Gold Sentiment is Very Low

Gold Survival Gold Article Updates: 22 February 2013

This Week:

• Pleasure or Pain? Where to Now for Gold and Silver in New Zealand Dollars?
• Gold Sentiment is Very Low
• What to Do About the High NZ Dollar?
• Canadian Maples Monster Box Deal

We’re late getting this out this week as we’ve been trying to finish off our latest article for the past couple of days and just not quite got there until last night. So we held off sending the email out until that was done.

So we’ll mention that article first up as we give a few thoughts on gold and silver in NZ dollars over on the website in:

Pleasure or Pain? Where to Now for Gold and Silver in New Zealand Dollars? READ MORE

Obviously you’ll be aware of the tumble that both gold and silver have taken over the past week. NZD gold in particular has dropped below the long term strong support it has had around $1950 as can be seen in the chart below.

The NZ Dollar has weakened a bit over the past couple of days now sitting at .8329. So today the price of NZD gold edged higher by around $15 to $1892.96. 

Silver was up just $4 to $1107 per kilo and as depicted in the chart below has held up better than gold thus far, remaining above solid support lines.

You can read today’s feature article mentioned above for our thoughts (perhaps guesses would be a better word?) on what might happen from here for both metals.

Gold Sentiment is Very Low

As we mentioned in this weeks Pleasure or Pain feature article, sentiment is certainly very low for gold presently. The US Federal Reserve minutes released yesterday didn’t help with the “Wizards of Oz” stating they might have to slow the printing presses faster than expected. Of course these are the same people who said US housing wasn’t in a bubble and wouldn’t fall by much a few years back, so watch what they do and not what they say is our advice. 

Remember the US is effectively using this printed currency to fund it’s ever growing budget deficit so if it were to stop or slow the currency creation they would have to make some sizeable spending cuts. Given US lawmakers have so far managed to put off even raising the US debt ceiling, the odds of them making significant spending cuts seems veeeeery slim.

See this article we read this morning for more on just how low gold sentiment is currently: Gold Sentiment

>> Learn More: Does Record Low Gold Volatility and Sentiment Mean Time to Buy?

Keep up the Anti Gold Talk

On the topic of sentiment David has received a few emails this week from friends/acquaintances commenting on the fall in gold (contrarian sign perhaps?). One of these was from an old colleague who now works at broking house JBWere during the week. It had the following commentary from as he put it one of their “outspoken Aussie guys” that said:

“The other feature is the “death of gold” – it had 10 good lovely years, but its now -16% off its high & I think we can confidently say the party is over the music has been turned off, the grog’s run out & all we now need is the gold bulls to go home. The only problem is they don’t believe it can finish like this – no one understands all the problems in the world but them – they know the US is gone, Europe gone, paper currencies gone – only problem is its yesterday’s story & when everyone was in a panic during GFC they had massive followings & many I spoke to were disciples & when Warren Buffett said – well it now looks quite correctly – that gold’s was really justa “ponzi scheme” – he was bagged as having no idea. Well now the selling in gold has began & who’s left to buy it.”

As we say in this weeks feature article we’d like to see a few more comments like these as they will be more indicative of a bottom in gold than a top we reckon. This fellow points out gold has had 10 good years but I wonder how many clients he recommended buy any during that time? He’s obviously not recommending they do now anyway!

The one caveat that we also discuss in the Pleasure or Pain article this week, is that there is a lot of mainstream talk of currency wars / competitive devaluation. So while this is being talked about it does put more focus on gold and silver and we prefer it when the metals are not being discussed in the mainstream as that’s when they are usually ready to rise.

We’ve actually heard Currency Wars discussed twice this week. On TV One’s breakfast news and also there was the below video interview on TV3 breakfast news with Greg Smith of Fat Prophets Australasia.

Fat Prophets head Angus Geddes commented in an email during the week on the high Aussie and NZ Dollars: 

“[Aussie Reserve Bank] Governor Stevens has a reputation as a “hard money” advocate and a sceptic on quantitative easing programs, but this stance will at the very least be put further to the test as the year goes on.

My colleague Greg Smith also made this point on TV3 in New Zealand this morning as the ‘Kiwi’ (with the Reserve Bank committed to price stability) in a very similar place to the Aussie dollar. He reinforced the view that I have made in recent weeks that the global injection of liquidity that we have seen will be very hard to withdraw and that there will ultimately be consequences on the inflation side. He also pointed out the case of Zimbabwe as an extreme case in point.”

Currency wars and high NZ dollar discussion begins 2 minutes in: 

What to Do About the High NZ Dollar?

The debate also continues about “what to do” about the high NZ dollar. RBNZ Governor Wheeler outlined the Reserve Banks criteria for intervention in the FX markets this week and managed to “jaw bone” the dollar lower as a result:

“Mr Wheeler told the New Zealand Manufacturers’ and Exporters’ Association the kiwi is significantly over-valued, and he “will intervene when the circumstances are right”.

The RBNZ can intervene in currency markets when the kiwi is at exceptional levels that are not justified, is consistent with monetary policy, and when it will work. It last intervened in mid-2007.”

Source

But the nature of the global monetary system means it really is a case for NZ of damned if you do and damned if you don’t when it comes to trying to manipulate the NZ dollar lower.

Higher inflation will result if we do, as we are currently shielded from rising prices of imported goods by the strong NZ dollar. By weakening the NZ currency, “the workers” that the opposition parties are talking about suffering via lost manufacturing jobs, will still get dealt to as well. As a weaker dollar will increase the prices of many everyday goods, in particular fuel which then has a direct flow on effect to just about every other product sold across the country due to higher transport and production costs.

But the economy will also suffer if they don’t through loss of jobs in the manufacturing sectors and potentially loss of income even in the primary producer sector due to higher comparative prices for our commodities. There is no easy answer.

Canadian Silver Maples Monster Box Deal

It really is anyone’s guess as to whether gold and silver have much further to fall or not, but better to be buying a tranche when the price is lower and oversold than at the other extreme.

If silver coins are what you’re after we have a deal today…

If you’re wanting a monster box of Canadian Silver Maples (500 x 1oz), I can have them delivered and insured to you direct via Fed Ex for $19,650. Just email David at orders@goldsurvivalguide.co.nz(Subject line: Canadian Silver Maples) to request the sale. Then you just need to deposit the funds into our kiwibank account which David will send you (special clearance of $25 is ideal as well as funds appear faster and I can lock down the price sooner) and the silver will be with you in approx 7-10 business days.

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 

THE PRICE OF GOLD IN THE COLD-GOLD WAR

2013-02-14 16:39:00-05 With gold and silver dipping lower in both NZ and US dollars this morning, this is a timely article from Darryl Schoon. He touches on recent news items on the amount of both Chinese and Russian gold purchases, but then also comments on the current sell off and it’s timing with the start of the […] read more…

Embrace Silver’s Volatility All the Way to the Bank

2013-02-19 16:15:26-05 Learn just how volatile silver can be compared to gold, but also how you can take advantage of this volatility for your financial benefit when buying silver… Embrace Silver’s Volatility All the Way to the Bank By Jeff Clark, Senior Precious Metals Analyst Most precious-metals investors know that silver is more volatile than gold. But […] read more…

Pleasure or Pain? Where to Now for Gold and Silver in New Zealand Dollars?

2013-02-21 05:04:20-05 What are you experiencing? Pleasure or Pain? It probably depends on whether you own any gold or silver already (and also when you purchased it), or whether you’re intending to buy some in the near future. If you’ve bought in the past 2 years you could be experiencing some pain as you may well be […] read more…

Today’s Spot Prices

Today’s Prices to Buy

1oz NZ 99.99% pure gold bar

$1957.32

1kg NZ 99.9% pure silver bar

$1217.76 (price is per kilo for orders of 1-4 kgs)

$1212.22  (price is per kilo only for orders of $50,000 or more)

 

1oz PAMP Suisse 99.99% pure gold bar $2004.21

1oz Canadian Gold Maple 99.99% pure gold coin $2034.93

1oz Canadian Silver Maple 99.99% pure silver coin (Minimum order size tube of 25 coins)