to say: People often underestimate the changes in long-term price variables.

So we need a framework to understand this.

In January of this year, I personally witnessed gold rise by 1% in one minute, which is $50. At that moment, I really felt as if I were in a different world Later at the brokerage, in order to understand the fluctuations of gold and copper, we began to study more economic issues.

If anyone remembers, in 2016, copper basically followed China's PMI and the Shanghai Stock Exchange 50, while gold followed real interest rates. But at that time, I didn't understand either of these things, so we spent a lot of time researching content related to economic cycles.

In the fourth part of this PPT, we will share: during this research process, how I learned various economic cycle theories along the way, and ultimately how I abandoned the method of "looking at the world purely through economic cycles." Because it was through repeated mistakes that I gradually understood: that framework is not complete.

So in my career, the last time I worked for someone else was probably at Zijin Mining. At that time, we helped them conduct some commodity price research for investment and hedging.

This is a truly great company. Although I am no longer officially working there full-time, I will briefly share why I think this company is very good.

Of course, this does not involve any investment advice.

If you ask me honestly, I think its best growth phase with the greatest elasticity may have passed. But how it achieved that, I still think is worth sharing.

That roughly sums up my simple past experiences.

Before concluding my self-introduction, I want to mention something I really hope to discuss with everyone.

Today in this class, all the content we share is essentially some techniques, some research methods. These techniques are certainly useful, whether for making money or for supporting a family; they are great tools.

But if you ask me what has truly determined our returns over the years, I would say: it is our values, our outlook on life, and those things we learned as children, such as honesty, kindness, and courage.

I know this sounds a bit abstract, but I still hope that after these four hours, or after today, everyone can understand one thing:

Methods can change at any time, but a person's basic qualities, fundamental values, and basic morals are crucial in determining returns .

If I can resonate with everyone on this through my experiences, I think that would be the biggest gain of today