Friday, September 23, 2011

Rest Easier With Gold Amidst Market Turmoil

If you owned gold in New Zealand dollars yesterday at $1811/oz then today at $1740/oz, you can buy the same amount of stuff in New Zealand dollars today.

This may not always be the case of course, some days up, some days down. But over the long term gold tends to be the true arbiter of value. This is because gold is money in it's ultimate form and the direct opposite of fiat money and the paper derivatives thereof. All goods and services are eventually measured against gold.

However, the major talking point this morning is the decimation of the world markets overnight:

Dow Jones -3.51pc
S&P 500 -3.18pc
Nasdaq -3.25pc
FTSE 100 -4.64pc
DAX -4.91pc
CAC 40 -5.16pc

Many pension funds, hedge funds, kiwisavers and sovereign funds have lost paper value by the billions. Those holding commodities, like silver, also were flattened somewhat. In London alone, £64bn was wiped off the value of Britain's biggest companies on FTSE 100.

One market participant said today, "Markets rely on confidence and certainty. Right now there is neither." How true.

With the leaders of major economies all bickering like schoolboys, it's no wonder confidence and uncertaintly reign. Here's a few quotes:

"Barack Obama has been having stern words with eurozone leaders this week, claims press secretary Jay Carney." Is this the same USA that holds the largest deficit by all emasures in history?

"World Bank president Robert Zoellick say today that the world was in a "danger zone" and the IMF's Christine Lagarde blaming politicians for bringing us all to the brink of recession."

Market participants have digested the latest 'operation twist' from the Federal Reserve, where they have said they will sell short term treasuries (of less than three years) and use the proceeds to buy longer term debt. The market has deemed this will not be enough to boost the economic system and the Fed will need to bring in QE3 in October. Yes, money printing on a scale never before seen. One that would even make Weimar Germany blush.

The markets have reacted as they should to the plans and bickering from our Leaders. Now the only course of action they really have is to print more money.

Is there another planet I can head to?

Gold in New Zealand dollars: $2225.33 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $45.94 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)


The Anglo-Far East Company
The Original Private Gold and Silver Bullion Custodian
Your reference: an-001


  1. Thanks Fatima. Just as an update, even with the violence in the gold prices, today we are still only NZ$36.00 down.