Prices and Charts
NZD Gold With a Sharp Bounce Off the Uptrend Line
Gold in New Zealand dollars was up a hefty $93 or over 3% from a week ago.
It has broken out of the sideways consolidation it has been in for the past month.
So does that mean the correction is over? It looks promising, however a further pullback still wouldn’t surprise us. We could yet see gold fall down to the $2700 horizontal support level. Or even down to the 200 day moving average at $2650.
NZD Silver Bouncing Even Harder
Silver was up even more. Rising almost 5.5% from last Wednesday after bouncing off the downtrend line to retest the breakout. Like gold, silver is looking strong. But if it was to dip lower then watch for the 200 day MA at $34.20 or even the uptrend line around $34.
Weaker NZ Dollar Gives Local Metals Prices a Boost
The Kiwi dollar was down over 1% this past week. It was one of those weeks where metals prices were up and so was the US dollar. So local gold and silver prices have been very strong as a result.
Late Update: The RBNZ just announced a 50 basis point increase to the Official Cash Rate. In response the NZ dollar did spike sharply up to 0.69 but then immediately fell back down to be pretty much where it was this morning.
We continue to think that the NZD/USD exchange rate probably won’t have a great bearing on metals prices. Rather that we’ll just see the large sideways trading range of the past 18 months continue. Just like it did from 2016-2020.
Or in other words, all government mandated currencies are going down against gold and silver. They just take it in turn at how fast each one falls.
This table from the always excellent Incrementum In Gold We Trust Report clearly shows this. While the NZD isn’t displayed we know from previous comparisons we have done that it comes in about the same as the AUD and the CAD. Two other resource currencies like the NZ dollar.
(We’d highly recommend you sign up for the excellent newsletter from Incrementum.)
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:
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The Yield Curve Recession Predictor 2022: Impact on Gold?
We talked about the odds of a global recession coming back in our newsletter on 17 March.
There has been discussion of a possible recession in New Zealand later this year as the effects of covid shutdowns take hold.
However in our 17 March report we were looking more at a global recession led by the USA. With history showing that the recent surge in energy prices is a good indicator of a recession coming.
But recently another very accurate recession predictor was also tripped. We last wrote about this back in 2019 and it proved to be very accurate then. So will the yield curve inversion prove to be a soothsayer again this time around?
Here’s what’s covered…
- What is the Yield Curve?
- What is an Inverted Yield Curve?
- What Does an Inverted Yield Curve Mean?
- How Does the Yield Curve Predict Recessions?
- When Did the Yield Curve Last Invert?
- What is the Yield Curve Saying Today?
- Recession Indicator: How Far Away Might the Next Recession Be?
- But Things Are Different This Time, Aren’t They?
- What to Do to Prepare?
- The Yield Curve and Gold and Silver Investing
Your Questions Wanted
Remember, if you’ve got a specific question, be sure to send it in to be in the running for a 1oz silver coin.
The Bank for Central Banks Warns: “We Should Not Expect Inflationary Pressures to Ease Soon”
As noted already, the RBNZ today announced a double whammy interest rate increase of 50 basis points or half a percent.
They are finally trying to make up for the massive juice they gave the economy during covid.
All the central bankers seem to be back tracking on their predictions from last year that inflation was just “transitory”. We hate to say I told you so… but last year we were warning about high inflation being likely. See here and here.
It seems that central bankers the world over are finally realising that they need to do something to try and get inflation under control.
Various economist reports we’ve read seem to think we’re looking at a year or two and then we’ll get back to normal. We haven’t read too many mainstream reports considering that we could be in for a long term period of heightened inflation. Perhaps one lasting a decade?
But then surprisingly we just saw this speech given earlier this month by Agustín Carstens, the General Manager of the BIS (Bank for International Settlements). The BIS is often referred to as the bank for central banks. So when we saw a speech by its head entitled “The return of inflation” we had to check it out.
Here’s the summary:
“We should not expect inflationary pressures to ease soon as many of the forces behind high inflation remain in place and new ones are emerging. There are already signs of increased price spillovers across sectors and between prices and wages, as is common in a high-inflation environment. Moreover, the structural factors keeping inflation low in recent decades may wane as globalisation retreats. The inflationary paradigm may be changing. Central banks need to adjust to this new environment, not least by raising policy rates to more appropriate levels. The world economy must learn to rely less on expansionary monetary policies.”
So a perhaps surprising conclusion, to see the bank for central banks in agreement with us. Although about a year later we suppose.
However we did choke on our lunch when we read this part:
“The key to higher sustainable growth cannot be expansionary monetary or fiscal policy. We must strengthen the productive capacity of the economy. Indeed, this is well overdue. Many of the economic challenges we face today stem from the neglect of supply side policies over the past decade or more. Over the medium term, higher potential growth would make it easier for indebted economies to withstand the higher nominal and real interest rates that are likely to prevail in the years ahead. Central banks have done more than their part over the past decade. Now is the time for other policies to take the baton.”
We wondered what he meant when he said: “Central banks have done more than their part over the past decade. Now is the time for other policies to take the baton.”
Did he mean central banks have certainly done their part in injecting huge sums of new currency into the global economy. Did he mean they have done their part in causing the current shambles we find ourselves in? Probably not.
Alas, when he said “Now is the time for other policies to take the baton”, he also probably didn’t mean we need to do away with central banks and having grey haired old men (and women) deciding on the price of money!
Hopefully that is where we are heading. But we probably have to see things get worse before we see the end of central banks and rather the decentralisation of everything.
Until then make sure you have enough insurance for the ongoing destruction of currency. So that your wealth can weather whatever storms are to come and make it out the other side.
If you’d like a quote please get in touch…
- Email: firstname.lastname@example.org
- Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
- or Shop Online with indicative pricing
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