Here’s Why Not to Worry About Silver’s Delayed Reaction to Inflation

why not to worry about silvers delayed reaction to inflation

Prices and Charts

Change from last weeks gold and silver prices
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Huge Plunge in NZ Dollar Boosts NZD Gold Price 2.5%

The recent weakness in the NZ Dollar was amplified this week causing the NZD gold price to rise by $70 or nearly 2.5% from last Wednesday. It has risen up strongly off the 200 day moving average (MA) and is now at the top of the sideways trading range between $2800 and $2900. It did jump briefly above this mark, but we need to see it make a clear higher high above $2900 now. In contrast the USD gold price fell below the support line at $1675 and is now at a 29 month low. Support lines to watch now are $1600 and $1550. NZ Dollar Gold Chart

While NZD Silver is Only Up slightly

Meanwhile NZD silver barely moved from a week ago, up just 13 cents or 0.40%. It touched the 200 day moving average (MA) to make a higher high above $33 which we had been watching for. Now pulling back and so we are watching to see if it can hold above the 50 day MA and the downtrend line. Have we finally seen the bottom in silver? If not, the next support line to watch is at $28. While in US dollars silver, can it make a higher low around $18? That would also create an inverse head and shoulders pattern, with $18 being the right hand shoulder. If the low from the start of the month doesn’t hold, then $16.50 is the next line of support to watch. NZ Dollar Silver Chart

NZ Dollar Drops to 2020 Low

The currency markets have been all go over the past few days. The British pound hit an all time low against the US dollar over the weekend. The Kiwi was not spared either, plummeting almost 4.5% from 7 days ago. The 260 basis point fall took the NZ dollar all the way back to the low it hit during the covid crash of March 2020. The Kiwi dollar has not been this low since dipping below 0.50 in 2009. There is not a lot of support between here and there now. However the NZ dollar is also very oversold now. While the USD index is at the top of the range it has been all year. So we would expect a bounce in the NZD in the short term. 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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Need Help With Understanding the Gold and Silver Spot Price?

With the strength in the USD and weakness in the NZD and just about every other currency, we have new people looking at protecting their purchasing power with gold. When starting out the pricing for gold and silver can be somewhat confusing. So this week we have a full explanation of the gold and silver spot price. You’ll discover:
  • What are Gold Futures Prices (and Silver Futures Prices)?
  • How Gold Spot Prices Are Not the Same as Retail Gold Prices (and Silver Prices)
  • How About in NZ Dollars?
  • When, Where, How, and By Who  is the Gold Spot Price (or Silver Spot Price) Set?
  • Simplifying the Gold Spot Price (or Silver Spot Price)

What Does Gold Spot Price (Or Silver Spot Price) Mean?

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Evidence The Fed (and Other Central Banks) Will Trigger A Recession

Last week’s US Federal Reserve announcement saw an unsurprising further 75 basis point interest rate increase. ZeroHedge reports:
“The Fed continued to rapidly adjust upward its 2023 (terminal) rate expectations… And the market is now pricing in 75bps for November, 50bps for December, and 25bps for Feb 2023… pushing the terminal rate above 4.60% (and also sending subsequent rate-cut expectations soaring)… Market-Implied-Fed-Terminal-Rate-expectations Source: Bloomberg Simply put, the market is calling The Fed’s bluff in 2023 – pricing in rate-cuts (after The Fed triggers a recession) while The Fed still expects rates to stay higher for longer… Implied-Fed-Funds-Target-rate-2025 Source: Bloomberg We leave you with this this take from Derek Tang, an economist at LH Meyer in Washington: “This is supposed to send the message, we mean it this time, we’re not pussyfooting or fooling or messing around this time. The mistake up to now has been to walk on eggshells in fear of a recession. The higher unemployment forecasts are fair warning they will inflict pain and this has just begun.” Just remember the mantra of the last decade – don’t fight The Fed. Place your bets. Source.
Some historical information from the Market Ear backs up the theory that the “soft landing” and no recession looks very unlikely. First up Federal Express plunged last week on the back of downgrades in its expected earnings…

It only happens in a recession

FedEx is now down 52% from its high. The 3 prior 50+% drawdowns in its history all occurred during recessions (1991-92, 2008-09, 2020). FedEx-Chart Source: Compound

This only happens in a recession

The Fed now projects a 0.9%pt increase in the unemployment rate; this has not previously occurred outside of a recession. US-Unemployment-rate Source: FRED / JPM

Fed tightens first. Earnings fall later

Mike Wilson outlined yet another leading indicator that points to EPS [Earnings per Share] downside – the Fed Funds Rate. Chart below shows that the deviation of the Fed Funds rate from its 2-year avg. alongside trailing net income growth … and that a rising Fed Funds Rate tends to correspond to earnings headwinds on a leading basis. Fed-funds-rate-vs-SP500 Source: Morgan Stanley Source: The Market Ear
So there are a lot of indicators pointing to a recession coming. Even if those in control keep trying to tell us it isn’t that likely to happen. Where the US goes the rest of the world generally follows, New Zealand included. We have more commentators and economists here starting to realise this now too. For example:
New Zealand facing higher inflation or unemployment rising as economist warns one ‘needs to win’ An independent economist is warning the Reserve Bank faces a battle between “the lesser of two evils” – inflation and unemployment – with the official cash rate (OCR) now being forecast to rise higher than first thought. Source.
Central banks won’t walk all the talk Central banks will keep hiking interest rates, but won’t follow through on all their tough talk. This is the view of Fisher Funds’ chief investment officer Ashley Gardyne, who is among a group of economic observers who believe the New Zealand economy won’t be able to handle too many more aggressive official cash rate (OCR) hikes. Read more
So there are more people starting to think the central banks won’t hold strong for as long as they might make out.

History Says Not to Worry About Silver’s Delayed Reaction to Inflation

You (like us), might have expected silver to be doing better given the high rates of inflation we have seen this year. Jeff Clark also thought the same so he went back to the last time we had high inflation and he charted the CPI vs. the silver price…

Silver Historically Had a Delayed Reaction to Inflation

“Here’s what it shows—notice what occurred in the second half of the 1970s. Silver-vs-CPI-1970s Inflation began moving up earnestly in early 1977—but silver didn’t begin its parabolic rise until nearly two years later. In other words, silver had a delayed reaction the last time we had spiking inflation. Like we’re seeing now. While that observation may not offer a lot of comfort, it does show that there is historical precedence for silver’s delayed response to inflation today.” Source. With silver it is definitely a case of patience required. Yes it likely has some catching up to do. But we know from experience that when it runs it runs fast. So it is a case of buying what you think you need and then stacking it away and forgetting about it for a while. Get in touch if you have any questions about silver or gold:
  1. Email:
  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:

What Does Gold Spot Price (Or Silver Spot Price) Mean?

Tue, 27 Sep 2022 6:20 PM NZST
What Does the Gold Spot Price (or Silver Spot Price) Mean? In simple terms the gold spot price (or silver spot price) means the price for delivery of a commodity like gold or silver, right now. The gold spot price relates to the price for 1 troy ounce of gold (or 1 troy ounce of silver for […] The post What Does Gold Spot Price (Or Silver Spot Price) Mean? appeared first on Gold Survival Guide.
Read More…

The Queens Death and N.Z. Currency

Wed, 21 Sep 2022 4:17 AM NZST
The-Queens-DeathPrices and Charts Looking to sell your gold and silver? Visit this page for more information Buying Back 1oz NZ Gold 9999 Purity $2712 Buying Back 1kg NZ Silver 999 Purity $1007 Weaker NZD Supports NZD Gold Price The trend continues of the weaker New Zealand dollar supporting precious metals prices here in New Zealand. […] The post The Queens Death and N.Z. Currency appeared first on Gold Survival Guide.
Read More…

Why Gold Bullion is Your Financial Insurance (& How It’s Still Not Too Late to Buy in 2022)

Tue, 20 Sep 2022 1:07 PM NZST
Why Gold Bullion is Your Financial insuranceGiven that we hear the price of gold quoted each day in the financial news, it’s not surprising that most people buy gold with the expectation it will go up in price? Perhaps this isn’t the best way to think of gold. See why you should think in terms of wealth protection first, profit potential second. […] The post Why Gold Bullion is Your Financial Insurance (& How It’s Still Not Too Late to Buy in 2022) appeared first on Gold Survival Guide.
Read More…

Will NZ’s Housing Market Be the World’s ‘Crash Test Dummy’?

Wed, 14 Sep 2022 4:34 AM NZST
Will-NZ-housingPrices and Charts Looking to sell your gold and silver? Visit this page for more information Buying Back 1oz NZ Gold 9999 Purity $2729 Buying Back 1kg NZ Silver 999 Purity $994 NZ Dollar Continues to Be Main Driver of Local Gold Price Gold in New Zealand dollars was up $20 from a week ago. […] The post Will NZ’s Housing Market Be the World’s ‘Crash Test Dummy’? appeared first on Gold Survival Guide.
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:
  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
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