When Boring (Precious Metals Price Movements) Can be a Good Thing

This week:

  • When Boring Can be a Good Thing
  • So Why Has the Kiwi Dollar Been Rising of Late?
  • More Reports of Big Buyers of Gold

When Boring Can be a Good Thing

A quiet week in the markets – which maybe we can blame on the northern hemisphere summer and many participants lazing by the beach.  As we mentioned in this article a few weeks ago, the summer doldrums occur regularly in gold (and silver).  Lows are often hit in the June to August period each year.

The prices of gold and silver are almost boring at the moment with both trading in very narrow ranges particularly in NZ dollars.  As we’ve mentioned in recent weeks the kiwi dollar movements have often been canceling out or at least limiting any movements in the price of gold and silver in USD terms.  Even we’ve been bored writing our daily price alerts.  Seems we just keep saying the same thing “gold and silver continue trading in their narrow ranges”.  Yaaawwwn.

However, we think this boring price action bodes well for the metals. The fact the metals are just drifting sideways is potentially a good thing.  They are building a base of support for further movements. Could they fall further?  Of course.  But they have both had big rises in the past year or so.  Remember NZD gold reached $2300 in November last year and silver almost touched $60NZ an ounce early last year in April.  Those were big rises that happened in pretty quick time, so after this a decent sized correction was due.

You can see in the charts below for both metals that they are trending down in an ever narrower wedge for gold and a giant “pennant” formation for silver.  At some point they will have to break out of these ranges.  Ben Davies in an article we reference below, also referred to this and said he favours the odds of a movement to the upside.

So Why Has the Kiwi Dollar Been Rising of Late?

As we mentioned earlier the stronger kiwi dollar has been cancelling out some of the rises in gold and silver in US dollars lately.  This has happened regularly during the last 10 years with the NZD prices of both metals treading water for long periods before busting higher.

So what’s the reason for the NZD dollar strengthening?

We read a Bloomberg article yesterday looking at the Aussie and Kiwi dollars and the fact they have been the best performing major currencies against the US dollar in recent months.

There was some interesting data contained in it and we thought we’d write a couple of paragraphs. But in the end it ended up being too long for this newsletter so it became this week’s feature article: Why Has the New Zealand Dollar Been Rising of Late?

The other article we have this week is an interview with Jim Puplava of Financial Sense who probably doesn’t have the profile of Eric Kings King World News but still has some great content.  He has some thought provoking comments on the inflation versus deflation debate: Could Gold Be Tripped Up by a Coming Deflation? 

More Reports of Big Buyers of Gold

The last week has seen more reports of big buyers of gold in the markets.  Here’s 2 examples from KingWorldNews interviews:

From precious metals dealer Bill Haynes:

“I can tell you this is money that has been waiting patiently on the sidelines for weeks, and even months in some cases.  The belief by these strong-handed buyers is that the bottom for gold has been achieved and it is now time to add to their positions.  Savvy buyers know that summer is historically a great time to buy and that’s exactly what they are doing.”

From Ben Davies of Hinde Capital:

“We want to state there has been a strong buyer in the gold market these past few months.  Also we want to reiterate the buyer in the room is Asian and has been stepping up their buy order, 1545, 1575 now 1600?”.

Interestingly these levels that Davies mentioned were similar to those we just read this morning in the latest newsletter from Chris Weber. (We’ve mentioned Chris before here as one of the few must reads we have every month). Weber was reporting a conversation he had with one of his trusted precious metals dealer in Silicon Valley regarding what Chinese and Indian investors were doing there.  The reply was that when gold is at or below $1575US the dealer knows he is going to get a lot of orders that day.  Maybe 20 orders for 5ozs of gold.  So these savvy smaller buyers (who are still spending US$8000 at a time!) are mirroring what is happening in the spot market of the bigger players it seems.

For a local anecdote of big buying of physical gold, this is backed up by what we heard in a discussion yesterday with someone from a specialist vaulting company.  They have operations in the likes of Hong Kong and recently added one in UAE.  They had made note of the “huge amounts of gold moving into Hong Kong in the last few months”.  Interestingly they store and transport manly cash for banks but are moving into more gold now too.

So if you’re keen to follow the likes of the Chinese and Indian buyers mentioned above and buy at these levels then get in contact. Our guess remains that anything around the current levels will be good buying in the long run.

1. Email: orders@goldsurvivalguide.co.nz

2. Phone: 0800 888 GOLD ( 0800 888 465 )

3. or Online order form with indicative pricing

 

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: 

Writer Satyajit Das on How New Zealand will Fare in the Crisis
2012-08-07 20:30:37-04
This Week: Weekly Charts of Gold and Silver in NZD Derivatives Galore Alf Field: Strong Probability that Gold Correction is Over Writer Satyajit Das on how New Zealand will Fare in the Crisis Weekly Charts of Gold and Silver in NZD Seems the Prime Ministers “jaw boning” yesterday might have had some impact overnight as […] read more…

Could Gold Be Tripped Up by a Coming Deflation?
2012-08-08 18:42:26-04

Here’s something a bit different.  Today we have the interviewer becoming the interviewee.  Jim Puplava who has interviewed many hundreds of people over the years on FinancialSense.com has the tables turned and instead is interviewed himself today.  Looking chiefly at the inflation versus deflation debate as well as taking a look at Japan’s lost decade […] read more…

Why Has the New Zealand Dollar Been Rising of Late?
2012-08-14 19:44:15-04

We read a Bloomberg article  yesterday looking at the Aussie and Kiwi dollars and the fact they have been the best performing major currencies against the US dollar in recent months.  In fact it noted the returns on New Zealand’s securities surged to sixth in the second- quarter, up from 13th in the first three […] 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.

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2 thoughts on “When Boring (Precious Metals Price Movements) Can be a Good Thing

  1. Pingback: What's Next for Gold and Silver in New Zealand Dollars? | Gold Prices | Gold Investing Guide

  2. Pingback: Why Jim Rickard's Advice to Australia Could Apply to New Zealand Too | Gold Prices | Gold Investing Guide

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