Gold new all-time high in NZD terms

Thanks for viewing,

After last weeks unexpectedly deep 50 basis point cut by the RBNZ the NZD has lost ground against USD ft.com/content/e51aa056-b8b5-11e9-8a88-aa6628ac896c. Against a back-drop of a very bullish gold/USD price this has resulted in gold breaking its 2011 all time high.

I get the feeling that the a new monetary easing policy (QE4?) is around the corner from the Fed, so we are at the start of a new easing cycle. If we are at 1% rates (this is a negative real interest rate. Inflation is 1.9% presently tradingeconomics.com/new-zealand/inflation-cpi) at the start of an easing cycle, then negative (nominal - not just interest rates below inflation) interest rates are a very real possibility.

We may be approaching a time in New Zealand that it will be much more prudent to keep your cash in a safe, instead of paying banks to hold it for you. This happened in Japan and can happen in Australia and New Zealand as well: scmp.com/news/asia/east-asia/article/2115888/cash-loving-japanese-savers-play-it-safe-hiding-money-their.

Remember that the RBNZ holds no precious metals (bulk sold in 1960s and the balance sold in 1991) and all of its assets are foreign currency cash assets rbnz.govt.nz/statistics/f5. Expect all of those cash assets to reduce in real purchasing power while gold continues to climb.

Protect those funds everyone.