Writer Satyajit Das on How New Zealand will Fare in the Crisis

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 the NZ dollar fell half a cent.  As they point out in this article on Stuff.co.nz, it’s interesting that the Aussie Reserve Bank did the same thing yesterday.  This has given the local gold and silver price a bit of a bump higher this morning.

Today we’ve produced some weekly charts instead of the usual daily ones we have.  This compares the price the metals open and close at each week, instead of each day.  It can serve to filter out a bit of the noise you see in the daily charts.

For gold the most obvious point is that the prices through which it has traded the past month have been through a much reduced trading range than any time in the past year.  See the area we’ve circled green.  Often this precedes a decent move in one direction or the other – shame it doesn’t tell us which!  For the price to move much higher we probably need to see it break out above the downward sloping trend line which is at about $2100NZ.  So for now we are still seeing the ongoing consolidation, with the 2 trend lines converging on each other.

Turning to silver in NZ dollars now.  Like gold the weekly price chart also shows these 2 converging trend lines.  And also like gold, in fact even more so, is the very narrow range through which NZD silver has traded the past month.  Probably a lot to do with the kiwi dollar largely cancelling out any moves in the silver price.  For silver we probably need to see a weekly close above around $37.50 for it to head much higher.

At some point there will be fireworks as the lines can only converge on each other for so long!  Both metals look pretty good at these lower levels we reckon.  As always it pays to keep some monopoly money up your sleeve in case we get a dip even lower though.

Derivatives Galore

We have a bit of a derivative theme for you this week as it happens.  We’ve put together a Beginners Guide to these Financial Weapons of Mass Destruction. In this article amongst other points we cover:

• What is a derivative
• How they came about
• How they have changed over time
• What are the main derivatives in existence today
• What do these derivatives mean for New Zealand
• New Zealand’s own “hidden” derivatives

Then we have a video which while not only discussing derivatives, they do play a reasonably large part of the video. Covering points such as why OTC derivatives are the primary reason for the ‘Too Big To Fail” policy of many financial institutions.  And do derivatives really matter and can they be unwound safely?

Video: Fraud Theft and  Financial Crime is Now a Business Model

Alf Field: Strong Probability that Gold Correction is Over

In our derivative article above we’ve drawn some inspiration from an article we read earlier in the year by South African born but now Australian based Alf Field, in which he made some comments about derivatives.  Alf is an accountant self taught in the art of Elliott Wave technical chart analysis. We first featured him in these pages just over 3 years ago in this article “How high can the gold price rise?”

He has gotten the large moves about right from what we’ve seen over the years.

In November we heard him speak at the Gold Symposium in Sydney and he outlined how his Elliott Wave analysis led him to believe the correction in gold, which was underway then, would bottom out at about US$1480.

Gold didn’t reach that level (or at least it hasn’t to date).  Alf has had a couple of hypotheses since then as to when the low might have been reached.

Now last week he has commented in an article on JSmineset.com:

“The bottom line is that we now have a really strong probability that the correction which started at $1913 on 23 August 2011 has been completed both in terms of Elliott waves and also in terms of time elapsed. If this is correct, the gold price should soon be expressing itself in violent upside action as it moves into the third of third wave which is still targeted to reach $4500.”

“Violent upside action” – crikey!

Writer Satyajit Das on How New Zealand Will Fare in the Crisis

We got into the car this week one morning and the radio was on 1ZB with Leighton Smith.  We’re not much of talkback listeners, but it was good timing, as Leighton was interviewing former derivatives trader (there’s that word again!) and now financial writer Satyajit Das.  Das was here to speak at a New Zealand Initiative event.  We realised the name rang a bell as we have previously read some articles from him on The Daily Reckoning Australia (he lives in Aussie).

Unfortunately we only caught the end of the interview, but afterwards Leighton was raving that he was one of the most insightful and concise people he had ever interviewed.

Anyway Das had some interesting comments on New Zealand and Australia in the current environment.  He believes China’s growth is somewhat false based upon bridges to nowhere and the like funded by government spending which he is not sure can continue forever. This will likely have a major effect on Australia due to China being their major customer for iron ore and coking coal.  While New Zealand will not be immune to the ongoing global stagnation, he thought given our role as a primary producer of food (and people will still have to eat ), we may be less affected.  We managed to find a YouTube video of an interview he did with TV3 while over here so that’s worth a look.

After the interview Leighton alluded to his own 20 Kg’s of silver (think it was that much but could be wrong) he’s held for years and years now.  Which is probably why he also mentioned that he had asked Das off air about gold, something you still don’t really hear in the mainstream media – Mr Das’s only comment was “Gold has its place”.

So if you think gold (and silver) “has its place’ in your finances then get in touch and we’ll help you out.  Try:

1. Email: orders@goldsurvivalguide.co.nz

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

3. or Online order form with indicative pricing

Have a golden week!  

Glenn (and David)

goldsurvivalguide.co.nz

Ph: 0800 888 465

From outside NZ: +64 9 281 3898

email: orders@goldsurvivalguide.co.nz

This Weeks Articles:

Silver Futures Commitment of Traders Data Looks Bullish

2012-07-31 21:44:43-04

This Week: Currency, doing business, & tax rates on the rich: How does New Zealand compare? Silver futures commitment of traders data looks bullish Another gold veteran thinks gold will reach full valuation in the next few years The one personality trait that all gold and silver investors need to be profitable   This week […] read more…

Derivatives – a Beginner’s Guide to “Financial Weapons of Mass Destruction”

2012-08-07 04:07:20-04

Over the last 4-5 years the term derivatives has been firmly embedded in todays lexicon. With the failure of Bear Stearns in 2008, and subsequent bailout of multiple other too big too fail banks, the term “derivative” was popping up everywhere.  Then recently we have JP Morgan’s $7 billion trading loss on credit derivatives in […] read more…

Fraud & Theft: Financial Crime is Now a Business Model – Ron Hera

2012-08-07 04:29:38-04

Continuing the theme of Derivatives this week, we have an interesting video with SGT Report interviewing Ron Hera from Heraresearch.com… Part 1: Fraud and Theft Covered in this interview: Absolute scandal from the bankers with LIBOR and Knight Capital flash crash. Market manipulation is running rampant and is creating artificial markets whereas free markets are a […] 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.