September 13, 2012. We think this date will be looked back upon in financial history as a game changing date. Of course you’ll have heard about Bernanke’s announcement of effectively unlimited money printing last Friday NZ time. Bernanke’s motto seems to be: If at first you don’t succeed, try, try again, or maybe, as we refer to in our lead article this week, he’s been watching toy story…
Anyway, much like Nixon’s decision to sever the global monetary systems link with gold in 1971, this decision will likely have profoundly damaging implications for the average joe on the street. Particularly those that don’t have hard assets but just money in the bank.
So we’ve put together our thoughts as to how QE3 might impact New Zealand gold and silver prices and the exchange rate, along with other asset prices here. We’ve also charted the effects of previous money prints on the local prices of gold and silver. So that is definitely a must read this week:
Other articles for the week:
Also this week we have an article that outlines why we might now be going to experience much worse stagflation than that present in the 1970’s
A week can be a long time in the financial markets these days and the question in the title of the other article on the site could already have been answered When Will Gold Finally Take Off Again?
If you like to listen rather than read we’ve got a fairly brief interview with Bill Murphy of GATA fame and why he thinks $100 silver will not be that far off.
For the past month or 2 we’ve been outlining how gold has been in a pennant or flag formation also known as a consolidating triangle formation. See the 2 green lines in the chart below.
Technical analysis indicates that when this formation occurs after a breakout, you can add the height of the triangle (the flag pole), to the point of the breakout to arrive at a price target for the next rally higher. So since the height of last year’s breakout was NZ$350 and the breakout kicked off at around NZ$2100 we arrive a target for NZD gold of $2450.
Of course in a world manipulated by central bankers technical analysis offers no guarantee but can still be a good guide of what may come to pass.
If we use the same methodology for NZD silver in the chart below, we arrive at a price target of NZ$66.25 for the next move up. This being NZ$31.25 (the move up last year after the breakout from $33.75), added to the current breakout price of $37.50.
While we have our technical analysis hat on, there’s also another indicator that is close to being confirmed for both gold and silver in USD and also in NZD. Given we buy gold and silver with New Zealand dollars we’ll show the kiwi dollar versions of the charts.
This indicator of a change in trend is when the 50-day moving average (blue line) crosses the 200-day moving average (red line). We’re not quite there yet but getting very close. As you can see in the chart, the last time this happened NZD gold rallied over $650 per ounce over the next couple of years.
The same set-up is also approaching for silver. You can see it in the earlier chart where we showed the price target for the next move in silver. Like gold, silver’s 50-day moving average (blue line) last crossed up over the 200-day moving average (red line) at the end of 2009. This preceded the move from NZ$23.00 to NZ$62.50 over the next 18 months.
So the stars certainly do seem to be aligning for the precious metals at the moment. Does that mean we are about to blast higher right now? Not necessarily, as obviously post Bernanke’s announcement most have swung to once again be bullish on gold and silver, so a pause would make sense. But will that pause be in the form of a consolidation sideways as we are seeing now or a correction lower down to the breakout levels? Who knows for sure but in the medium term it seems that the way is up from here now.
We just read a very interesting blog post and then as we finished Jim Sinclair has also commented on it confirming our thought that it did seem very significant. It seems Samsung is the first major global corporation to recognise the value and scarcity of gold and possibly the likely further depreciation of their paper currency reserves.
They have entered into an arrangement with an African gold miner Cluff Gold. As per the libertyblitzkreig.com blog:
“Cluff Gold plc, the dual AIM/TSX listed West African focused gold mining company, is pleased to announce that it has signed a Memorandum of Understanding for a long term strategic partnership with Samsung C&T Corporation (“Samsung”). This alliance commences with an unhedged US$20m facility to provide additional funding to Cluff Gold to further the development of its portfolio of assets.
Through this long term partnership Samsung will have access to a reliable supply of gold bullion, underpinned by the Company’s strong operational and management team whilst Cluff Gold will benefit from Samsung’s financial support. The relationship is expected to result in a significant financing in Cluff Gold’s Baomahun project, subject to the outcome of the feasibility study, together with an ongoing commitment to jointly assess other opportunities in the region.
So here we have it folks. We have finally reached the point where large global corporations can no longer ignore the writing on the wall with regard to fiat currencies (they will all be devalued massively, if not printed into extinction) and have started to protect themselves.”
So if you want to follow Samsung’s lead and secure yourself some gold or silver as protection against further currency debasement get in touch.
1. Email: email@example.com
2. Phone: 0800 888 GOLD ( 0800 888 465 )
Have a golden week!
This Weeks Articles:
Will NZ Banks Buy Gold?
This week: Gold and Silver Again Above Their 200 Day Moving Averages Plenty More Action in the Week Ahead Property Versus Gold in NZ Our Most Popular Articles Will NZ Banks Buy Gold? Gold and Silver Again Above Their 200 Day Moving Averages Both precious metals continued their rise over the past week although with […] read more…
When Will Gold Finally Take Off Again?
With the latest ramblings from the Bearded One Bubbly Ben Bernanke due tomorrow, we could know the answer to the question in this articles title in a matter of hours. Or it could be that gold has already taken off again with the rise over the past few weeks. Either way this outlines a few […] read more…
Bill Murphy: $100 Silver Soon
Here’s a fairly short and to the point interview of Bill Murphy of Le Metropole Cafe and GATA.org. Some of what is covered includes: How Bill is expecting a JP Morgan silver manipulation scandal to break soon. How $50 silver will fall soon and $100 will not be far behind, then silver will have to […] read more…
What do Buzz Lightyear from Toy Story and Ben Bernanke have in common? “To Infinity and Beyond” is their shared catch phrase it seems. With the US Federal Reserve’s Chairman’s announcement last week of open ended quantitative easing (QE), Jim Sinclair’s (of JSmineset.com) long time call of QE to infinity seems to now be in […] read more…
STAGFLATION IN EXTREMIS & THE EXPLOSIVE RISE OF GOLD
We were reminded of prolific inventor and futurist Buckminster Fullers work in this piece by Darryl Schoon. We’ve read a few of Fuller’s books, notably the Grunch of Giants (free pdf version available here) which deals chiefly with the global monetary system. Written in 1983 soon after the final link with gold was severed, it […] read more…
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.