Gold is Cheap Compared to Inflation Protected US Government Bonds

Gold-is-cheap

Prices and Charts

Change from last weeks gold and silver prices

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Buying Back 1oz NZ Gold 9999 Purity $2518
Buying Back 1kg NZ Silver 999 Purity $1123

NZD Gold Up Despite Sharemarket Fall

Gold in NZ dollars was up close to $20 from 7 days ago. Mostly boosted by the weaker Kiwi dollar, with the USD gold price flat.

This was despite the biggest fall since last October in the US stock market yesterday. So gold is holding up well. Continuing its rise off the uptrend line and now clearly closing above the 200 day moving average for the first time since November.

Now we’re watching to see if NZD gold can get back to the June highs above $2650. We still need to keep an eye out for a possible return to test the rising blue trendline though.

NZ Dollar Gold Chart

Silver Continues to Underperform Gold

Silver continues to underperform gold this week. Down almost 3.5% from a week ago and dropping below the 200 day moving average. Also below the June low. So unlike we thought last week, silver hadn’t bottomed yet in this correction.

We’ve redrawn the blue uptrend line as this dip took silver below the old one. With the RSI now getting close to oversold, we may well see a bounce up off the uptrend line before too long..

NZ Dollar Silver Chart

NZ Dollar Reaches New Low for 2021

The New Zealand dollar was down over half a percent this week. Now sitting just above 0.6900, the Kiwi is at a new low for 2021 today.

The performance of the NZ dollar is likely quite confounding to many people. The talk is of likely interest rate rises here in NZ. So the expectation would be for the Kiwi to be rising on the back of a widening interest rate differential.

However we have been pointing out for a while that the US dollar is holding up well. So despite what many have thought, the NZD/USD currency pair continue in this wide trading range.

As we said last week it seems the forex markets may not believe interest rate increases are coming as quickly as the bank economists are predicting.

NZ Dollar Chart

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:

Gold and Silver Technical Analysis: The Ultimate Beginners Guide

Continues below


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RBNZ Ends Q.E./Currency Printing Early. How Will This Impact Precious Metals Prices?

The news that the Reserve Bank was ending its Large Scale Asset Purchase (a.k.a. currency printing or Q.E.) program early, came out just as we were sending last week’s email out. So we didn’t have time to write too much on the topic.

Reader Chris emailed us back to ask:

“What is going on with RBNZ and their decision to stop QE? and what does it mean for PM prices going forward?”

So in this week’s feature article we dive into answering his query. Including:

  • How Has QE Affected Precious Metals Prices in New Zealand to Date?
  • The Impact of QE on NZD Gold and NZD Silver Prices
  • Does the End of QE Mean the End of The Precious Metals Bull Market?
  • What is the Most Important Driver of the Gold Price?

RBNZ Ends Q.E./Currency Printing Early. How Will This Impact Precious Metals Prices?

Not long after wroting the above article, we came across this King World News item on the same topic. The interviewee, Peter Boockvar, comes to a very similar conclusion to us. You can read a short summary, or listen to the full interview here:

THE BIG QUESTION: What Impact Will Eliminating QE Have On The Gold & Silver Markets?

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Gold is Cheap Compared to Inflation Protected US Government Bonds

Spoiler alert: In the feature article above we cover real interest rates and why we think that will be more important than QE in terms of precious metals prices.

This theory is backed up by a recent note from Goldman Sachs about inflation protected US Government treasuries or bonds (TIPs)

These bonds are usually highly correlated to gold. This is because the inflation protection built into them mimics the real (inflation adjusted) interest rate.

Definition:

Treasury Inflation-Protected Security (TIPS) is a Treasury bond that is indexed to an inflationary gauge to protect investors from the decline in the purchasing power of their money. The principal value of TIPS rises as inflation rises while the interest payment varies with the adjusted principal value of the bond.

Currently there is a wider than usual gap between TIPS and gold.

Gold – the cheap way to play the TIP(s)

…the gap between gold and TIP looks too wide here.

[Goldman Sachs] sees gold cheap vs TIPS and sees gold moving higher implied by the US 10 yr real rate.

Note gold is pushing recent highs as of writing, trading at highest levels since the ugly candles in mid June.

Goldman’s latest long gold logic can be summarized with (outlined here);

“”However, in a scenario where the global economic recovery does not play out as expected or inflation begins to move materially above expectations, we see material upside to gold given its undervaluation and low allocation from the investment community. Therefore, we think that gold may be a good strategic purchase here for portfolio managers looking to hedge against tail risks of macro volatility”.

Gold-vs-TIPS

Gold-vs-Real-rates

Source.

So despite gold holding up fairly well, it seems to be lagging other inflation tracking measures. Therefore making current prices likely a good buy.

An update to the website has caused some issues. That is being fixed, but you may have trouble accessing the product pages to see current pricing on the website.

So just drop us an email or phone or live chat if you have any trouble.

  1. Email: [email protected]
  2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
  3. or Shop Online with indicative pricing

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This Weeks Articles:

RBNZ Ends Q.E./Currency Printing Early. How Will This Impact Precious Metals Prices?

Wed, 21 Jul 2021 10:28 AM NZST

Last week the Reserve Bank of New Zealand (RBNZ) announced they would be ending their Large Scale Asset Purchase (LSAP) program – i.e. Q.E. – by 23 July.  The announcement came just as we were sending out our weekly newsletter. So we only had time to jot down a few thoughts: Late Update: RBNZ to […]
Read More…

NZ Bank Economists vs Global FX Markets

Thu, 15 Jul 2021 6:23 AM NZST

Nz bank economists vs global fx marketsPrices and Charts Looking to sell your gold and silver?Visit this page for more information Buying Back 1oz NZ Gold 9999 Purity $2505 Buying Back 1kg NZ Silver 999 Purity $1166 NZD Gold Rising Further Off Uptrend Line Gold in New Zealand Dollars was up further from the uptrend line this week. Rising $33 dollars […]
Read More…

Runaway House Prices: The ‘Winners and Losers’ From the Pandemic

Thu, 8 Jul 2021 12:36 PM NZST

RUNAWAY-HOUSE-PRICESPrices and Charts Looking to sell your gold and silver? Visit this page for more information Buying Back 1oz NZ Gold 9999 Purity $2469 Buying Back 1kg NZ Silver 999 Purity $1164 Correction Over? It Looks Like Gold Has Bottomed Out Gold in New Zealand dollars is up $45 from 7 days ago. It has […]
Read More…

Will New Zealand Property Prices Ever Fall?

Tue, 6 Jul 2021 5:35 PM NZST

Will New Zealand Property Prices Ever FallHere’s a reader question that’s likely crossed your mind recently too… “Will New Zealand house prices ever fall?” Reader Jim R. writes: “There may or may not be a question here but I thought I’d ask. It’s more based around property but may be linked. As inflation is here to stay for a while the […]
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: [email protected]
  2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
  3. or Online order form with indicative pricing


7 Reasons to Buy Gold & Silver via GoldSurvivalGuide

Today’s Prices to Buy
1oz NZ 99.99% pure gold bar
1oz NZ Gold Ingot
$2714
1kg ABC 99.95% pure silver bar
1 Kilo NZ Silver Bar
$1,305 (In stock)
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1kg “Scottsdale Gold” Bar 99.99% with unique serial number

$87,032.34
1 oz Gold PAMP Suisse Lady Fortuna Minted Bar with Certificate
1oz Pamp gold bar
$2,785 (in stock)
1oz Canadian Gold Maple 99.99% pure gold coin (2020)
Gold Maple
$2,796 (on back order)
1 oz RCM Silver Maple Coin
(Minimum order size tube of 25 coins)

Silver Monster Box
Tube of 25: $1,133 (pick up) (pre-order)
Box of 500:

$22,609 (Pre-order)

(Fully insured and delivered)

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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
  • Plus we accept BTC, BCH, Visa and Mastercard
  • Note: For local gold and silver orders your funds are deposited into our suppliers bank account. We receive a finders fee direct from them. Pricing is as good or sometimes even better than if you went direct.

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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: [email protected]

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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.
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