Swords have been clashing over the past week. In the silver market that is. There is a real battle going on at the US$35 level. For the past few trading days we have seen silver just above or just below this level. Have a look at the USD Silver 24 hour chart from kitco below.
The red line was yesterdays trading where the price sprang higher at New York open to touch US35.40 before being forced lower to close at $34.65, Today in New York it also touched US$35 again before closing at the same level as yesterday at $34.63.
The result of this battle is silver is trading sideways. In New Zealand dollars the same thing is happening with silver trading in a narrow range between NZ$41 and NZ$43 per ounce. And by moving sideways silver is also getting out of overbought territory. We mentioned a couple weeks ago that this could happen. Of course it doesn’t mean we won’t see a fall yet, but this base building is a positive sign nonetheless.
Gold is also doing the same thing. It too has moved out of overbought territory on the RSI without actually falling in price. We think it was James Turk on King World News that said there has been very little profit taking after the recent run up in the metals and the charts bear this out. The battle in USD gold is just below $1800. US$1780 seems to be where it is at. In NZ dollars resistance is at around $2190 which is the high reached back in June, so we are just bouncing up against that level at the moment.
So what to do about this battle? We’ll pinch a few lines from one of our favourite financial writers Chris Weber’s latest report, that we think best sums up the way to handle the current state of the world…
“Of course, to talk about gold or silver over the short term and watch it each day or week or even month is just something you have to do if you have a newsletter. For the average investor, just looking at the gains these metals have made over the past four years makes me believe that the best way to invest –for most people– is to take a good-sized position in them and then just go about your life. Both gold and silver are in bull markets.
For me, that’s the most important thing you need to know. If you know that you’ve much more than doubled your money every four years, do you really need to stress yourself out in obsessing over shorter term swings? To me, the answer is No.”
Chris Weber – The Weber Global Opportunities Report
Unfortunately for us we have a website covering gold and silver so we have no choice but to obsess over them!
Our feature article this week is a follow on from last week where we looked at reasons to buy gold. We thought we better also give the same treatment to silver as being labelled “poor mans gold” is enough to give “him” an inferiority complex as it is! So head over to see the long list of reasons we came up with to buy silver and add any we’ve missed to the comments at the bottom.
The politician whose career just won’t die has launched a bill which would see the RBNZ focus on the kiwi dollar and intervene to cheapen it if necessary.
Always one for a bit of populism is Winston Peters, but getting support from Labour on this one too. Of course he neglects to mention how joining the currency wars and forcing the dollar down, while having some impact for exporters, will also raise costs for the average man that he says he is trying to help.
A cheaper currency makes imports such as oil and the multiude of other products a country with a trade deficit like ours has to import more expensive. There is no silver bullet for the imbalances that a fiat monetary regime has wrought upon the world as much as the poli’s would like to convince us otherwise. (Actually there is a silver bullet and a gold one too but there’s not too many politicians discussing them!)
Departing RBNZ head Bollard commented last week that the comparitively high profits for NZ Banks is the price we pay for financial stability in NZ. We think it might be a bit rich to say that the relative monopoly that the big banks have here is the reason why the NZ has been doing comparatively better than elsewhere in the developed world.
Rather NZ banks are only profitable due to government handouts.
“But there’s not been a NZ Bank bailout during the financial crisis?” you may say.
Well the NZ Government bank guarantee launched in November 2008 was an indirect bailout that enabled the banks to continue trading without which they surely would have collapsed as funds would have exited the banks.
Of course as we’ve reported previously there is no longer a bank guarantee in place in NZ. Rather the new RBNZ policy means depositors will get a “haircut” in the case of a bank failure.
But an interesting addition to this fact is that some foreigner investors will get first dibs on banks assets in the case of a failure (hat tip to reader Maurice for this link). Foreigners get first dibs on bank assets
Covered bonds that our banks have been allowed to write effectively mean the holders of these bonds jump ahead of term deposit holders in case of a failure. So your “haircut” could be bigger than expected as you’ll have to wait until covered bondholders are repaid before you get a bite of the cherry (albeit a very beaten up cherry in the case of a bank collapse).
Bernard Hickey states:
“Refinancing the “hot” foreign money with “cold” foreign money also reduces the incentive for New Zealand to cut its foreign debts. If the Reserve Bank had encouraged banks to raise more long-term funds from savers, term-deposit rates would have risen and there would not have been so much upward pressure on the New Zealand dollar.”
If you read any of the comments at the end of this article you’ll see the usual noise about how NZ assets (Banks, Telecom etc) should never have been sold. Of course these all miss the point as to why they happened. They occurred due to the imbalances created by the fraudulent global monetary system. In this old article by Mexican Billionaire Hugo Salinas Price on the gold standard he outlines this perfectly.
Mulling these imbalances over again as we do, last week we stumbled across Salinas Price’s latest article and so we’ve posted that on the site too as again he cuts to the heart of the impacts wrought by the fiat currency system that exists today. How they have changed societies attitudes and habits and how this bodes very badly when the end of the fiat regime finally arrives…
The other article we have on the site this week is from Darryl Schoon. He outlines how the rest of the developed world is “turning Japanese”. Their private sectors are de-leveraging which is requiring massive sovereign/public sector responses of money printing. He outlines how this will inevitably end in an eventual collapse of paper money…
This chart gives a very visual reason as to “why buy gold?”
“In round numbers, the Fed conjures about 55 million fresh dollars into existence every hour. By contrast, the entire world’s gold mines only manage to extract about $15 million worth of gold from the earth every hour and US mines only extract $2 million worth of gold per hour. In other words, Ben Bernanke creates US “money” about 27 times faster than US gold mines.”
So if you want some protection from the extra $55 million dollars being created every hour get in contact with us:
Have a golden week!
This Weeks Articles:
THE FED IS TRAPPED – GOLD IS THE EXIT
Darryl Schoon outlines how the rest of the developed world is “turning Japanese”. Their private sectors are de-leveraging which is requiring massive sovereign/public sector responses of money printing. He outlines how this will inevitably end in an eventual collapse of paper money… THE FED IS TRAPPED – GOLD IS THE EXIT 47% of US investors […] read more…
Gold to Silver Ratio: What Can We Expect Now After QE3?
This week: QEternity Aftermath Gold to Silver Ratio The High NZ Dollar Why Buy Gold? QEternity Aftermath So what’s happened since the announcement of QEternity? Well after a bit of a bump higher gold and silver just seem to be consolidating at the moment as you can see in the charts below. Gold seems to […] read more…
Why Buy Silver?
Last week we took some time to jot down all the reasons we could think of as to why to buy gold. So it seems only fair that we should give “poor mans gold” the same treatment and so today we look at the question – “Why buy silver?” First up a number of the […] read more…
Reflections on the effects of War as compared to the effects of Fiat Money
Last week after listening to some politicians theories on how they were going to “fix” the high NZ exchange rate, we were again contemplating how so many of the wrongs in the world have at their root cause the fraudulent fiat monetary system that exists. How it allows governments to spend far more than they […] 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.