NZ Dollar, RBNZ Announcement and Inflation

Gold Survival Gold Article Updates:

Apr. 24, 2014

This Week:

  • Metals Prices versus Share Prices
  • NZ Dollar, RBNZ Announcement and Inflation
  • A Short History Lesson on Tax in NZ

 

Our apologies that we didn’t get a newsletter out last Thursday. Our website was unexpectedly down for part of that day so there was no point in sending something out when you wouldn’t be able to read the articles attached.

As a result there’s quite a list of articles and videos posted on the site for you to peruse. See down the page a bit for links and intros to all of them.

Given the lack of an email last week, today we’ll give the movements in price from 2 weeks ago instead…

 

Gold in NZ dollars is down $12.75 per ounce or .85% from 2 weeks ago. Sitting just below $1500 as we type at NZ$1495.75. 

While silver is down about the same percentage wise – 0.83% – or 19 cents from 2 weeks ago to NZ$22.67 per ounce.

After a steady rise since the start of April, USD gold plunged last week getting below $1300 in a hurry. This was caused by a half billion dollars of gold futures being dumped at the not particularly sensible time (i.e. suspicious) of 8.27am New York time.

Gold in both US dollars and NZ dollars has continued to edge lower since then. You can see in the chart below that in both currencies it may well be forming a double bottom around US$1280 and NZ$1500 respectively, and trying to eek out a higher low from those reached at the end of December.

NZD Gold Chart

 

Also of note today is that most precious metals mining shares are up a couple of percentage points, even in the face of the price of the actual metals being pretty stagnant.

This divergence is quite obvious in the chart below of the gold ETF GLD versus the mining index GDX. GLD (blue line) is barely changed from yesterday (Note: Chart is in US time so Wed 23rd is today), while the mining index GDX is up quite noticeably.

GLD vs GDX Chart

And the shares actually began rising on Monday while GLD dropped slightly.

As we’ve mentioned before the shares often lead the metals price both up and down. So this could be an indicator that gold will head higher in the coming days.

 

Like gold, silver also headed lower last week 

In fact with the kiwi dollar holding close to recent highs, silver in NZ Dollars has actually dipped just below the lows of December and March. 

NZD Silver Chart

 

You can now buy silver at prices not seen since February 2010

However like the gold mining shares, the silver miners might be indicating a move higher in silver also. Silver has been pretty flat for the past few days, while the SIL miners index has risen 5%.

Silver Vs Silver Miners

 

NZ Dollar, RBNZ Announcement and Inflation

To be honest we get annoyed having to listen to the central bankers but their words continue to move markets, so we continue to listen like the rest, given it affects the NZ dollar and therefore the gold price.

The press release that accompanied RBNZ rate hike announcement to 3.00% this morning did not contain anything that significant. Guv Wheeler noted:

—–

“The speed and extent to which the OCR will be raised will depend on economic data and our continuing assessment of emerging inflationary pressures, including the extent to which the high exchange rate leads to lower inflationary pressure.”

—–

It is noteworthy that whole milk prices have fallen 20% in the past couple of months. Inflation also seems to be slowing as opposed to rising. The RBNZ raised its inflation projection at the time of the March OCR increase from 1.5% to 1.9%. But the March quarter CPI came in much below expectations (0.3% versus 0.5%) so the need for further rate hikes could be a somewhat less than most expect.

If this plays out we might well see the NZ dollar weaken from where it is. 

As mentioned earlier the kiwi dollar is holding fairly steady just down from the highs earlier this month. It did edge slightly higher following the rate increase this morning but is still down a cent from recent highs.

Likewise the dollar has still not yet breached or in fact reached the high from 2011 (show by the red circle in the chart below).

NZ Dollar Chart

 

To our eye there seems to be more downside than upside risk to the dollar from here. But we’re not a bank economist so what would we know?

A Short History Lesson on Tax in NZ

With the financial year having just ended, with it comes the need to prepare tax returns to tell the government how much they can legally plunder from you this year. (if you’re an employee then you just get it stolen from you every pay packet of course so the pain is somewhat dulled when by not handing it over in such a big lump) So we thought you might be interested to see the changes that have occurred in income tax over the past century in NZ.

You have likely come across the fact that income tax arrived in the USA “temporarily” in 1913 to help fund the 1st World War. (Co-incidentally(?) also the year that the Federal Reserve act was enacted.) Income taxes were also enacted during periods of the 1800’s in various forms but 1913 was the year federal laws were enacted. 

Source. 

However you might not know that just like being first to give women the vote, and being first to enact Bank Bail-in provisions, New Zealand also beat the USA to having permanent income taxes. 

You see, income tax was first introduced in New Zealand in 1891.

—–

“For income tax, individuals were exempt if they earned less than £300 per annum ($50,000 in 2008). This was most of the population. The top tax rate was 5%. Companies paid 5% on profits. Dividends (payments by public companies to their shareholders) were not taxed…

By 1900 tax revenues had increased from 6.4% to 8% of GDP. The tax system and the size of the state were very different from modern times. Before the First World War the top rate of income tax was 6.65%.”

Source.

—–

My, how things have changed! Back in 1891, no one earning under $50,000 (in 2008 dollars equivalent) paid any tax. And at most you paid just 5%.

This recent NBR article runs through how this changed over the rest of last century.

That might make you feel worse when you hand over your likely somewhere between 20-33% fee to the IRD this year. But it shows you the overall trend is unfortunately up for taxes.

 

Inflation low – but is it?

As mentioned already the inflation rate for the March quarter was 0.3% or 1.2% annualised. However of note were some of the contributors to this number. 

—–

“Housing and household utilities underpinned the annual lift in the inflation rate, with new housing prices up 5.1 percent, rentals up 2 percent, and property maintenance services increasing 5.1 percent. Dwelling insurance prices were up 21 percent in the year.

Energy prices rose 2.7 percent in the year, with a 2.9 percent increase in electricity prices and a 2.1 percent lift in gas prices.”

Source.

—–

Note that all these are expenses you have every year (well except buying a new house but then rates rise with house prices and you do pay these every year). Whereas consumer electronics, furniture and overseas holidays (all of which fell in price) aren’t necessarily regular purchases for most.

Just shows you how irrelevant CPI is to the average family.

Check out this article we wrote on this subject last year for more on the topic.

Inflation low- but is itHere’s Why Not to Believe the NZ Government’s Inflation Statistics – Comparing Money Supply, Government Inflation Statistics, Property Prices, and Gold Prices for the Last 10 Years

Even if the government numbers try to lead us to believe that inflation is lower than it is, over the long term gold and silver are likely to be a decent hedge against this loss of purchasing power. Over the past 10 years that has been the case, odds are the next 10 will be too.

With silver in particular as cheap as it was 4 years ago, now looks like as good a time as any to get some financial insurance. Get in touch if you agree.

 

 

This Weeks Articles

 

 



Bank Bail-Ins Going Global
Bail in2014-04-10 00:32:54-04
Gold Survival Gold Article Updates:   This Week: NZ Government Deficit May be Bigger Than Expected Bank Bail-Ins Going Global Reader Question on Gold and Silver and Airport Customs  Rather a quiet news week this one in the world of precious metals it seems. Can’t say we’ve come across anything too earth shattering in […] read more…

Listening to the Canary
Canary2014-04-14 19:40:39-04
Here’s an interesting look at how the world has been desensitised to money printing and so now expects everything to just continue as it has done so far. However, you’ll see the problems the central planners still have to face and overcome, and it offers an opportunity to see what the consequences of economic mismanagement can […] read more…

Top 17 Reasons To Own Gold Right Now
17 reasons2014-04-14 20:27:44-04
It seems Chris Duane of Silver Bullet Silver Shield has done somewhat of an about-face on his theory of selling your gold to buy silver. As his latest video is entitled “Top 17 Reasons To Own Gold Right Now”. Previously he has certainly been very pro silver. In November last year we outlined why we […] read more…

THE REAL PURPOSE OF QE
Real Reason2014-04-15 20:18:48-04
Darryl Schoon gives his take on what the Fed has really been aiming for in its money printing programme. It’s not unemployment or financial stability or even inflation targeting. He also looks at where things might be heading and there’s a couple of shortish videos towards the end that are worth a look too, particularly […] read more…

Doug Casey’s Coming Super-Bubble
Doug Casey 22014-04-21 18:28:40-04See why Doug Casey thinks truly explosive gains for Junior mining
stocks are not just possible, but probable in the not too distantfuture […] read more…


A Crisis vs. THE Crisis: Keep Your Eye on the Ball

Eye on Ball2014-04-21 20:22:11-04We recently had a conversation with someone where they thought gold
had only risen this year because of the troubles in the Ukraine. We
pointed out that it had been rising since the end of 2013 before
there was much talk of Ukraine at all. But that the escalation had
likely pushed gold higher and close to the US$1400 level. The
following article shows clearly the impact of geo-political
ructions on the gold price, but that they are usually short term in
nature. More importantly it outlines what we should really bewatching out for […] read more…
Meltdown America – Are You Prepared For the Coming Collapse?
Coming Collapse 22014-04-23 17:33:09-04This documentary features an interesting mix of people being
interviewed. Not just the usual economists and hard money experts,
but real people that have lived through monetary troubles in anumber of different countries. Well worth a watch we reckon […] read more…

 

Insurance remains cheap at the moment when most aren’t interested in buying it. But if you are get in touch.

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

 


Today’s Spot PricesSpot Gold
NZ $ 1495.75 / oz
US $ 128410 / oz

Spot Silver
NZ $ 22.67  / oz
NZ $ 729.00  / kg
US $ 19.47  / oz
US $ 625.85  / kg

7 Reasons to Buy Gold & Silver via GoldSurvivalGuide

Today’s Prices to Buy

1oz NZ 99.99% pure gold bar

1oz NZ Gold Ingot
 

$1546.61

1kg NZ 99.9% pure silver bar

1 Kilo NZ Silver Bar
 

$801.90
(price is per kilo for orders of 1-4 kgs)

$793.83
(price is per kilo only for orders of 5 kgs or more)

 

 

 

 

1oz PAMP Suisse 99.99% pure gold bar

PAMP Gold

$1593.10

1kg PAMP 99.9% pure silver barPAMP Silver 
 

 

 

$851.90

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


$1607.93
1oz Canadian Silver Maple 99.99% pure silver coin (Minimum order size tube of 25 coins)



Silver Maple



Silver Box

Tube of 25 $716Box of 500 $13455(Fully insured and delivered) 

 

 

 


 

 


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.




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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 888 465
From outside NZ: +64 9 281 3898
email: 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 © 2013 Gold Survival Guide.
All Rights Reserved.

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2 thoughts on “NZ Dollar, RBNZ Announcement and Inflation

  1. Pingback: Gold Prices | Gold Investing Guide Silver Bullion Price at 4 Year Lows - Gold Prices | Gold Investing Guide

  2. Pingback: 2014 Gold Coverage Ratios - How Much Gold Does NZ Have? - Gold Prices | Gold Investing Guide

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