The Current Danger of the 60/40 Investing Approach

The current danger of the 60/40 investing approach

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Change from last weeks gold and silver prices

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Gold in NZ Dollars – Expected Pull Back is Underway

Gold in New Zealand dollars is up $23 from 7 days ago. However, there was a sharp pullback overnight from even higher levels. This wasn’t a big surprise after such a hefty bounce back. We could now see NZD gold retreat back down to the 50 day moving average (MA) around $2840. Or even back to the blue uptrend line.

If neither of those levels held, then the next support zones to watch for would be the horizontal support line at $2700. Or the 200 day moving average – currently at $2660.

Regardless of where gold pulls back to, the uptrend that started in March 2021 will still clearly be in play.

NZ Dollar Gold Chart

Silver Also Pulling Back – But Uptrend Clearly in Place

Silver in New Zealand dollars is up just 14 cents from 7 days ago. Silver had risen substantially over the past week but overnight it fell sharply. Look for silver to now return back towards the 50 day moving average at $36.65. Or even to retest the downtrend line again, which also coincides with the 200 day MA at $34.80.

Like gold, regardless of whether silver pulled back to any of these marks, or even a bit lower to $34, the uptrend from September last year will remain in place.

NZ Dollar Silver Chart

Conversely the Downtrend in the NZ Dollar Remains

The New Zealand dollar continued its recent fall. Down 114 basis points or over 1.5%. Unlike gold and silver the Kiwi remains clearly in the downtrend it has been in since early 2021.

US interest rates are now much higher than those of many other currencies, and money has therefore been flowing into the USD from across the globe. Even with the RBNZ raising rates last week by half a percent, that doesn’t seem to have made much difference to the funds preferring to flow into USD rather than NZD right now. As it seems the differential between the NZ rate and the US rate is not great enough for forex investors.

NZ Dollar Chart

Need Help Understanding the Charts?

Check out this post if any of the terms we use when discussing the gold, silver and NZ Dollar charts are unknown to you:

Gold and Silver Technical Analysis: The Ultimate Beginners Guide

Continues below


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The Current Danger of the 60/40 Investing Approach

We have been pointing out that sharemarkets may well be in for an extended period of underperformance. The previously much exalted NASDAQ tech stock market index is down almost 14% year to date. It seems that the majority still think this is a short term blip. With buy the dip still being the mantra for many.

The standard recommendation remains to be 60/40 split in terms of shares to bonds. Most investment funds continue to follow this approach to investing.

The “40” in this split also has the added risk that interest rates might also be undergoing a long term change from falling to rising rates. So this will hurt the performance of bonds. Because bond prices fall as interest rates rise. Why? Because each new bond that gets issued will have a higher coupon or interest rate yield. Therefore older bonds lose value as their yield is lower. So a buyer will pay a lesser amount for an older bond, compared to a newer bond with a higher rate.

This approach 60:40 to investing means that most people’s investments are potentially at risk on both fronts. While the average person in New Zealand doesn’t invest in bonds, most Kiwisaver funds and managed funds do. Bonds are part of the fixed interest asset allocation. What is usually referred to as the “low risk” part of a Kiwisaver or managed fund. Shares make up the rest. Which could include real estate funds.

Why the NZ Super Fund Should “Invest” in Gold in 2022

This reminds us that future retirees are also at risk from this investment approach.

As the NZ Super Fund operates on a different and what might be seen as even more high risk split than this. The NZ Super Fund invests with a 80/20 stocks to bonds split.

So this week’s feature article looks at the risks faced by the NZ Super Fund. How they could reduce them and what you can learn from this.

Here’s what’s covered:

  • A Repeat of the Financial Crisis Could Equate to 50% Fall in NZ Super Fund Assets
  • Risk Versus Volatility
  • What if Markets Don’t Bounce Back Within 2 Years?
  • What Risk is the NZ Super Fund Ignoring?
  • How Could the NZ Super Fund Mitigate These Outlier Risks?
  • NZ Super Fund Should Invest in Gold
  • Lack of Counter-Party Risk is the Main Reason to “Invest” in Gold
  • But the NZ Super Fund Does Invest in “Real Assets”
  • Gold is a Non-Correlated Asset
  • Holding Gold Can Reduce Losses in Financial Crises
  • Will the NZ Super Fund Invest in Gold?

Why the NZ Super Fund Should “Invest” in Gold in 2022

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Central Banks in a Quandry – No Easy Exit

People continue to be surprised by rising inflation and interest rates. The recency bias means we are conditioned to think that the past will be the future. Tomorrow the latest New Zealand CPI number will be released. Inflation is already at a 3 decade high. But it’s predicted to have skyrocketed above 7% now.

So the RBNZ, just like every other central bank, finds themselves in a quandary. As our secret investment advisor recently pointed out, while central banks know that inflation hits the poorer people the most, they also know if they clamp down too hard stocks would plunge far more steeply than the so-far “manageable” declines.

Here in New Zealand where most people invest in real estate, the same rules apply to how interest rate increases affect real estate prices.

After years of vast increases in money creation, when it seemed like no ill effects would appear, central banks are now caught. There is no easy exit for them.

Make sure you are protected as they attempt their no win exit.

If you’d like a quote please get in touch…

  1. Email: orders@goldsurvivalguide.co.nz
  2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
  3. or Shop Online with indicative pricing

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This Weeks Articles:

Why the NZ Super Fund Should “Invest” in Gold in 2022

Wed, 20 Apr 2022 10:36 AM NZST

WHY THE NZ SUPER FUND SHOULD INVEST IN GOLDSee how another financial crisis could cause the NZ Super Fund to lose over 50% in value. And why we believe the fund guardians should have an exposure to physical gold as insurance against crisis events. The New Zealand Super Fund was set up to help the Government save now. In order to help pay for […]

The post Why the NZ Super Fund Should “Invest” in Gold in 2022 appeared first on Gold Survival Guide.

Read More…

We Should Not Expect Inflationary Pressures To Ease Soon

Thu, 14 Apr 2022 6:12 AM NZST

We should not expect inflationary pressures to ease soonPrices and Charts Looking to sell your gold and silver? Visit this page for more information Buying Back 1oz NZ Gold 9999 Purity $2762 Buying Back 1kg NZ Silver 999 Purity $1151 NZD Gold With a Sharp Bounce Off the Uptrend Line Gold in New Zealand dollars was up a hefty $93 or over 3% […]

The post We Should Not Expect Inflationary Pressures To Ease Soon appeared first on Gold Survival Guide.

Read More…

The Yield Curve Recession Predictor 2022: Impact on Gold?

Fri, 8 Apr 2022 5:40 PM NZST

The best predictor of a recession we have seen is the yield curve. While the yield curve may sound like something only economists would know about and discuss, it’s actually a surprisingly simple measure. In this post we’ll cover: What is the Yield Curve? The yield curve is simply a plot of the interest rates […]

The post The Yield Curve Recession Predictor 2022: Impact on Gold? appeared first on Gold Survival Guide.

Read More…

Has Russia Just Put a Floor Under Gold? Russian Central Bank Sets Fixed Price of 5,000 Roubles per Gram

Wed, 6 Apr 2022 8:48 AM NZST

Last week Russia’s central bank announced a major change. It will now purchase gold from local banks at a fixed price. What are the implications on the gold price of this move? Kitco reported: …the Russian central bank will pay a fixed price of 5,000 roubles ($52) per gram between March 28 and June 30, […]

The post Has Russia Just Put a Floor Under Gold? Russian Central Bank Sets Fixed Price of 5,000 Roubles per Gram appeared first on Gold Survival Guide.

Read More…
As always we are happy to answer any questions you have about buying gold or silver. In fact, we encourage them, as it often gives us something to write about. So if you have any 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


7 Reasons to Buy Gold & Silver via GoldSurvivalGuide

Today’s Prices to Buy
1oz NZ 99.99% pure gold bar
1oz NZ Gold Ingot
$2,992.50
1kg Pure Silver bar
1 Kilo NZ Silver Bar
Local silver bar $1,320.10
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$95,434.60
1oz ABC Bullion Gold Cast Bar
1oz ABC gold bar
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1oz Canadian Gold Maple 99.99% pure gold coin (2020)
Gold Maple
$3,096.40  (in stock)
1 oz RCM Silver Maple Coin
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Tube of 25: $N/A (pick up) (Tubes of 1oz silver Britannia’s and Krugerrands are available for $1162.75, but not due for around 4 weeks)
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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
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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.
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