Well it has been a few days of action the world over. Massive market declines with conversely massive rises in gold. Riots in England. The ECB announces a bond buying program for Italian and Spanish debt. S&P downgrades US treasuries. Silver suffered an initial big drop held up pretty well but is now falling again. Markets have bounced today including most gold and silver miners even with silver being down, which is interesting.
But the big question is will we see a repeat of the across the board free-fall of 2008?
Well 2008 was a liquidity crisis. Money left banks at a great rate of knots and came close to collapsing the system. Since then governments the world over have gone about papering over the cracks with a lot of new paper money. They’ve bailed out private companies left and right and set up bank guarantees. Our gut says that they may have done enough to keep things a float – for now – and that instead we may see enough continued weakness worldwide now for the money masters to justify more intervention – the much talked about potential QE3 – in whatever new form it may take. But our guess is as good as the next guys!
New Zealand has imported inflation
Even here where there may not have been “money printing” per se – we’ve “imported” the inflation from elsewhere nonetheless with prices of everyday goods rising even in the face of a rising kiwi dollar. Of course the government’s GST increase and the emissions trading scheme hasn’t exactly helped to keep prices down. But how much worse would it be if we hadn’t been shielded by the higher NZ dollar?
Are we about to find out? Yesterday the kiwi fell over 3 cents versus the greenback in short order and was a big contributor to the local NZ dollar gold price rising so strongly – as we discuss in this weeks headline article. “Gold Bullion in New Zealand dollars hits record high – Time to buy or sell? “
How much has the NZ dollar been devalued since 2000?
Also on the subject of loss of purchasing power is the another article “When Buying Gold Becomes a Life-or-Death Question“. This is from an American point of view but at the beginning we compare the US dollars loss of purchasing power with that of the NZ dollar since the year 2000. With all the talk of how much the US dollar has been devalued lately you might be surprised to see what the difference is.
This week we also feature the 2nd part of the video interview with Bud Conrad – Chief Economist at Casey Research.
Gold, Silver and Forex markets are very volatile
We also commented in the “Gold Bullion in New Zealand dollars hits record high – Time to buy or sell?” article how volatile the forex markets have been. Quotes from our suppliers for gold and silver have only been valid for an hour at most lately simply because there have been such large movements in the forex markets in the past week. So if you request a quote bear in mind you don’t have that long to make up your mind at the moment. Phone David on 0800 888 GOLD or email orders@goldsurvivalguide.co.nz if you think you can make up your mind fast enough!
Here’s wondering what will happen next – gold has risen so fast you’d think it has to correct soon – only time will tell though.