Sep 16, 2009

Update: Here is an updated article on this subject for 2011: Is now a good time to buy gold in NZ dollars? – Part 2

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With Gold having reached a weekly closing price over $1000 US for the first time in ‎history on Friday 11 September and being less than $30 off it’s all time high, is it ‎currently a good time to buy gold in New Zealand?‎

We have written in our FREE eCourse (which you can access here) how the time to buy is on dips ‎not when the gold price is reaching or close to reaching new highs, so that would ‎indicate that this isn’t the best time to buy gold.‎

But, while that might be the case in the U.S., here the New Zealand dollar gold price ‎tells a different story.  Just look at the following 1 year price chart…‎

Clearly, February this year was not the ideal time to be buying gold in New Zealand dollars as it topped out.  This was also when the NZD reached a low against the USD as per the 1 Year Chart below:

The US Dollar generally moves inversely to the (US Dollar denominated) gold price, while the NZD – as a preferred resource currency – generally also moves inversely to the US dollar.  So, the exchange rate plays a major role in the NZ dollar gold price.

The below table shows the annual percentage change in the gold price for 10 currencies during the last eight years of the current bull market in gold.

Annual Percentage Change in Gold Price
	USD	NZD	AUD	CAD	CNY	EUR	INR	JPY	CHF	GBP
2000	5.7%	11.6%	10.6%	2.2%	5.8%	7.0%	1.2%	5.6%	4.7%	2.1%
2001	2.5%	9.1%	11.3%	8.8%	2.5%	8.1%	5.8%	17.4%	5.0%	5.4%
2002	24.7%	-1.0%	13.5%	23.7%	24.8%	5.9%	24.0%	13.0%	3.9%	12.7%
2003	19.6%	-4.5%	-10.5%	-2.2%	19.5%	-0.5%	13.5%	7.9%	7.0%	7.9%
2004	5.2%	-4.1%	1.4%	-2.0%	5.2%	-2.1%	0.0%	0.9%	-3.0%	-2.0%
2005	18.2%	24.4%	25.6%	14.5%	15.2%	35.1%	22.8%	35.7%	36.2%	31.8%
2006	22.8%	19.4%	14.4%	22.8%	18.8%	10.2%	20.5%	24.0%	13.9%	7.8%
2007	31.4%	21.5%	18.6%	10.4%	23.0%	17.9%	17.5%	24.7%	21.5%	29.2%
2008	5.8%	20.0%	32.5%	32.4%	-1.1%	11.9%	30.4%	-14.9%	0.2%	44.3%
Average	16.3%	12.8%	13.3%	13.6%	13.5%	10.8%	16.8%	13.6%	10.6%	17.1%

You can see that while there is significant volatility year to year in every currency, the overall change in the past 9 years has been very consistent.  At a 13.8% increase on average per year it has also been large!

The chief point to take away from this table is that all currencies have been devalued compared to gold, and on a remarkably similar basis.  Gold has gained by over 100% in almost every currency over the past decade.

So if you are a long term holder you have made good gains or rather protected your original capital well.  So the question remains, is now a good time to buy gold as a New Zealander?

If we look at the longer 2 year price chart for NZ dollar gold we can see that the price is now back around where it was a year ago just prior to the panic surrounding the Lehman Brothers collapse.  So overall we think this is a good time to be buying gold in New Zealand.

As we’ve already mentioned the NZD/USD exchange rate is a big factor in the NZ dollar gold price.  While the “Kiwi” may still strengthen further from here, this is also the time of the year when the US dollar denominated gold price usually strengthens which could negate much of any further NZD strengthening.

Could the price drop further yet?  Yes, as the graph shows it may yet drop back to the longer term trend line at about $1300, but we would much rather be buying gold at the current price than anything else for the last 8 months.  We still believe we are in the early to middle stages of this current upwards gold price cycle.  We discuss this further in an earlier article.  Refer to the last 3 paragraphs here.

So, if you buy gold in New Zealand dollars now we don’t think you’ll regret this in the years to come.  Many experts recommend a minimum of 5-15% of your assets should be allocated to physical gold.  We also discuss this in more detail in our Free eCourse.

NOTE: You can go to our Gold Prices page to see the very latest Silver and Gold prices in both NZ and US Dollars along with their respective gold charts.  For a complete list of all our articles go to the “Sitemap”.

P.S. If you’re ready to buy gold now, we have negotiated a deal just for our readers from a local Auckland, New Zealand gold supplier, where you can buy gold bullion for only 3%* above spot price and as low as 2.5%* for larger orders (* plus ingot charge).  For more information go to…  Buy Gold in NZ

P.P.S. Or if silver is what you’re after, we also have a deal with an Auckland, NZ silver refiner and supplier, so you can buy silver bullion for only 10% above the silver spot price.  To learn more go to…   Buy Silver in NZ