Since last week both metals in NZ dollars are slightly lower. Gold is $2039 per ounce versus the $2061 it was last week. Silver is at $39.28 per ounce down not far off $1.00 per ounce from a week ago when it was $40.07.
But to our eyes both charts still give the impression of good buying zones. Gold in particular, with the price just below the 200 day moving average (red curvy line), but above the long term trend line and still above the previous downtrend line that it broke out above in September. Plus with the RSI almost in the oversold range gold in NZD looks ripe for a bounce from around here.
Silver continues to consolidate – it’s not quite so oversold as NZD gold though so a chance remains that it could go slightly lower than here in the short term. As always we can but make an educated guess.
Something we read this week that gives weight to being near a bottom for silver was an article on Goldseek on seasonality of the silver price.
There was this great chart (below) going back 30 years looking at the average performance of silver over the course of the year. You can see that from mid December where we are now silver has on average rallied hardest from now until the end of April.
They also took a shorter term look using a Bloomberg performance table.
Over the last 5 years this table shows January and February have been months when silver has performed well (3.4% and 9.5% on average respectively). And over 10 years it was 2.5% and 6.4% for January and February. So this also points to this month of December being a good time to take a position in silver on average. Then combine that with the bullish chart formations discussed above and it ups the odds in our estimation that now is indeed a good “buy zone” for silver.
Of course the numbers in the seasonality chart are in US dollars so will be a bit different for us in NZ dollars. As we’ve written countless times before it is the local price you need to track when buying gold and silver.
So speaking of the NZ dollar, how is it looking?
Well, today we are as high as the kiwi has been since about March of this year. With the Fed meeting tomorrow US time and with it expected that they will announce another 45 billion per month in printing to replace the expiring Operation Twist, it would seem logical to argue that the USD will weaken further on the back of this and the kiwi will continue to rise.
However there is the chance that this has already been priced in. Also the fact that the NZD chart above shows the RSI in overbought territory well above 70 could well mean we are at or close to a peak in the kiwi. You can see in the chart the last time the RSI got to these levels the NZ dollar fell quite steadily for a few months. If it falls from here that will be positive for local gold and silver prices (well positive if you own some anyway but not if you want to buy them cheap!)
Roger Kerr over at interest.co.nz had a similar take on the NZD/USD cross-rate but using the state of the NZ sharemarket.. He outlines the correlation between the NZX and the Kiwi dollar and reckons the sharemarket could be ripe for a correction and therefore the dollar will weaken a bit too. This too would fit in nicely with the current charts depicting a potentially higher NZD gold price coming up shortly.
“That dream run for the Aussie economy and their currency may now be coming to an end and thus international investors sitting on large currency gains may well be enticed to cash-up and pull out.
Those investors need somewhere else safe to park their money and up until now they have been reluctant to go into Euro’s or back into the USD.
With US economy continuing to improve and monetary stimulus measures now ended, the confidence about the USD itself should start to improve also.
The markets will be firmly focused on the US fiscal/budget deficit negotiations over coming weeks with time running down the uncertainty and risk levels should increase.
The net result of the time of year and market movements to date suggests the Kiwi dollar will not maintain rates above 0.8300 for very long.
It will requires a stronger USD globally and a weaker AUD in the region to get the Kiwi dollar below 0.8000 to deliver some relief for local exporters. Both seem more likely than the opposite occurring.”
Of course all these prognostications are just that – guesses and when it comes to currencies especially that’s what it’s best to call them. But it will be interesting to see how the rest of the year plays out.
During the week we saw Ben Davies on King World News comment that he thought the bottom was likely in for gold, that volatility is actually at lows (as we had noticed a couple weeks ago when we said the price action was “Boring”)… “Higher prices are coming into next year. The volatility premium is so low, it means the longs have taken all of the pain now, and the shorts are more exposed to upside prices.”
Davies also stated “China is a great example of where they’ve got desperate mining.
In 2011 they had 360 tons of supply. The Ministry of Information & Technology in China just recently said they want to try to get supply up to 450 tons.
Why do they want to do that? Because they have come out and actually given guidelines to the demand in China. They think it’s going to be over 1,000 tons. In 2011 that (demand) was around 750 tons. If you increase supply by 90 tons and you increase demand by 240 tons, you are looking at a 150 to 200 ton deficit going forward. So, again, there is this huge appetite and demand for gold.”
This comment ties in nicely with an article we posted on the website this week:
This takes a close look at how even though supply is rising each year we may be heading for a global deficit in the not too distant future.
The other article we posted this week was from Darryl Schoon. He discusses what is likely to be the cause of the collapse which in his opinion is inevitable. Japan features as one of the possible causes… THE GOLD MARKET SEEN THROUGH A GLASS DARKLY
We probably should mention there is only 7 trading days to go before Christmas when 2 of our main local suppliers will be closed for 2 weeks. So time is running out to place an order before then.
However we do have access to another supplier, therefore we do have the ability to give quotes over the holiday period. So while local gold and silver bars might not be available there are options if we get a repeat of last year and see a low form right in the middle of the holiday period.
1. Email: email@example.com
2. Phone: 0800 888 GOLD ( 0800 888 465 ) (or +64 9 2813898)
3. or Online order form with indicative pricing
Have a golden week!
This Weeks Articles:
|Fiscal Cliff/Debt Ceiling Solution?|
This week: Chart of the Week: Why the Miners have Sucked Fiscal Cliff/Debt Ceiling Solution? Student Loans – Another Great Idea Even the Believers are Worried We’ve had another decent dip down in silver and gold prices today. And these have been compounded by a stronger kiwi dollar also. Gold priced in NZ dollars has […]
|Is a Global Gold Supply Crunch Forming?|
Learn why even though global gold mine supply has been growing since 2008, we may still be heading for a much tighter supply in the future… A number of market analysts and gold-industry insiders are warning about a possible shortage of gold supply. Barrick CEO Jamie Sokalsky recently stated that since gold production is inelastic […]
|THE GOLD MARKET SEEN THROUGH A GLASS DARKLY|
Darryl Schoon discusses gold “price management” since the 1980′s and how today it’s likely that it’s China who doesn’t want the price to rise too fast… THE GOLD MARKET SEEN THROUGH A GLASS DARKLY Gold is a leading indicator of monetary distress No matter what confidence game is being run, confidence is the necessary pre-requisite. […]
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.