Deflation Still the Danger But Interest Rates Already Rising? Huh?

Interest Rates

This Week:

  • US$ Gold Dips to New Low – Now What?
  • Stocks vs. Gold During Fed Rate Hike Cycles
  • Deflation Still the Danger But Interest Rates Already Rising? Huh?

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Prices and Charts

Spot Price Today / oz Weekly Change ($) Weekly Change (%)
NZD Gold $1661.14 + $3.33 + 0.20%
USD Gold $1071.10 – $14.10 – 1.30%
NZD Silver $22.05 + $0.16 + 0.73%
USD Silver $14.22 – $0.11 – 0.76%
NZD/USD 0.6448 – 0.0098 – 1.49%

The big news this week was that gold fell to new 6 year lows – well in US dollar terms at least.

As you can see in the table above in NZ dollars both gold and silver were actually up slightly on last week, driven by a weakening Kiwi dollar.

We’ll include our usual gold and silver charts below which show an NZ Dollar chart at the top and a US Dollar chart in the lower portion. But we won’t bother with too much commentary today. Because this weeks feature article on the website takes a close look at the lower USD gold price and what this means for us here in NZ.

NZD gold Chart

NZD Silver Chart

The NZ Dollar remains below 65 cents. It dropped in the lead up to a 7.9% fall in World dairy prices at the GlobalDairyTrade auction on Wednesday. This followed on from a 7.4% hit two weeks ago, and a 3.1% per decline a fortnight earlier.

So while the Kiwi dollar is still above the September lows it’s struggling to make much headway. However it is pretty oversold so may not go too much lower from here. But since the MACD indicator is yet to turn higher it may need to build a base around these levels for a bit yet before it moves much higher.

NZ Dollar Chart

US$ gold Price DipsAs mentioned already this weeks feature article looks at Wednesday’s new low in US dollar gold. We then look at what this might mean for us here buying gold here in NZ. We also take a look at silver in NZ dollars.

We run through various technical indicators, but also some anecdotal evidence that we’ve observed of late.

US$ Gold Dips to New Low – Now What?

Stocks vs. Gold During Fed Rate Hike Cycles

Last week we looked at 3 Reasons Why Gold Doesn’t Have to Fall when Interest Rates Rise.

The National Inflation Association shared some data this week which backs up the fact that gold might actually do the opposite of what most expect if/when US interest rates start to rise.

Their numbers show that:

“During the previous three major Fed rate hike cycles, gold achieved an average gain of 263.95% vs. the S&P 500 averaging a nominal gain of only 8.69%. Gold on average gained 30X more than the S&P 500′s nominal gains. Stocks on average in real money terms lost 60.18% of their value.

Source.

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Deflation Still the Danger But Interest Rates Already Rising? Huh?

Our favourite newsletter Writer Chris Weber pointed out this week that recent evidence suggests deflation is still the main threat facing the global economic system.

German government bond yields have just gone below zero. While in China it seems people are scared to borrow as bank lending dropped for the first time since 2009.

Copper and oil prices and most other commodity prices remain very weak.

Precious metals performed well in the 1930’s deflation but have struggled more recently.

The common perception is that in times of deflation government bonds should do well as people don’t spend and park their money in cash, happy to earn nothing but hold on while prices of goods drop.

However if you look at the US 30 year Treasury Bond interest rate it has actually been going up all year.

So this is indeed a strange occurrence.

When most other prices are falling we’d expect US bonds to be rising. That is their price would go up as more people want to buy them and so the accompanying interest rate would go down. Instead the exact opposite is happening.

US Treasury yields are rising in order to attract buyers.

US Treasury Yield 30 Years

So while most indicators are saying deflation, it seems treasury bonds are in fact saying just the opposite: “Look out for inflation”.

Meanwhile here in NZ latest reports show that inflation expectations have drifted further below the RBNZ’s 2% mid-point.

“Longer term inflation expectations weakened marginally in the latest Reserve Bank of New Zealand survey of expectations, with annual consumers price inflation expected to be 1.85 percent in two years’ time, compared with an expectation of 1.94 percent for the same measure in the September survey.”

Source.

So what to make of all this conflicting data?

Beats us!

But it suggests all is not right in the global financial system.

Our theory remains have some cash as a cushion but also some physical gold and silver as financial insurance. It seems likely there will be some fun and games ahead in 2016.

Spoiler Alert: As we note in this weeks feature article, both metals sit at solid support lines. So while sentiment is very negative, we think these might end up being pretty good buying zones in the long run for NZ buyers.

As an example NZ$30,000 today and with an approximately 50:50 gold and silver ratio you can get around 9 oz NZ gold 9999 pure and around 18 x 1kg NZ silver 999 pure, with an option to pay 20% deposit on the silver and balance paid 3 days before delivery in around 3/4 weeks.

Please get in touch if you’d like a more specific quote.

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This Weeks Articles:

Nirvana

Gold & Silver: COT Report Nirvana

2015-11-17 18:01:23-05

We haven’t posted anything from Stewart Thomson in a while, but of late he’s had a rather different take on the possible US interest rate increases (maybe, one day, eventually!) and their impact on gold. He outlines why he believes raising US interest rates would actually increase inflation, lower real (after inflation) interest rates and […]

Read More…
Cashless Society

The World’s First Cashless Society Is Here – A Totalitarian’s Dream Come True

2015-11-18 15:50:15-05

We’ve been writing a lot about negative interest rates in recent weeks. One way that central planners can ensure that these have the desired effect is by eliminating the ability for citizens to hoard and use cash. See how one country in particular is well on the way to doing this and which others are following suit. […]

Read More…
Now What

US$ Gold Dips to New Low – Now What?

2015-11-18 17:59:58-05

Overnight Tuesday, gold in US dollars closed below the July low of $1080. It dipped to a low of $1065.60 by late morning New York time before closing higher on $1069.30 for a daily decline of around $15 per ounce. You can see in the chart below this is a clear break below the July lows. […]

Read More…
As always we are happy to answer any questions you have about buying gold or silver. In fact, we encourage them, as it often gives us something to write about. So if you have any get in touch.

  1. Email: orders@goldsurvivalguide.co.nz
  2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
  3. or Online order form with indicative pricing

Today’s Spot PricesSpot Gold
NZ $ 1661.14 / oz US $ 1071.10 / oz
Spot Silver
NZ $ 22.05 / oz
NZ $ 708.90 / kg
US $ 14.22 / oz
US $ 457.10 / kg

 


7 Reasons to Buy Gold & Silver via GoldSurvivalGuide
Today’s Prices to Buy
1oz NZ 99.99% pure gold bar
1oz NZ Gold Ingot
$1717.62
1kg NZ 99.9% pure silver bar
1 Kilo NZ Silver Bar
$801.06 (price is per kilo for orders of 1-4 kgs)
$786.50  (price is per kilo only for orders of 5 kgs or more)
1oz PAMP Suisse 99.99% pure gold bar
PAMP Gold
$1852.49
1kg PAMP 99.9% pure silver bar
PAMP Silver
$829.79
1oz Canadian Gold Maple 99.99% pure gold coin
Gold Maple
$1785.73
1oz Canadian Silver Maple 99.99% pure silver coin (Minimum order size tube of 25 coins)
Silver Maple Silver Box
Tube of 25 $728.25
Box of 500 $13885
(Fully insured and delivered)

Note:

  • Prices are excluding delivery
  • 1 Troy ounce = 31.1 grams
  • 1 Kg = 32.15 Troy ounces
  • Request special pricing for larger orders such as monster box of Canadian maple silver coins
  • Lower pricing for local gold orders of 10 to 29ozs and best pricing for 30 ozs or more.
  • Foreign currency options available so you can purchase from USD, AUD, EURO, GBP
  • Note: Your funds are deposited into our suppliers bank account only. We receive a finders fee direct from them only.


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Our Mission

  1. To demystify the concept of protecting and increasing ones wealth through owning gold and silver in the current turbulent economic environment.
  2. To simplify the process of purchasing physical gold and silver bullion in NZ – particularly for first time buyers.

We look forward to hearing from you soon.Have a golden week!

David (and Glenn)
GoldSurvivalGuide.co.nz

Ph: 0800 888 465

From outside NZ: +64 9 281 3898

email: orders@goldsurvivalguide.co.nz

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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.
Copyright © 2015 Gold Survival Guide.All Rights Reserved.

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