The RBNZ joins the Currency Wars (Sort of)


 

Gold Survival Gold Article Updates:

May 09, 2013

This week:

  • Have We Seen the Bottom for Silver in NZD?
  • The RBNZ joins the Currency Wars (Sort of)


Sorry we are slipping – getting this out even later this week. On the plus side it gives you the weekend to peruse our ramblings if you should so choose to…


After checking out gold last week, this week our feature article looks at silver in New Zealand Dollars. It includes the below chart that seems to indicate a move is about to come in silver one way or another. 

NZD Silver Chart

Silver BottomSo head over to the website and check out our musings on where silver is at and where it may go in the short term. The article also has a great 10 year NZD silver chart so you can get a big picture view of where we are at. As always our thoughts are free and worth every penny so at the end of the day you have to make your own call.

Have We Seen the Bottom for Silver in NZD? Read more

Gold in NZ dollars edged up above the recent trading range yesterday, on the back of the news that the RBNZ had been intervening in the currency markets (more on that below). But today it is back down under that $1750 range that it has been in for almost 2 weeks. Sitting at $1741 today. (See all spot prices in the sidebar to the right).

NZD Gold Chart


The RBNZ Joins the Currency Wars (Sort of)

Of course when looking at gold and silver here in New Zealand, a major factor is the direction of the kiwi dollar. On Wednesday RBNZ Governor Graeme Wheeler let slip that the Reserve Bank has been selling dollars into the forex markets with an aim to lower the dollar or at least to stem its rise. We’ll find out in a month or so just how much they “spent” doing this. The first time in 5 years they have intervened. So the odds are it was more of a pea shooter than a bazooka that they joined in with, compared to other central bank action of late.

We’re not sure when it will come, but at some point odds are the kiwi dollar will take its turn to fall relative to other fiat currencies (and obviously even more so compared to silver and gold). When this happens it will likely be hard and fast just as the Euro, Pound, and most recently the Yen have done over the last couple of years. 

It could be the Aussie dollar is just starting its turn to fall after years of strength, on the back of an interest rate cut by the RBA earlier this week. 

So the good old kiwi may be the last man standing (or one of them) but this move to sell NZD by the RBNZ shows they will not let it rise unabated. Of course the trouble is our central bank is caught between a rock and a hard place – but of their own making. Cheap money (i.e.artificially low interest rates set by them) is causing house prices to rise while the Kiwi dollar remains high. A rate cut would lower the dollar most likely but would further fuel the debt binge on housing.

So selling dollars without a rate cut is one way to impact this. Of course it may prompt the likes of George Soros to head across the ditch (having been rumoured to have profited already from the Aussie dollar fall last week) and try and make a quick $60 million here too. 

And old George’s pockets might well be deeper than the RBNZ’s. As of March their “Foreign Currency Intervention Capacity” stood at $8.7 billion. Source. It will be interesting to see how much of this disappeared in April. If they get really serious at some point the $8.7 billion could disappear quite fast. 

The historical data on the RBNZ website shows $2.36 billion was sold from June to August of 2007 and then $1.64 billion from February to June of 2008. But this was before the all out currency war started. Now we have most major central banks actively selling their local currency to keep it down and this is in the 10’s of billions each month. With many of them creating money to do this.

If the RBNZ wants to do more than just stem the rise of the NZ dollar they’ll likely need to use up a fair portion of this “intervention capacity” and then some. 

Can anyone spell “Currency Printing”?

Our bet remains NZ will join the currency wars proper before this is all over. And Governor Wheeler with his World Bank background is likely the right man for the job.

We are a long way from the end game yet and odds are before we get there the Kiwi will have its turn to topple too. It just won’t be expected and will most likely come when most analysts are talking about reaching parity with the USD and think the kiwi dollar simply can’t fall.


Other Articles and Videos This Week

We’ve got a couple of other articles posted on the site this week. 

Darryl SchoonFirst up with all the talk lately of manipulation in the precious metals arena, Darryl Schoon posits a theory on where the gold might be coming from for these very large sales that have caused the price to tumble more than once.

GOLD: WHO’S SELLING WHO’S BUYING WHO’S LYING

Lead HorseNext we have Paul Brodsky, of QB Asset Management mulling over who may be the lead horse to take over from the Bernank. And it’s not the most obvious choice, but makes a lot of sense to us.

Handicapping the Potential Successors to Ben Bernanke

Alistair MacloedFinally, is a great interview with Alistair Macloed who we haven’t mentioned much before but whose research on precious metals we always take notice of. So this video is definitely worth a watch.

Alistair Macleod: What Most Gold Analysts Get Wrong

Final 2 Cents on Sentiment

So the metals remain keenly balanced right here. There is room for some downside but just about every sentiment indicator is at all time lows. (This was a great article we read during the week that summarised many of them: Gold and Silver Sentiment Reversal). So we could just as easily still head higher too. It really is a difficult one to call.

But if you don’t have a position in gold or silver and want to get your first tranche now and get one “stake in the ground” at least, then 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 



Have a golden week!

Glenn (and David)

goldsurvivalguide.co.nz

Ph: 0800 888 465
From outside NZ: +64 9 281 3898
email: orders@goldsurvivalguide.co.nz

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This Weeks Articles

 

Update on Gold and Silver Premiums
Premiums Update2013-05-01 13:52:13-04

Gold Survival Gold Article Updates: May 2, 2013 NOTE: You’re receiving this because you subscribed to receive information from either goldsurvivalguide.co.nz or BuyGoldAuckland.co.nz. We don’t want to bother you if you don’t want to receive these weekly updates so please click the following link if you wish to Unsubscribe  This week: How Much Further […]
read more…

Handicapping the Potential Successors to Ben Bernanke
Lead horse2013-05-08 18:30:18-04

Ben Bernanke has made noises in recent times that he may not be around after his current term at the Fed ends. This dryly written piece looks at who his likely successor is, what that might mean in terms of the action they will take and how that might impact precious metals. Along with what action […]
read more…

GOLD: WHO’S SELLING WHO’S BUYING WHO’S LYING
D Schoon2013-05-08 19:17:53-04

Darryl Schoon makes no bones about his belief that the recent plunge in the gold price was a manipulation, plain and simple. But he also gives some background as to how past incidences may also have been a result of “intervention” and does some theorising as to where the gold used to force the price […]
read more…

Alistair Macleod: What Most Gold Analysts Get Wrong
A Macloed2013-05-08 20:10:19-04

We have a lot of respect for Alistair Macleods point of view. This a great interview where his matter of fact approach contrasts nicely to Max Keisers outrageousness. In the interview they cover a lot of ground including: Why most analysts looking at the supply of gold get it wrong Why the move out of […]
read more…

Have We Seen the Bottom for Silver in NZD?
Silver Bottom2013-05-09 20:19:30-04

Last week in our article How Much Further Could Gold in NZD Fall? we had a go at looking where gold might drop to if it was to fall further. Our gut reaction was that the recent price plunge was not over and done with and we could likely see at least a retest of previous […]
read more…

 

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2 thoughts on “The RBNZ joins the Currency Wars (Sort of)

  1. Pingback: A Currency War Special | Gold Prices | Gold Investing Guide

  2. Pingback: Gold Prices | Gold Investing Guide Where to for the NZ Dollar?

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