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. Clearly the price has dipped lower in recent months. In fact it is not far above the lows for the year to date. 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).
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.
Currently the NZ Dollar looks to be assisting the gold price in NZ Dollars. As the Kiwi Dollar looks to have topped out last year. Now in what appears to be a longer term downtrend.
New Zealand Economy Looks to Have Topped Out and is Slowing
Economic numbers coming in seem to indicate the New Zealand economy may have topped out (possibly why the NZ dollar also topped out last year).
Dairy Prices Look to be Weakening
ASB reports today:
“Dairy prices have shifted lower. Over the past 5 auctions overall dairy prices have fallen 9%, with whole milk powder prices down by a similar 8%. Notably, once strong butter prices have fallen hard, down around 17% over this period.
Initially, with global demand still firm, the fall looked like it could prove temporary. But this no longer appears the case.”
Troubles in New Zealand Construction Industry
There are troubles appearing in the New Zealand construction industry with problems with major players such as Ebbet, Hawkins and Fletchers. Money Morning NZ just commented on this issue.
Refer to these recent 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 Bottoms
Gold often bottoms during the middle of the year. Making 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?
Good Time to Buy Gold When Sentiment is Negative and Volatility Low
There is currently very little interest in gold. Sentiment is about as bad as it can get. Especially when you have a major precious metals fund dropping precious metals from its name!
Whatever your views on the barbarous relic, it’s hard to ignore the sentiment behind Vanguard dropping “precious metals” from its Precious Metals and Mining Fund after having dropped “gold” at almost the exact low in May 2001. $VGPMX pic.twitter.com/VTu0mMYGr5
— SentimenTrader (@sentimentrader) 31 July 2018
Very negative sentiment often equates to a contrarian buying opportunity.
Commercial Shorts in Gold at Record Highs
In the gold futures market, the group of traders known as “managed-money” are positioned heavily short – meaning they expect lower gold prices.
At first glance this might seem to not equate to a good time to buy gold. However history shows these traders are almost always wrongly positioned at the extremes. So at highs they are long, then the price falls. At lows they are short – then the price rises.
“Latest data from US regulators say that hedge funds and other large speculators grew their net bearish position on Comex gold futures and options to a new series record last week, equal to a notional weight of 127 tonnes.
That ‘Managed Money’ position has been net bearish in only 15 of the 634 weeks since the CFTC began collecting these figures.
The average position among money managers has since early 2006 equated to a bullish bet worth 377 tonnes.”
Editor’s note: this blog post was updated in August 2018 for accuracy and relevance.
>> Read more: When to Buy Gold or Silver: The Ultimate Guide
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. 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.
Or head to our online shop to buy gold today.