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Tony’s market update

Trust in government and institutions at an all-time low sees people turning to gold

We have recently seen the price of gold rise strongly, pushing on to a June high of US$1,432 before profit taking the price of an ounce briefly back down below US$1,400 at the end of the month – gold is showing an aggressive upward trend. We’re not quite ready for gold to move so there’s still time to buy before that happens – but all the signs are heading towards it.

Earlier in the year the Federal Reserve Bank announced interest rates would rise, but in June they said they plan to lower them – there is even talk of them going to zero. When interest rates are higher, people tend to invest in US dollars to get a return. When interest rates fall, the risk of holding currency increases and because the competition for gold is the US dollar, gold has less competition.

People often associate the price of gold going up with inflation, however gold usually goes up due to a lack of faith in government. When this happens we see people invest in private equity – property, gold, commodities. The US political landscape, the shambles with Brexit, Farage winning significant votes in EU elections – we are starting to see ordinary people negating the elite and using their vote to have their say – and people turning to alternative wealth protection and security.

If gold and silver seem expensive, it’s only expensive in NZ dollars as the NZ dollar is losing ground against the US dollar. Our dollar will continue to fall as money migrates to safety which is still the US dollar. If we do have a currency collapse, people have to be prepared to pay whatever the market dictates. Housing prices haven’t reflected the declining NZ dollar yet, but gold has (as it’s priced in real time). Gold is up $350 or 20% per year and it wouldn’t surprise me if it goes up to NZ$2,400/oz by the end of the year.

Gold held above the magic US$1,400 at the end of June now needs to breach US$1,585 by the end of the year. Gold closed above US$1,362 for the month and that’s a great signal to buy. We know that banks and the wealthy are buying gold and the money to make it rise is still there.

The ability for silver to multiply is also very high. Currently, 1oz of gold is equivalent to 93oz of silver, and while many agree that silver is under-priced, we need gold to take off before silver will be pulled up.

We are not financial advisors, therefore we are unable to make financial decisions on your behalf, however we are committed to bringing you the latest in market evaluations, as viewed from a Kiwi perspective. What we want for all our customers is that they buy and sell gold at the right price, this can only be achieved by taking time to either understand the market or discuss with our team how precious metals can help protect your wealth.

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The Keiser Report: Secret Bull Market in Gold

Max Keiser is an American broadcaster, Wall Street trader and financial genius. He has been producing The Keiser Report – a financial program offering insightful and thought-provoking perspectives on financial markets and heterodox economics theories since 2008.

In his report from June 16th this year, he discusses why gold is good option. If you’re considering purchasing precious metals, it’s a must watch.