We’re a day early today as we thought we might struggle to get this email out tomorrow due to other commitments. And thankfully perhaps for you it won’t be as long as usual (okay, easy on the applause, we’re not usually that long winded!) But as you’ll see below we have 3 articles and 1 video posted on the site to make up for this.
As usual first up a look at prices and charts
NZ dollar gold is today up $8.16 or 0.55% on last week to $1496.45 per oz.
Meanwhile silver is at $23.98 per oz. Down 21 cents or 0.87% on last Thursday.
The NZ dollar is at 0.8306 versus 0.8327 last week. More on that topic a bit further on.
More Positives from Gold and Silver Miners
As we mentioned last week the fact that the gold and silver mining shares have been leading the metals is likely a positive indicator. Well today that was very evident again. Even though the price of gold and silver were both down overnight, the shares of most of the mining companies we follow were actually up quite nicely. Fortuna Silver Mining was actually up 10% today.
We read somewhere recently that Rick Rule said some big money has been circling the miners lately. Not necessarily taking major positions but showing much more interest than they have in a while. (Speaking of Mr Rule, in case you missed it at the time, here’s our summary of Rules presentation at the Sydney Gold Symposium late last year, where he discussed the pyschology of buying assets when they are on sale.)
Also this week GoldCorp announced a takeover bid for Canadian rival Osisko. So that shows that a major miner sees value here, or they wouldn’t be prepared to spend up on an acquisition.
Of course the miners are coming from a very low base so have plenty of room to run. One of this weeks articles looks specifically at the shares and just how undervalued they are via a series of very compelling charts.
The big gold news this week has been all about Germany
Three topics in fact, perhaps all related to some degree?
1. First up, recall how Germany asked for much of its gold held offshore in France and New York returned to German soil last year? And how it was announced they had agreed to a 7 year timeframe for the transfer to take place? Reports this week show how little of it was transferred in 2013. Only 5 of the 300 tonnes from the Federal Reserve. And only 32 of the 374 tonnes at the Banque de France. There have been all manner of reasons trotted out as to why so little, some with a bit more credence than others.
2. Next the head of Germany’s financial regulator (BAFIN) made some comments on the ramifications of postulations about manipulations in gold. (thats a lot of “tions”!) You might recall they have begun an investigation into the London gold “fix”. However Perth Mints Bron Suchecki has the actual quote from the head of BAFIN and rather than specifically saying there is manipulation, rather she is referring to “the accusations of manipulation around important reference rates…” and how “These allegations are particularly serious, because such reference values are based – unlike LIBOR and Euribor – typically on actual transactions in liquid markets and not on estimates of the banks.”
So perhaps not as major an event as some might think.
Nonetheless it is interesting to have a financial regulator investigating these allegations, although recall nothing came of a similar investigation in the US by the CFTC. So don’t hold your breath. We’d be surprised if anything significant results from it.
3. Finally also in Germany was the interestingly timed announcement from Deutsche Bank that they were resigning their seat on LBMA’s London Fix. Very curiously coming after the announcement from the head of BAFIN. Hmmm.
We’re not sure what to make of all this really. No doubt in due time it will all be clear but for now we have read many theories on the connections and don’t know exactly who we’d side with. They’re all just guesses anyway. The only thing for sure is that the central planners are doing all they can to keep the facade going. And the German Central Bank is still a part of this charade.
Here’s a few GATA posts with links to various articles if you want a few opinions yourself:
A couple of this weeks articles on the site also touch on these German issues.
First up we have “Why Gold Still Remains So Misunderstood”. This piece comments on the latest on Germany’s gold repatriation, along with Deutsche Bank resigning from its seat at the LBMA’s London Gold Fix. Plus it looks at why most remain quite confused about gold and silver.
Next we have a video interview with Sandeep Jaitly from Fekete Research in which he also has some comments surrounding the German gold situation, as well as many other topics including China, USA and India. Not too long and worth a quick watch.
The final article on the site looks what might follow a collapse in the US petrodollar system such as major collapses in the bond and stock markets and possible sudden deflation (primarily of assets), followed by dramatic inflation, if not hyperinflation (primarily of commodities), followed by a crash of several major currencies, particularly the euro and the US dollar.
The secondary events will be less certain, but likely: increased unemployment, currency controls, protective tariffs, severe depression, etc.
NZ “Rock Star” Economy Already Priced into NZD?
The New Zealand “Rock Star” economy has reached the Wall Street Journal today. In a piece entitled “New Zealand Outpaces Crawling World Economy” the WSJ explains:
“In a world still limping its way out of the global financial crisis, New Zealand’s economy is looking remarkably zippy. Evidence of how prosperous New Zealanders feel is everywhere.”
It goes on to discuss housing demand and prices along with high dairy prices and the likelihood of an interest rate hike by the reserve bank. Nothing that ground shaking that we haven’t heard locally.
But the question that arises is whether anecdotally this indicates the “nothing but good news for NZ” story might have reached the mainstream globally already?
Always hard to make a call as to how widespread a theme has become and whether it has reached saturation point. If in fact this is the case then an article from Roger Kerr on Interest.co.nz is worth mulling over. He looks at the New Zealand dollar in reference to the Aussie and US dollars and where they have been in the past and asks where the kiwi dollar might head this year?
“History also tells us that the NZD/AUD forays into the 0.9000’s never last for too long and the two economies always eventually re-align with each other.”
His reasoning for why this may happen is:
“As FX markets always price the future into today’s exchange rate, the question has to be asked as to whether all the very favourable NZ economic news is now fully priced into the NZD/USD exchange rate and further independent NZD gains are unlikely as the good news cannot just keep on repeating.”
So we wonder if the WSJ article perhaps shows that this is the case? That is, that the “good news” is close to being priced into the kiwi dollar already? Kerr goes on to outline a few factors that could turn the kiwi dollar back down from current high levels:
“Given the Kiwi’s over-extension against the beleaguered AUD, a number of developments over coming weeks and months could prove to be more negative for the Kiwi on its own:-
* Large trading positions, long NZD/short AUD, just have to be unwound at some stage following the six cent spiral in the NZD/AUD cross-rate from 0.8800 to 0.9400.
* Interest rate and FX markets seem to be expecting an immediate OCR increase by the RBNZ on 31 January – they stand to be disappointed with inflation still too low, the exchange rate still too high and insufficient time for the RBNZ to evaluate the impact of LVR’s on the residential property market.
* Wholemilk powder prices commence a correction downwards as European and American powder supply comes onto the market to meet the high Chinese demand due to their domestic supply being severely reduced by herd reductions as a result of foot and mouth disease.
There remains considerable confidence that the NZ economy will expand by 3.5% to 4.0% this year and this expectation has prompted international investors to single out the NZ dollar for special/favourable treatment.
However, food and manufacturing exporters into Australia will be hit hard by the high NZD/AUD exchange rate and it will only take lower milk powder prices or a slowing housing market to dent the buoyant mood in New Zealand right now.
In world currency markets, the USD is finally making gains against the Euro following another reiteration from the ECB that they will ease their monetary conditions further.
A lower NZD against the USD and higher NZD/EUR and NZD/GBP cross-rates still appears to be the more likely scenario for 2014.”
Overnight with NZ inflation data for the last quarter came in higher than expectations. ASB reported:
“Q4 CPI increased 0.1% over the quarter, stronger than our expectations of a 0.1% decline and RBNZ forecast of a 0.2% decline. The result saw the annual rate of inflation lift up to 1.6%, from 1.4% in the previous quarter…. Overall, the CPI outturn points to the inflation environment in the NZ economy remaining contained in the near term, although there are some signs worth keeping an eye on.
We continue to expect the RBNZ will wait until March to raise the OCR, although we now see the probability of a January OCR increase as slightly higher now (25%, up from our pre-CPI view of 20% probability). The outcome does fall into a grey area: inflation is stronger than both we and the RBNZ expected, but the upside surprises are largely in the areas which are of less concern for the RBNZ. “
The NZ dollar did move higher yesterday on the news – currently at .8306. But it was up less than a cent and is still below the highs of earlier in the month (see chart below). So that may well be evidence that most of the “good news” has been priced in. It seems almost everyone already expects interest rates to be higher here in the next couple of months. It will be interesting to see if the kiwi dollar heads much higher from here.
As always, only time will tell whether Kerr is correct about a lower NZD against the USD being more likely for the year. But at close to highs for the NZD/USD cross rate and close to lows for gold and silver prices, this may make it a pretty favourable time to add to or begin accumulating precious metals for New Zealanders in the long run.
On top of this an article by Minewebs Lawrie Williams (who offers a pretty sensible middle of the road perspective- as he usually does) who asks if just maybe, possibly, Is confidence returning to the gold markets?
If you think it might be a good time to take a tranche then get in touch. We’re happy to answer any questions if you’re unsure about anything via email, phone, or “Live Chat” on the website.
1. Email: firstname.lastname@example.org
2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
3. or Online order form with indicative pricing
Have a golden week!
Glenn (and David)
Ph: 0800 888 465
From outside NZ: +64 9 281 3898
This Weeks Articles:
|New Zealand Almost Losing the Race to Debase|
|2014-01-15 22:20:39-05 Gold Survival Gold Article Updates: Jan. 16, 2014 This Week: NZ Dollar: Rising and Rising Forevermore? 10% Wealth Tax on the Cards? New Zealand Almost Losing the Race to Debase Latest from Ronald Stoeferle Compared to last week, NZ dollar gold is up $7.26 per […]read more…|
|Contrarians’ Wildest Dream Coming True|
|2014-01-16 17:15:37-05As we noted in our weekly email yesterday, gold mining shares held up well in late december when the USD gold price retested the June lows around $1180. You can see in the chart below that while gold dipped down to the $1180 mark on the last trading day of 2013, the Gold Miners Index […]read more…|
|A Glimpse into the Coming Collapse|
|2014-01-20 20:33:59-05It might seem like there is not much reason to internationalise your assets here in rosy looking New Zealand. However the time to prepare is not when trouble appears but rather when it seems far on the horizon. In this piece from the International Man we get a look into what to consider from a […]read more…|
|Why Gold Still Remains So Misunderstood|
|2014-01-20 21:23:57-05Here’s some commentary on a few of the major news items out this week concerning gold and silver. Including the latest on Germany’s gold, Deustche Bank resigning from its seat at the LBMA’s London Gold Fix and more… As we start 2014, due to gold’s 30% drop and silver’s 37% drop in 2013, sentiment regarding precious metals is […]read more…|
|Sandeep Jaitly: Why the USA is Selling China Its Gold|
|2014-01-21 17:34:46-05The always interesting Sandeep Jaitly was on the Keiser Report today. The interview begins at 12:15. Sandeep discussed with Max a multitude of topics including: Why Sandeep thinks a reported potential increase in China’s gold reserves from 1,100 tonnes to 2700 tonnes is a good move. Why is the USA selling China it’s gold? And […]read more…|
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