|Spot Price Today / oz||Weekly Change ($)||Weekly Change (%)|
|NZD Gold||$1641.17||+ $32.96||+ 2.04%|
|USD Gold||$1131.75||+ $11.20||+ 0.97%|
|NZD Silver||$23.15||– $0.59||– 2.48%|
|USD Silver||$15.96||– $0.91||– 5.39%|
|NZD/USD||0.6896||– 0.0211||– 2.96%|
|Looking to sell your gold and silver?Visit this page for more information|
|Buying Back 1oz NZ Gold 9999 Purity||$1575|
|Buying Back 1kg NZ Silver 999 Purity||$704|
Silver is down sharply from a week ago while gold is up a couple of percent.
NZD gold dropped sharply just after the US Fed increased interest rates. But with the NZ Dollar plunging over 3 cents this week this has given a boost to local prices.
NZD gold bounced off the rising trendline and is back up close to the previous horizontal support. It is finally out of the oversold territory it has been in since November. As we’ll cover later, history says the price may head lower again before the end of the year though.
After being stronger than gold silver has reversed course. It too is now close to the rising trendline. Almost touching it intraday this past week, but back up above $23 again now.
The Kiwi dollar has really plummeted. As noted already it’s down over 3 cents post the Fed rate increase. But it is now right on the lower Bollinger band (blue shaded area) so odds favour a bounce higher from here. So this could send local precious metals prices lower into the year end.
Ronni Stoeferle of Incrementum sent out a Letter to Investors this week. We would highly recommend you at least skim through the update:
But here are a few choice selections we think worth repeating:
Again they discuss the “Cantillon Effect”. As we reported back in May the Cantillon Effect:
“…describes the fact that newly-created money is distributed neither equally nor simultaneously among the population. This means that people handling money partially benefit from inflation and partially suffer from it. Monetary dispersion is never neutral. Market participants who receive the new money early and exchange it for goods benefit in comparison with those who get the newly-created money later. We can see a transfer of assets from late money users to early money users.
Friedrich von Hayek once pictured the cantillon effect with the process of pouring honey into a saucer. The honey dollops in the middle first and only later it spreads out to the periphery. Prices also do not rise evenly. Typically price levels are higher in regions, which directly or indirectly benefit from monetary inflation. If you happen to live in a financial center you may have noticed.”
Incrementum argue that:
“The regional election/referendum results in the USA and the UK, respectively, make a clear case for where the honey has been flowing first: generally speaking, urban areas have benefited significantly from the reflation of the money supplies. Subsidised regions have also been among those that have been given access to the honey trough on the back of the fiscal deviation of funds. Rising interest rates could slow down fresh supply and put a sudden end to the trickle-down bubble philosophy of recent years, and they could do so with grave economic consequences.
…At the end of the zero interest rate trap: inflation
The US dollar, i.e. the leading global currency, has been locked into a falling inflation and interest rate trend for more than three decades. Within this super-cycle, we can single out the following two observations: intermittently rising interest rates, driven by higher inflation expectations, have almost always
1) either led to a recession in the USA, or
2) triggered crises in excessively leveraged regions, at times with supra-regional implications and feedback effects for the USA.
We can also see that during this period the Fed set its Fed funds rate at lower levels after each cycle, and that overall debt (consisting of government, corporate, and private household debt) has increased exponentially. We do believe that this development is based on a crude, self-enhancing causality, which at its logical completion can only lead to a dead end with exactly one way out. Once an economy is chronically burdened by excessive debt and interest rates have reached the zero lower bound, there is de facto no alternative to “printing until inflation kicks in.”2
During the falling interest rate trend and with constantly rising debt, the process of the cycle looks roughly as follows. The question this time around will be: can the Fed orchestrate a significant hiking cycle without causing severe damage to the economy or the financial markets?
From our point of view we will see in the coming year – after the current, highly subdued cycle of interest rate hikes – whether the economy will stall and trend toward stagflation amid its debt cycle, or whether another “ordinary”, deflationary recession is looming at the horizon. We believe that the yield increase in the USA is likely the beginning of further frictions on capital markets, which ultimately may lead to the overdue recession in the USA.”
Finally they finish with a pretty ancient quote from a Greek general:
Jim Sinclair’s thoughts on Trump echo a discussion we had with someone recently about what Trumps real skills are:
So the inference is that Trump is the right man to lead America into bankruptcy and to “restructure” it out of it. This will likely involve a change in the global monetary system but first some pain to be suffered by anyone unprepared.
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As interest.co.nz reported local NZ wholesale interest rates and swap markets rose with the Fed rate hike last week.
The moves were quiet significant and they note:
“If you are a borrower, you should be aware that changes of this magnitude will probably affect how banks price their fixed rate mortgage offers. By the time you come back from holiday, there is the possibility that fixed mortgage rates could be noticeably higher.”
So as we’ve been saying, even though the RBNZ may be cutting their overnight cash rate, it is the offshore markets that will likely have the biggest impact on the “price of money” here in New Zealand.
As noted already the price of gold and silver fell sharply following the US Central Bank interest rate hike last week, even though this was widely expected. Why?
Casey Research notes that:
Last year gold fell initially too after the first Fed rate hike. Of course there’s no guarantee we will see an exact repeat, but there certainly to us seems to be as much pessimism towards gold now as there was a year ago.
There is certainly very little buying going on currently compared to earlier in the year. Maybe everyone is right to wait for gold and silver to go lower? But maybe this is a good contrarian indicator of a possible bottom forming?
History also shows why a bottom could be forming now.
Last week we posted a chart that showed the last days of the year are often a good time to buy. Possibly because the price is forced lower in low volume holiday trading. Here’s the chart again in case you missed it.
You can see that in each of the last 3 years the NZD gold price did spike lower over the holiday period. But also in each of these years that proved to be the low for the upcoming year.
As it happens Jeff Clark of GoldSilver published some research this week that backs up our assertion.
We ran the same data for silver and here’s what we found.
It’s easy to see silver’s higher volatility. What also sticks out is that historically, silver doesn’t come close to touching the prior year’s price.
As with gold, there were certainly years where the silver price fell below where it started. But the historical data says that on average, it rises more often in the following year than it falls.
We are thus much better off buying silver now than waiting for a dip in 2017. If you wait, history says you will likely pay a higher price.
The conclusions here are obvious. While there are always corrections along the way…
Whatever you want for 2017, you will likely be better off making those purchases now than waiting until next year.
Combine this data with the current correction and you have the perfect Christmas gift for yourself: gold and silver on sale, with much higher prices coming over the next few years.
The short answer is yes (assuming we get one). While local NZ suppliers are officially closing up shop tomorrow, we do have options available to purchase both local and imported gold and silver. But local gold and silver will only be for purchase in amounts up to $50,000 and these won’t be shipped out until 19 January.
So we’re not actually “closed” over the holidays, there may just be restrictions on what exactly is available for purchase.
If you see a spike lower in the lead up to New Year you can still buy. Just get in touch via phone, email or the website.
If you subscribe to our daily price alert we may still send these out on occasion over the holidays if we see significant moves in the prices of gold and silver. It would not surprise us to see the price pushed back down to the recent lows around NZ$1600. So we’ll let you know if they are. (You can sign up here for that service if you’re thinking of buying over the coming weeks).
This will be our last weekly newsletter until mid January. So we wish you and your family all the best for the holiday season. Be safe on the roads and on and in the water and we’ll see you in the new year!
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Tue, 20 Dec 2016 3:59 PM NZST
In this video JS Kim of SmartKnowledgeU discusses Modi’s war on gold, disguised as a war on cash and a war on corruption. He also discusses the latest banker raid on gold and silver, and how low gold prices will go before rebounding. He believes this recent fall in gold and silver will be a […]
Tue, 20 Dec 2016 11:35 AM NZST
See how bonds, inflation and commodities might all be in the process of changing trends… The World’s Biggest Financial Bubble Is Coming to an End… Here’s How to Keep Your Money Safe By Justin Spittler Doug’s absolutely right. The bond market isn’t safe. Yesterday, we shared a recent essay by Casey Research founder Doug Casey. […]
Tue, 20 Dec 2016 10:35 AM NZST
Doug Casey gives his thoughts following the election of Trump, not only on bonds, but on property, stocks and gold too… Doug Casey: “Sell All Your Bonds” By Justin Spittler Editor’s note: If you read the Dispatch often, you know we like to share insights from Casey Research founder Doug Casey as much as we […]
Thu, 15 Dec 2016 6:45 PM NZST
This Week: Silver Still Outperforming Gold What Might Happen Now After Fed Rate Hike? ‘Bond God’ Gundlach: Trump rally is ‘losing steam’… Gold headed higher The Full Details on Silver Manipulation Exposed Not Long Until the “War on Cash” Comes to New Zealand Prices and Charts Spot Price Today / oz Weekly Change ($) Weekly […]
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|The Legal stuff – Disclaimer:
We are not financial advisors, accountants or lawyers. Any information we provide is not intended as investment or financial advice. It is merely information based upon our own experiences. The information we discuss is of a general nature and should merely be used as a place to start your own research and you definitely should conduct your own due diligence. You should seek professional investment or financial advice before making any decisions.
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