How the China Slowdown Will Impact NZ

How the China Slowdown Will Impact NZ

This Week:

  • Common Questions from First Time Precious Metals Buyers
  • How the China Slowdown Will Impact NZ
  • Silver Shortage – Reality or Hype?

 

Prices and Charts

Spot Price Today / oz Weekly Change ($) Weekly Change (%)
NZD Gold $1770.93 + $10.68 + 0.60%
USD Gold $1121 + $13.80 + 1.24%
NZD Silver $23.62 + $0.33 + 1.41%
USD Silver $14.95 + $0.30 + 2.04%
NZD/USD 0.6330 + 0.004 + 0.63%

Are You a 1st Time Buyer of Gold or Silver?

If you’re one of the many people new to precious metals and thinking of buying gold and silver, we’ve updated and extended a previous article of ours with the answers to many common questions we get.

Common questions for 1st time gold & silver buyersJust a few of the questions covered include:

  • What is the spot price of gold or silver?
  • What percentage of gold vs silver should I buy?
  • How do I pay and do I have to pay upfront?
  • Along with covering shipping, insurance, and storage options.

So we’d highly recommend you check that out if you’re pretty new.

Buying Precious Metals | Common Questions from First Time Buyers

US Interest Rates – Will They or Won’t They?

It seems all eyes are waiting on the US Federal Reserve announcement tomorrow. Yet another will they or won’t they on raising interest rates. This has been going on for well over a year now, but unfortunately that is the world we live in. A world where everyone waits on the word of the “wise few” to decide the price of money.

We still reckon they won’t change them. But who knows? We’ve read some good arguments as to why the Fed might shock everyone with a rate rise, cause a crash in stocks and give themselves room (and an excuse) to cut again soon.

This seems to be what is holding gold and silver in the ranges they have been in too.

Gold and Silver in NZ Dollars This Week

NZD Gold has been holding just above NZ$1750 all week. So far at least it hasn’t really pulled back much from the recent highs.

NZD Gold Chart

Silver remains in an even more compressed trading range. This morning it again bumped up against the overhead resistance line in this wedge formation it has been in for many months now.

So odds are that the Fed announcement tomorrow could well break it out of this pattern.

NZD Silver Chart

Meanwhile the Kiwi Dollar has edged higher this week but not much higher off the multi year lows of last week.

NZ Dollar Chart

This article from last Friday outlines how gold mining shares are set up to have a big move tomorrow also.  And why the odds favour this being a rally higher.

So we sit and wait until tomorrow to see in which direction the metals move.

How the China Slowdown Will Impact NZ

Last week we discussed the possible impacts of China importing less from Australia and also how this might affect NZ.

We were reminded of something we posted back in 2012. An interview with Satyajit Das where he commented on how NZ might fare compared to Australia in a China slowdown.

Das is worth listening to. A very clear to the point style of speaking devoid of hype or fluff.
So far things for Australia and NZ seems to be playing out much as he expected.

Sticking to the topic of China and its impact upon New Zealand

Rod Oram in the Sunday Star Times had quite a good run down of the troubles facing China and by proxy New Zealand.

“…the outlook crucially depends on China. If its problems deepen and its growth slows further, then things gets tougher for the global economy. We are not immune.

The caveat is wise. The Reserve Bank and most other economists around the world have consistently under-estimated China’s challenges. As a result, our growth, trade and inflation have all under-performed the Reserve Bank’s forecasts over the past couple of years.

China is the first or second largest trading partner for more than 100 countries. Yet New Zealand is one of the most vulnerable to a Chinese slow down, according to analysis published by the UK’s Guardian newspaper two weeks ago.

In the first seven months of this year, Chinese imports fell 14.6 per cent. If this continued for a year, we would lose exports equivalent to 1.9 per cent of our GDP.

The common view here and abroad is that China’s growth is slowing because it is making the transition from an investment-driven economy to a consumer-driven one. This is superficially reassuring to us, suggesting that Chinese people will buy even more of the food, drink, tourism and education we sell them.

But what’s going on in China is far more profound. The country is undertaking its biggest, most complicated and difficult strategic shift in its 35 years of modernisation, a senior bank economist told this columnist in an interview in Beijing this week.”
Source.

We hunted out the article Oram referred to in The Guardian (see their Infographic here). Indeed he is right that according to their analysis New Zealand will be the most affected in terms of percentage of GDP. The chart is misleading at first glance as our “circle” is so small but as a percentage of GDP the change is very significant.However as we noted last week China does not make up as large a percentage of total exports for NZ (15%) as they do for Australia (36%).But we were still surprised to see a 14.6% drop in imports in China would have such a big impact on New Zealand’s GDP.We still think the odds of NZ also heading into recession is much higher than most would think. As Rod Oram points out at the start of his article the RBNZ and most other bank economists around the world have underestimated China’s challenges in recent years.That seems to be continuing with NZ GDP rising 0.4% in June quarter from March versus the RBNZ and economists consensus forecast of 0.6% growth.Weaker exports, stronger imports, and transport and warehousing also being the softest since 2009  were blamed.As a result of this the current account deficit also widened.

“A rise in New Zealand’s overseas expenditure combined with a fall in earnings from exports drove an increase in our seasonally adjusted current account deficit, Statistics New Zealand said today.

The annual current account balance was a deficit of $8.3 billion (3.5% of GDP) for the year ended June 2015. This compares with a revised deficit of $8.1 billion (3.4% of GDP) for the year ended March 2015. The larger current account deficit was mainly due to a combination of decreased goods exports and increased goods imports.”
Source.

What is a current account deficit?

From investopedia:

“The difference between a nation’s savings and its investment. The current account is an important indicator about an economy’s health. It is defined as the sum of the balance of trade (goods and services exports less imports), net income from abroad and net current transfers. A positive current account balance indicates that the nation is a net lender to the rest of the world, while a negative current account balance indicates that it is a net borrower from the rest of the world.”
So in short New Zealand remains a net borrower from the rest of the world. The major weakness in our economy persists and is likely to get wider in coming years.
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We saw this over the weekend and wondered what impact it will have on NZ?

“Today’s chart shows that peak in the dollar value of China’s foreign exchange reserves. 
China's FX ReservesAs Bill explained, China amasses forex reserves by exporting goods and receiving foreign currency as payment.[ GSG NOTE: Bill Bonner that is who said: “So you could track much of the global growth binge by looking at China’s foreign exchange reserves. As they went up, more and more money flowed back into U.S. financial assets… and Americans borrowed and spent more and more.
But whoa, whoa, whoa! Those foreign exchange reserves have now peaked.”And as you can see above, last year, these reserves peaked at a dollar value of $4 trillion.That’s roughly the same amount as the Fed spent buying U.S. government-backed bonds under its three QE programs.Now that trend is going into reverse…China is switching from an export-led growth model to a domestic consumption-based model.

As its exports shrink, less foreign currency is flowing into the country to pay for exports…

…and that means less forex reserves being recycled into financial assets outside of China.”
Source.

So the upshot of this is the rest of the world is feeling the effects. New Zealand has not, and likely will not, be immune to this reduced flow of currency.

Will it mean less money from China finding its way here? How will that affect the property market?

Points to ponder we think.

Silver Shortage – Reality or Hype?

Silver ShortageWe’ve seen quite a number of articles on the interwebs this week about silver shortages. We’ve posted a short video from Mike Maloney on the topic and then given our thoughts on the matter. There is a lot of “opinion” on this topic floating around. So we’ve tried to navigate some middle ground in our thoughts.

But one thing that is not in doubt is that demand is pretty high and supplies of many popular products are low or even not available. This seems to now be feeding through to causing delays in other products.

Silver Shortage – Reality or Hype?

So get in touch if you’d like a quote, but bear in mind that for silver you may be waiting longer than usual for delivery. However for an extra $27 a kilo, you can get Swiss PAMP silver available now. Also there is better pricing available for orders of $50,000 or more.

Free delivery anywhere in New Zealand and Australia

We’ve still got free delivery on boxes of 500 x 1oz Canadian Silver Maples delivered to your door via UPS, fully insured.

Todays price is $15,135 but delivery has blown out to at least 5 weeks away.

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This Weeks Articles:

Silver Shortage?

Silver Shortage – Reality or
Hype?

2015-09-16
01:26:11-04

Mike Maloney just released a very short video looking at the
current shortages of many silver products being encountered currently.

We’ve summarised the content of the video below. But make sure
you also check out our on views on his comments below the video and the
latest on what we are seeing here in New Zealand as far as silver shortages
go… […]

Biggest Risks to Auckland and Wellington

Lloyd’s of London: Biggest
Risk to Auckland and Wellington is a Market Crash

2015-09-10
01:29:48-04

This Week: How China Will Blow Up Australia (and NZ?) Ronni
Stoeferle’s Latest Gold Chartbook Lloyd’s of London: Biggest Risk
to Auckland and Wellington is a Market Crash Why we Should Talk About the
Price of the Dollar   Prices and Charts Spot Price Today / oz Weekly
Change ($) Weekly Change (%) NZD Gold […]

Common first time buyer questions

Buying Precious Metals | Common
Questions from First Time Buyers

2015-09-15
20:03:44-04

UPDATE: We’ve been receiving a number of common questions
from first time gold and silver buyers recently. So we thought it worthwhile
to dig out this old post of ours from 2012 and update it. We’ve added a
few new questions that we didn’t have in there before and generally
tweaked it here and there […]

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. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
  2. or Online order form with indicative pricing

Today’s Spot PricesSpot Gold
NZ $ 1770.93 / oz
US $ 1121.00 / oz
Spot Silver
NZ $ 23.62 / oz
NZ $ 759.38 /
kg
US $ 14.95 / oz
US $ 480.69 /
kg

1oz
NZ 99.99% pure gold bar

1oz NZ Gold Ingot
$1831.14
1kg
NZ 99.9% pure silver bar

1 Kilo NZ Silver Bar
$858.10
(price is per kilo for orders of 1-4 kgs)
$841.52 
(price is per kilo only for orders of 5 kgs or more)
order now
1oz
PAMP Suisse 99.99% pure gold bar

PAMP Gold
$1971.81
1kg
PAMP 99.9% pure silver bar

PAMP Silver
$885.32
1oz
Canadian Gold Maple 99.99% pure gold coin

gold coinGold Maple
$1903.75
1oz
Canadian Silver Maple 99.99% pure silver coin (Minimum order size tube of 25
coins)

Silver Maple Silver Box
Tube of 25
$755.75
Box of 500
$15135

(Fully insured and delivered)
order now

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.

order now

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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 465From outside NZ: +64 9 281 3898email: 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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