One of the most common questions people ask is: “Is now 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 what is the gold price doing now? Has the priced dipped? If so, does that make it a good time to buy gold now? Is there anything else to consider? Read on to find out…
NZ Dollar Gold Price Has Dipped – Good Time to Buy?
Below is a chart of gold priced in New Zealand Dollars.
NZD gold made a new all time high back in August. So you may be thinking after such a strong rise, now can’t be a good time to buy can it?
However since August the price has pulled back a little. The gold price is now sitting almost right on the 50 day moving average (MA). In a bull market (which gold certainly looks to now be in), this 50 day MA is often an area of support for the price.
So this looks like one of those “buy the dip” opportunities.
Longer Term – The Trend is Also Up
Also the “trend is our friend”. Longer term we can see the gold price has been rising steadily since 2014 (see the lower rising trend line in blue).
The recent breakout brought with it a new all time high. After the pull back the price is now sitting just above the old high from 2011. This could be a possible area of consolidation with the old highs providing “support”.
Other Indicators Showing Now is a Good Time to Buy Gold
New Zealand Dollar is in a Downtrend Longer Term
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.
Recently the NZ Dollar has been assisting the gold price in NZ Dollars. The Kiwi Dollar topped in mid 2017. It has been falling steadily since. So the NZ Dollar looks to be in a longer term downtrend dating back to 2014.
Crucially if the Kiwi drops below 0.6200, there is no real support until 0.5000!
Any further moves lower will push the local gold price higher.
>> Read more on why the New Zealand Dollar is falling and why it may continue to weaken further: NZ Dollar Falls – Why Has the NZ Dollar Weakened and Where to Now?
New Zealand Economy Looks to Have Topped Out and is Slowing
Economic numbers continue to be released that indicate the New Zealand economy has topped out (possibly why the NZ dollar also topped out back in 2017).
“The BusinessNZ Planning Forecast for the September 2019 quarter shows the New Zealand economy growing at a slower rate than previously forecast, and slowing indicators in key sectors.”Source.
There were a number of indicators in this report showing that the NZ economy has been slowing such as:
The seasonally adjusted PMI for August was 48.4 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). While this was 0.3 points up from July, the last time the sector experienced a decline for two months in a row was 2012.
While an International Monetary Fund (IMF) report said the New Zealand economy is operating at “close to potential”, but warned the future outlook is “tilted to the downside”. The IMF said:
“Downside risks to the economic outlook in New Zealand have increased, however, reflecting higher downside risks to the global economic outlook.”Source.
Statistics New Zealand reported last month that:
“…New Zealand’s gross domestic product (GDP) had grown 0.5 percent in the April-June quarter. It was the first time GDP had reached $300 billion.
However, despite that, the rate of growth is falling. In the previous quarter, growth jumped 0.6 percent. Annual growth is also down to its lowest level since 2013.”Source.
While another recent report showed that:
“Businesses continued to sink deeper into gloom during the September quarter and that will likely shave annual GDP growth to below 1 percent, according to the New Zealand Institute of Economic Research’s latest quarterly survey of business opinion.”Source.
Refer to these reports for more on why the NZ economy may have turned:
Gold is a “non-correlated asset”. So often performs better when other assets such as shares and real estate are doing badly.
>> Learn more: Why Gold Bullion is Your Financial Insurance
Seasonality: Now is the Time of Year When Gold Often Rises
Gold often bottoms during the middle of the year. Then rises through to year end. So the recent pullback could make this time of the year a good time to buy gold, before what is often the next move higher.
>> Learn more:Does Gold Seasonality Affect the NZ Dollar Gold Price?
Futures Market Commitment of Traders Positions Point to Higher Prices
NIA has just posted a 2019 year-to-date chart comparing the managed money net long position in gold futures contracts vs. the price of gold. The managed money group of traders can be useful to track as they are often the momentum buyers that propel the price.
Gold finished 2018 at $1,285 per oz and hedge funds at that time were net long gold by 72,711 contracts. Nine weeks into 2019, despite gold’s managed money net long position declining by 34.16% to 47,872 contracts, gold showed tremendous strength by finishing March 5, 2019 at $1,284 per oz practically unchanged for the year. Over the following eight weeks, gold’s managed money net long position declined by another 78.19% to only 10,440 contracts, yet gold amazingly finished April 30, 2019 at $1,285 per oz unchanged for the year despite gold’s managed money net long position declining by 85.64% during the first four months of 2019!
At this point, gold was like a coiled up spring ready to explode with hedge funds short 93,220 gold futures contracts, which ranked it in the 93rd percentile of historical levels. Over the following five months, 82% of gold’s managed money short sellers got squeezed and were forced to cover, reducing gold’s managed money short position to a new 84-week low on September 24, 2019 of 16,791 contracts. During this time period, gold’s managed money net long position EXPLODED by 2,697.57% to a new all-time high of 292,066 contracts as the price of gold increased by 19.14% to $1,531 per oz!
Over the following week, gold got slammed down by $52 to finish October 1st at $1,479 per oz as a result of hedge funds dumping 17.63% of their net long position! Since then, gold has rallied by $28 to $1,507 per oz! NIA strongly believes that gold already bottomed last week and its next move is to $1,600 per oz with HUGE catalysts ahead at the end of October such as a likely no deal Brexit! Keep in mind, when gold settled one week ago at $1,479 per oz with a net long position of 235,174 contracts, gold’s net long position was 17.5% below its net long position of 285,082 contracts from six weeks earlier on August 20th when gold settled at $1,474 per oz! It is an EXTREMELY bullish sign how gold settled October 1st at a price that was $5 per oz above its August 20th price, despite its net long position declining by 17.5%!
In fact, gold’s net long position as of October 1st had fallen 2.48% below its level from three months earlier of 241,163 contracts, yet gold as of October 1st was up by $57 or 4% from its July 2nd settlement price of $1,422 per oz! This is the most bullish sign possible for gold, making NIA extremely confident that gold’s next major move will be to $1,600 per oz, possibly near the end of this month!Source.
All These Factors Point to This Being A Good Time to Buy Gold
If you buy gold in New Zealand dollars now we don’t think you’ll regret this in the years to come. Gold certainly looks to be in a new bull market.
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.
>> Read more:When to Buy Gold or Silver: The Ultimate Guide
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.
Or head to our online shop to buy gold today.
If you need more information on the process of how to buy gold see: How to Buy and Invest in Gold and Silver >>
Editor’s note: this blog post was published in August 2018. Updated 8 October 2019 with new charts and updated numbers and reasons.