Prices and Charts
Gold Bouncing Back
Gold is up from last Thursday by about 1.5%. Rising up from $2850 to now be not far below $2900.
But we’d say the odds still favour a further fall to come. We could yet see a test of the 200 day moving average at $2700. While that might sound like a serious fall, it is only a 6.5% pull back from current levels.
Of course there are no guarantees which is why buying in tranches is a good idea.
Silver Rising Sharply
Silver in New Zealand dollars is up a hefty 6% from last week. It has bounced back sharply off the support line near $34. This was perhaps not a huge surprise given the sharp fall.
But we could still see silver head down to test the 200 day moving average near $30. This is also the break out level for the recent surge higher. So that is not uncommon to see the break out line retested.
As with gold consider layering in as picking bottoms is very difficult to do.
NZ Dollar Still Looks like a Fake Out Not a Break Out
The New Zealand dollar is up a little from last week. But is still well under the downtrend line. So it still looks like the break out was merely a fake out. We could yet see the Kiwi head a bit lower yet too.
Need Help Understanding the Charts?
Check out this post if any of the terms we use when discussing the gold, silver and NZ Dollar charts are unknown to you:
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27 Ounces of Ancient Gold to Buy “a Fancy House in One of the Best Neighborhoods”
This week a reader sent us an interesting news item about a find of 400 ancient gold coins in Israel.
It was not the finding of coins from 1100 years ago that piqued our interest though.
But rather the calculation that our reader did as to what the buying power of this cache of coins would amount to today…
According to a report by the Jerusalem Post, the 424 coins were discovered by two members participating in a dig conducted by the Israel Antiquities Authority.
“The cache, deliberately buried in the ground inside a clay jug, held 424 gold coins, with most dated to the early Islamic period and the Abbasid dynasty,” Liat Nadav-Ziv and Dr. Eli Hadad, the dig administrators, told the Jerusalem Post. “The person who buried his treasure 1,100 years ago definitely expected to come back to take them, and even fixed the vessel with a nail so that it would not move.”
The Abbasid Caliphate ruled over most of the Islamic empire after assuming power in the year 750. The caliphate reigned until 1258, when it was destroyed by the Mongol invasion.
According to Robert Cole, a coin expert at the Antiquities Authority, the coin cache, consisting of 846 grams of 24-karat gold, is one of the oldest ever discovered from the Abbasid Period.
“A significant amount of money in those days. For example with a sum [of cash] like this, a person could buy a fancy house in one of the best neighborhoods in Fustat, the rich capital of Egypt at the time,” Cole explained.
One of the coins discovered is extremely rare and has never been found in Israel before, according to the Jerusalem Post. It is a “fragment of a gold solidus of the Emperor Theophilus,” the Post explains, noting that the coin was minted in Constantinople, the capital city of the Byzantine Empire. Theophilus ruled from 829 until his death in 842.
Our reader then points out:
“846 grams = 27.2 troy ounces.
House in Parnel picked at random from real estate listings. Renovated 1940’s weatherboard on tiny section. Very good area. $1.6m
This equates to $58,824 per ounce.
I wonder if our ‘expert’ Robert Cole is accurate in his assessment????”
The $58,000 might seem high, however it is not that far above other measures of gold we’ve read about. It’s also not too hugely above one measure for gold we’ve done ourselves too. See this post: How Do You Value Gold | What Price Could Gold Reach? Updated 2020
In that we arrive at a gold price in NZ dollars of $42,000 – based upon achieving a 100% backing of the US dollar. Less than $58,000 but not by a massive amount.
However the issue with coming up with a projected “dollar” price for gold is that dollars are a constantly expanding measure.
So we’d say how many ounces of gold to buy a house is the more useful measure to take note of.
On that note we have updated our measure of house prices in gold in New Zealand this week.
You’ll discover that when priced in gold, New Zealand median house prices have fallen 50% since 2005. You’ll also see how history shows New Zealand house prices could fall 79% further yet…
Your Questions Wanted
Remember, if you’ve got a specific question, be sure to send it in to be in the running for a 1oz silver coin.
Could Looser Lending Rules Boost House Prices Further?
In this week’s feature article on the housing to gold ratio, we postulate that perhaps house prices could continue to rise in nominal dollar terms, while falling in gold terms.
Looser lending rules could be one way to help keep house prices high. Surprise, surprise. This is exactly what is now happening in Australia. Never mind the Australian Royal Commission into banking practices and the clean up that was meant to produce.
Now with COVID as an excuse Australia is doing the exact opposite. A news item this week highlighted that Kiwi mortgage advisors are hoping for the same here.
Kiwi mortgage advisers are hopeful that Australia’s move to scrap responsible lending rules will lead to changes here. On Friday, Australia’s government relaxed responsible lending laws, making banks subjects to less onerous oversight.
In the coming years we’d expect to continue to see relaxations in the various lending restrictions, such as we have already seen with the likes of loan to value ratios. That combined with record low interest rates could send house prices even higher in the next few years.
Of course, as one of our readers, you’ll know to instead keep measuring house prices in gold. Rather than the quantitative easing stretched elastic band that is our kiwi dollar.
If you have any questions about the process of buying gold and silver please get in touch…
- Email: [email protected]
- Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
- or Shop Online with indicative pricing
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