Inflation – Hot and Going to Get Hotter Regardless of War in Ukraine

Prices and Charts

Gold Surging, Closing on 2020 Highs

Gold in New Zealand dollars shot up overnight. From 7 days ago  it is up $139 per ounce – or almost 5%. That is a hefty move and with the RSI into overbought (above 70) gold is due a correction. That correction could come from even higher levels, but it will come.

This week we thought we’d plot some Elliott waves into the chart. A real quick summary of Elliott wave theory. Basically there are 5 major waves. 3 of these are shown on our chart, labelled (1), (2), (3).

Then, within the major up waves are 5 smaller waves – labelled (i) to (v) on our chart. While the down wave takes the form of a down (a), up (b), down (c) correction.

So in our view we are in wave iii up of the 3rd major wave up. We are likely getting close to the end of this wave up. Which then should see a corrective wave down. See the green arrow labelled (iv). Then the final wave up. So new all time highs are likely this year for gold. And probably quite a lot higher than $3,150 current high.

So the ideal time to buy will be during the corrective wave (iv) down. Buy zones to watch for are at $2900, $2800, the 50 day MA and the blue uptrend line around $2725.

NZD Silver Jumping – Also Due a Pullback

Silver surged overnight, but over the past 7 days gold has been lagging gold. Up $1.44 or just under 4% versus gold’s almost 5% since our last update.

Silver in NZD got briefly above $40, now just above $39. RSI now just into overbought, so like gold, a pullback is due. Initial buy zones to watch for are $38, $37 and $36.

The key point here is silver is still lagging gold. Unlike gold, silver is a long way from all time highs. In fact it is still a fair way from the 2020 high of around $45.50. The all time high from 2011 is $62.50. Our guess is that once the 2020 high is broken it won’t take too long to reach the all time high. As there is not a great deal of overhead resistance levels between those two levels. But just be aware that before this happens we are likely to see an initial correction first.

NZ Dollar Down – But Maybe Just Sideways in the Long Run?

The New Zealand Dollar is down 43 basis points from a week ago. It looks like it is heading towards the 200 day moving average at 0.69. It might struggle to get too much above this.

The Kiwi remains clearly within the downtrend channel. In the longer term our guess is it continues in a large sideways trading range against the USD. As both currencies will continue to lose value against gold and silver.

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

NZ Housing to Silver Ratio 1968 – Dec 2021 – Measuring NZ House Prices in Silver

This week we’ve seen a few articles that allude to the potential for housing to fall:

A buyer-seller standoff has led to monthly property sales in January slumping to the lowest since the fallout of the global financial crisis, CoreLogic head of research Nick Goodall says. There were 4113 residential property sales in the first month of the year, the lowest number in over a decade, with the exception of April 2020 when a nationwide lockdown slashed sales to 1286, Goodall said.
Read more

Annual house price growth slowing, average values fell in February – QV
Read more

New credit rules and rising interest rates are having an impact on the housing market as price growth slows. The latest Quotable Value figures show the average house increased in value by just 2.3 percent nationally over the past three-month period to the end of February, down from the 6.1 percent quarterly growth in January.
Read more

So this week our feature article compares NZ house prices to silver. This is one of a number of our favourite measures of comparing gold and silver to other tangible assets. Rather than looking at dollar values.

Our ratio chart just plots quarterly prices so is only up until the end of December 2021. Where housing had been rising and silver not doing too much.

But our guess is we are now in the start of a period where silver will rise faster than house prices. Or maybe as the articles above discuss, house prices will even fall, while silver rises?

So check out the housing to silver ratio. It covers:

• What is the Housing to Silver Ratio?
• How Have NZ House Prices Varied Over the Past 50 Years When Priced in Silver?
• How Many Ounces of Silver to Buy the Average NZ House Today?
• How Does the Housing to Silver Ratio in New Zealand Compare to the USA?
• How to Buy a Median Priced House in NZ Freehold, for Only $49,447…
• Is the 1970’s Repeating?

NZ Housing to Silver Ratio 1968 – Dec 2021 – Measuring NZ House Prices in Silver

Your Questions Wanted

Remember, if you’ve got a specific question, be sure to send it in to be in the running for a 1oz silver coin.

Inflation – Hot and Going to Get Hotter Regardless of War in Ukraine

Last week we shared a few media pieces that highlighted inflation fears were growing in NZ.

Following on from that, this week ANZ have adjusted up their inflation peak to reach 7.4% in the second quarter. Previously they forecast a peak of 6.4% in the first quarter. Expect these adjustments to continue for a while yet. As bank economists seem to usually be behind the eightball.

But worldwide we are seeing the same thing:

Inflation running hot, set to turn hotter

The war in Ukraine is being blamed, which of course oil and other commodities are likely to be pushed up by this. See: Leading economist says Omicron peak and Ukraine war will see inflation rise to its ‘worst’ in decades.

But don’t forget, the real cause of inflation is currency creation by central banks. Even if the war stops tomorrow, the monetary chickens will come home to roost.

Likewise if the war were to stop, we’d expect to see a pullback in gold and silver. As discussed in our recent post: How Does War Affect the Gold and Silver Price?

However we think the main driver of precious metals prices will continue to be people escaping monetary debasement.

So regardless of what happens in Ukraine, make sure you have enough gold and silver to shield you from the future fallout of past central bank and government policy.

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

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

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Shop the Range…

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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

• 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
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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