|Spot Price Today / oz||Weekly Change ($)||Weekly Change (%)|
|NZD Gold||$1751.10||– $32.72||– 1.83%|
|USD Gold||$1277.60||– $20.49||– 1.57%|
|NZD Silver||$25.31||– $0.14||– 0.55%|
|USD Silver||$18.47||– $0.05||– 0.27%|
|NZD/USD||0.7296||+ 0.0019||+ 0.26%|
|Looking to sell your gold and silver?Visit this page for more information|
|Buying Back 1oz NZ Gold 9999 Purity||$1690|
|Buying Back 1kg NZ Silver 999 Purity||$784|
Well. That was an action packed 24 hours!
As a “surprise” (at least to the mainstream media both in the US and here) Trump win looked likely, it seemed like the world was going to end. Share Markets tumbled across the globe and gold spiked sharply higher.
Then today we wake up to see everything apparently back to how it was. Sharemarkets have had snap-back rallies. Gold has dropped back to where it was prior to yesterday. What to make of it all?
We’ll come back to that shortly.
The charts show just how volatile things were yesterday and overnight.
NZD gold shot up above $1835 late yesterday. But then fell all the way back down to $1750 this morning.
Silver was very interesting to watch. It didn’t rise as sharply as gold. But today it also hasn’t fallen back so far. It is sitting just on the 200 day moving average and above the rising trendline. Unlike NZD gold, NZD silver continues to quietly trend higher over the past month.
The NZ Dollar has held up fairly well. Despite all the predictions of how Trump presidency would be so bad for us down here, the Kiwi is not far off its September highs today.
We’ll try to keep it brief as we’re pretty over it too.
Why did everything reverse course today after the doom and gloom end of the world predictions on the mainstream last night?
Alexander Green reckons:
The answer seems to be “Who knows?” Trump was suitably vague in much of what he said.
As we said a couple of weeks ago it probably didn’t matter who won. The US will continue along its preordained path.
Bill Bonner summed this up this morning:
While Trump’s election may have been a revolt against the US establishment, David Stockman certainly doesn’t believe he is a cure for the USA’s ills:
But it certainly looks like Trump will give an “economic revival” a good nudge!
His speech last night mentioned the infrastructure building program he has talked about. He is certainly not looking like constraining spending.
This leads in nicely to a theme of the articles we have posted on the website this week.
In our feature article we ask:
It seems like a Trump presidency could well crank up the spending and finally kick off a surprisingly high level of inflation.
Jim Rickards also agrees with this sentiment:
So while gold may not have popped even higher today, a further rise in the months ahead looks likely.
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The other theme we’ve been tracking lately is the bond market and interest rates. Here’s another article on this topic:
Bill Bonner has also noticed that perhaps the bond market has changed trend and we are at the beginning of a rising interest rates cycle:
If you want some specifics of the impacts of these rising borrowing costs then check out this excerpt:
So what about here in New Zealand?
Well the Reserve Bank cut the Overnight Cash Rate to a new record low 1.75. Largely as a result of persistently weak inflationary pressures. (See how the aim is to get inflation up still).
What was the impact?
The dollar didn’t fall much. Even though a “decline in the exchange rate is needed”.
The BNZ said it won’t pass on the interest rate cuts to borrowers. Saying it needs overseas funding to fill the gap between borrowers and depositors.
But what most won’t have noticed and hasn’t been reported is that even on a day when short term interest rates were cut, 10 Year NZ government bond rates actually rose.
Here’s a screenshot from Bloomberg this morning:
The Yield has risen 0.244 which is a rise from the day before of 8.94%.
Looking back to the low of August, NZ 10 Year Government bonds interest rates have risen from 2.143% to 2.951%. That is an increase in the interest rate of 37.7%.
So how can this happen when the RBNZ just cut the OCR?
Because these government long bonds are not so easily controlled. The market still has its way with them and it seems to be saying that the days of low long term interest rates are ending.
The fact that local banks aren’t passing on rate cuts is testament to the fact that their cost of borrowing from offshore is rising.
As Bill Bonner said above when this cost of credit begins to rise it sets off problems for companies that rely upon cheap credit to keep them afloat.
Here in New Zealand our model of borrowing to buy houses that always go up, also relies upon the falling cost of credit. Once interest rates start to rise here there could be problem.
Of course that’s not to say this will happen overnight.
The RBNZ will probably do all they can to stop this happening.
We could yet see further cuts in the OCR from the central bank yet. But it does appear the trend of ever falling interest rates may be coming to an end.
As we conclude in our feature article this week:
Prepare accordingly now.
Get in touch if you have any questions about the buying process. David is only too happy to answer them.
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Thu, 10 Nov 2016 9:19 AM NZST
Earlier this week we wrote the below article. It featured thoughts from a number of alternative commentators, and even Alan Greenspan, on how inflation may be just starting to poke it’s head above the parapet. Is Inflation Going to Surprise Us? Someone else who looks to be leaning to point of view that inflation will […]
Tue, 8 Nov 2016 4:48 PM NZST
Throughout most of the world, the last 7 or 8 years has delivered what appears to be very low levels of what is known as “consumer price inflation”. Sure house and other asset prices have risen in many parts of the globe. But these get conveniently stripped out of or “substituted” from most government measures […]
Mon, 7 Nov 2016 1:24 PM NZST
This Week: 3 Current Positives for Gold An Upside Surprise for Precious Metals From US Election? A Perfect Storm Has Formed in the Gold Market These Three Major Catalysts Are Poised to Send Gold to the Moon Prices and Charts Spot Price Today / oz Weekly Change ($) Weekly Change (%) NZD Gold $1783.82 + […]
Mon, 7 Nov 2016 11:51 AM NZST
In our subscriber only email newsletter last week we said: “So to us the odds of another Brexit-like surprise outcome seem to be much closer than most would expect. If Trump wins we will likely see a jump in volatility in the sharemarket. That is already happening after the FBI investigation announcement. If gold’s correction has […]
Fri, 4 Nov 2016 1:47 PM NZST
Back in September we discussed the possibility that the bond prices might have changed trend from up to down. Or put another way that long term bond yields or interest rates may be at the start of a trend change to higher interest rates: Has the Bond Bubble Popped? Interest Rates to Rise? Impact on Gold […]
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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.
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