The last 2 days have seen a big move in silver and as we suspected might happen eventually, even a strengthening kiwi dollar has not negated too much of this rise in the price. You can see in the 3 year chart below that NZD silver has broken above one downtrend line and is now approaching the next.
The breakout is much more obvious in the 6 month chart below and we are now well above the 50 day moving average for the first time since March which is significant. We are closing in on overbought territory in the RSI at the top of the chart but not there yet, so the price could close in on the 200 day moving average yet.
NZD gold is also now above its 50 day moving average but still within the bounds of a large flag formation.
The talking heads are putting these rises down to the ECB possibly capping Spanish and Italian bond rates so this will likely require more Euro’s be created to do so. Of course this may not eventuate and we could end up back in the sideways action we’ve been locked in for a while, but this rise in precious metals currently does seem stronger. As always only time will tell but it is almost a given that at some point further monetisation of debt will have to occur.
This weeks feature article was inspired by a video we watched and posted of Sandeep Jaitly earlier in the week: Here’s Where Ludwig von Mises Was Wrong on Gold.
It reminded us of a lecture of Sandeep’s we heard a couple years back and prompted us to dig out an old notebook and flick through it.
As a result we have for you this week, Why Fractional Reserve Banking is Not the Problem. As the title suggests, on that day we learnt how it’s not necessarily fractional banking that is the problem but rather how far it has morphed today from it’s origins.
We’ve got a couple more articles on the website. If you missed any of the comments we’ve had in the past couple of months on the likely pending banking regulation changes for 2013 and how this could be positive for gold then you’ll definitely want to check out Big Changes Ahead: Gold Just Became Money Again.
And if you’re any kind of conspiracy buff then 911, Gold, Money and Power will be right up your alley.
Also speaking of Sandeep Jaitly we also read a short post of his a week ago, on a likely bullion squeeze due to the ongoing silver backwardation (for a primer on backwardation see this article).
Perhaps this is beginning now with the large jump in price over the past 2 days?
Over the weekend we read some comments by Jim Rickards (Author of Currency Wars) on the Australian dollar and gold, and thought the points made could likely be just as relevant for the New Zealand dollar.
Rickard’s was in Australia and spoke at a gathering put on by the Daily Reckoning Australia. They reported that Rickard’s believes that “the US dollar is in terminal decline. That means the anchor of the global financial system is lost. This will result in volatile and unstable markets (and societies) with diminished world trade until a new system emerges.”
Before this he thought things could very sticky and the system may cease to function properly and emergency controls could be put in place.
He believes gold will be the currency most likely to survive intact in the new financial system and that it would have to be re-rated much higher than today’s price considering the expanded monetary supply. By his calculations at around $7000 US in fact.
Rickard’s was also interviewed on ABC in Australia which you can watch below.
If you don’t watch we can tell you the most interesting point he made during the interview came towards the end. It was in response to what should Australia do with all the capital that is entering the country at the moment looking for a safer location than Europe. His answer?
Either sell infrastructure bonds being sure to actually build something productive and useful [Not sure how crash hot governments are at accomplishing that generally!]. Or “if you don’t like that idea then the Reserve Bank of Australia should buy gold”as they have so little comparatively. “Particularly with the strong [Australian] currency you’re going to get more gold for your money”.
Given New Zealand seems to be in a very similar situation at present with capital flowing here from offshore looking for a home that is preferred to Europe, it seems he could just as easily be speaking to us. Also we have even less gold than Australia, a big round zero ounces actually. But as we’ve commented before it seems very unlikely our Reserve Bank is likely to buy any gold. Recall 2 months ago reader Jake actually asked them (see Gold is not liquid enough for the RBNZ). Their response?
“The Reserve Bank’s position is that gold does not meet our liquidity requirements.”
So our position is to become your own central bank instead – let’s call it the RBoY – The Reserve Bank of You! And take Jim Rickard’s advice and buy gold (and silver) while the kiwi dollar is strong and get more bullion for your money while you still can.
1. Email: firstname.lastname@example.org
2. Phone: 0800 888 GOLD ( 0800 888 465 )
Have a golden week!
This Weeks Articles:
Sandeep Jaitly: Here’s where Ludwig von Mises was Wrong on Gold
We’ve enjoyed being present for a number of lectures by Sandeep Jaitly and had some informative discussions with him too in recent years. There’s plenty to learn in this short video with him being interviewed by Max Keiser of the Keiser Report, (you can now see the Keiser Report regularly on RT available here in […] read more…
9/11 & GOLD, MONEY AND POWER
If you like a good conspiracy theory, this ones got plenty. From Yamashita’s gold (a.k.a. China’s stolen gold), to 911 cover-up, to the assassination of Bankers who knew too much. We’ve read about Chinas stolen gold before but not in connection to 911 (which we’ve also read about in the past and been left wondering about many unanswered […] read more…
Why Fractional Reserve Banking is Not the Problem
Early this week we watched and posted a video interview with Sandeep Jaitly of Feketeresearch.com. Sandeep covered many points but one in particular reminded us of a lecture of his we were privileged to hear here in Auckland a couple of years ago. In the video interview Sandeep stated that extending credit does not cause boom […] read more…
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 […] read more…
Big Changes Ahead: Gold Just Became Money Again
The following covers something we’ve written about a number of times in the past. In fact we first discussed the topic of possible changes to Basel III bank capital rules back in June 2011 in: Instead of Negative Could it be Positive News that Sends Gold on its Next Leg Up? And again more recently in […] 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.