Prices and Charts
Gold Jumping Sharply on Coronavirus Fears
NZD gold is up over 1% this week. And that is after pulling back today. It seems the fear of the spread of the coronavirus may be the cause of the jump.
Gold in NZ dollars is now back above the high reached in early January. If the fears are overblown we may see gold pull back again. Thereby filling the “gap up”. That would be our guess. But the fear trade can often be much stronger than we’d think. As it stands we are not far off retesting the August 2019 all time high for gold in NZ dollars.
Whether it pulls back in the short term or not, we’d say that high is likely to be broken before too long regardless.
While Silver Drops
Meanwhile silver was following the “risk off” theme and followed global share-markets lower this week. Rather than moving higher with gold. So NZD silver is now retesting the upper trendline after the breakout from the bullish pennant formation.
A Gold Silver Ratio High Today
This move lower for silver in comparison to gold has pushed the gold/silver ratio back up to 90. The highest it has been since mid 2019. This has us thinking (yes dangerous we know dear reader!). Could this be one of the times when the ratio peaks and silver bottoms?
Check out the chart below which points to this likely being the case. At some stage silver will play catch up to gold and the ratio will head higher. Meaning silver will gain much more than gold. This usually happens later in a bull market. So you have to get on board the silver train, and then wait patiently for it to leave the station!
NZ Dollar Still Dropping
The New Zealand Dollar was down even further this week. But it now sits on the 200 day moving average (MA) and also the rising trendline (red). So a bounce back higher looks likely now. But with the contagion fears this is no guarantee.
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Check out this post if any of the terms we use when discussing the gold, silver and NZ Dollar charts are unknown to you:
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Are We Now in the Crack-Up Boom?
Bill Bonner looks to have been right on the money when he wrote this back in late 2017:
“So, let’s see…
Mr. Xi is tightening up.
Mr. Draghi is tightening up.
Ms. Yellen is tightening up.
They are reversing the policy that a generation of investors, businesses, and households has taken for granted.
From “buy,” they are moving to “sell”… from loose to tight… from “Party Now!” to “Party Later!”
Hmmm… what will that do to the gigantic bubble they have created? We don’t know. But we have a hunch that it will send central bankers scrambling to bring out the biggest punch bowl ever.”
Sure enough, that looks to have been the case. The US central bank was forced to restart QE last year after troubles in the Repo market.
Read on to see how that looks likely to have entered us into the “crack-up boom” phase of the monetary breakdown. It’s likely why everything was rising last year. See what that would mean for gold and silver…
Why You Should Ignore the USD Gold Price
As mentioned already, gold has jumped in recent days following fears about the Coronavirus spreading from China (more on that soon). So as a result we’ve see more mentions in the press of gold rising to get “close to US$1600 per ounce”.
This is a useful reminder not to pay too much attention when the media quotes the US Dollar gold price. Here’s why…
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Should We Be Worried About the CoronaVirus?
The Coronavirus spreading seems to have really spooked global markets. Gold is up, silver down and share-markets have taken a tumble.
So how worried about it should we be?
This interesting chart below shows that past contagious disease outbreaks have not hurt global markets much at all in the medium term.
The next chart also shows the US Stock Market is more expensive now than at the height of the dot.com bubble. In fact it is the most expensive ever.
So perhaps the markets have been looking for a reason to fall?
And a global pandemic is as good a reason as any we guess.
Source: Weber Global Opportunities Report
That being said, we have also read some serious reports of how quickly this current outbreak has spread. It seems to be contagious before any visible symptoms too. And with the Chinese New Year in full swing it could spread even faster.
Plus you’d never know quite what to believe when it comes to Chinese government reporting.
(Not that the Chinese have dishonest government statistics all to themselves! See: Comparing NZ Money Supply, Government Inflation Statistics, Property Prices, and Gold Prices for the Last 19 Years)
It certainly seems to have spooked many people. Our sister website Emergency Food NZ has seen a serious surge in the purchase of long life food in the last week. Plus we’ve almost sold out of water filters.
And the Coronavirus scare is about all we could put that down to. Still it pays to be stocked up before any trouble hits. Because that’s when the shelves go bare.
So we don’t have the answers on this one sorry. Other than plan for the worst and hope for the best.
It’s the same advice we give whether it be for an earthquake, flu pandemic or a financial crisis. You’ve got to have your supplies well in advance of any trouble.
So get in touch. Whether that is to buy some gold or silver – or some emergency supplies. And remember to keep a good chunk of cash on hand too. ATM’s and Eftpos are the biggest weak points in the money chain when things go bad.
- Email: email@example.com
- Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
- or Shop Online with indicative pricing
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