Gold

[JBmurc]

I hope you are right.

At some point inflation will win or the banks will have to put up with higher rates and business defaults on loans increasing ... add in the picture of HUGE debt loads from the GFC .. I remember years ago tens of Billions of BONDs that were sold with zero return !!!! the write-down in values of these bonds much be HUGE for holders ... junk bonds selling for just a couple percent etc

we know Central banks have been the buyer of last resort for many years .. just how much crap can they continue to add to the balance sheet

... high inflation really only way out I can't see how deflation can run just look at all the issues we have in adding more supply Vs demands

.. GOLD does very well when Inflation is running ..maybe in time we need to see some backing to Fiat currencies to bring back TRUST to these fiat currencies ?? as we know FIAT is all about TRUST ... and many smaller banks in the US have holders not trust they can survive high rates now with SVB tipping over really because of their underwater bond portfolio + major withdraws of funds ..

I see GOLD SILVER Bullion purchase volunes gone skyward of late..

[Nor]

Great couple of days for gold. With each bailout, first the UK guilts now Silicon Valley Bank people might be starting to realise how worthless fiat currencies are becoming. If faith and trust in fiat currencies ever disappears things could change rapidly.

Anything bad that happens in the financial system will be met with money printing and lower interest rates. Default or inflation. I know which way I am betting. Pay rises for all, just not as much as inflation, everyone is happy. Higher deposit rates, fantastic, only 3% below the inflation rate, things are looking good.

What cost of living crisis? everyone knows that printing (or borrowing) more money and giving it to people will cure the cost of living crisis.

I don't see how inflation can be brought under control if everything is increased to compensate, benefits, wages, minimum wage, prices etc. Seems to me to mean inflation becomes exponential.
The only trouble with gold is you can't spend it. Have to sell it and put it in the bank first.

[Bjauck]

I don't see how inflation can be brought under control if everything is increased to compensate, benefits, wages, minimum wage, prices etc. Seems to me to mean inflation becomes exponential.
The only trouble with gold is you can't spend it. Have to sell it and put it in the bank first.

Increasing labour productivity or increased immigration helps. NZ usually goes down the immigration route as household investment is mostly channeled into inflating the value of real estate investments (mostly untaxed), as opposed to investing in investing in improving labour productivity, companies and business (mostly taxed).

[Aaron]

I don't see how inflation can be brought under control if everything is increased to compensate, benefits, wages, minimum wage, prices etc. Seems to me to mean inflation becomes exponential.
The only trouble with gold is you can't spend it. Have to sell it and put it in the bank first.

I think it is called an inflation spiral. Great news for getting rid of all the debt. Bad news for poor people and society in general. Even if it is the next great depression you can't go to the dairy with your gold and buy a loaf of bread. Gold is also faith based much like fiat currency except there is a physical restriction on its production so provided everyone keeps the faith it should hold its value better.

I meant to look back at average house prices from years ago and work out how many ozs/kgs of gold it would take to buy a house say in the 60s, 70s, 80s, 90s 00s, 10s, 20s. In theory if gold has held its value it should still take roughly the same ozs/kgs of gold to buy a house today as it did in the 60s. We know it takes a lot more $NZ. Just an interesting thought. Not sure where I get data on average house prices over that time or average gold prices.
Currently too pushed for time to do it. there is probably a similar study on the web somewhere.

I thought you were staying in Kiwibonds and keeping money out of the bank. If the $500,000 limit on Kiwibonds was a problem for you then you might need a new shovel to bury all your gold.

[Aaron]

Thought I would try doing a quick study kgs gold to house prices. Very brief and not confirmed but based on this article

https://www.oneroof.co.nz/news/ashle...ed-to-be-36862
https://www.qv.co.nz/price-index/
https://goldprice.org/

1966 average house price $8,400
2017 average house price $526,000 Gold per kg NZD $54,094 (roughly)
2023 average house price $920,366 Gold per kg NZD $100,000(roughly)

If my maths is correct 9.72kgs of gold to buy the average house in 2017 and 9.2kgs in 2023. Sadly 1966 best I could find is gold $35.13USD oz. I would need the USD NZD exchange rate then convert to kgs NZD. Maybe someone could help me with that one. History in the online financial world seems to stop in the 1990s.

Anyway the conclusion from such a tiny example is that gold has done what it is supposed to do. Hold its value. I would note that $NZ to house prices nearly halved in just six years and this trend could be accelerating with weak central bankers. Gold to house prices improved a bit. Not exactly a scientific study but would be interesting to see how many kgs of gold in $NZD to buy a house in 1966.

Have not done comparison with bitcoin but based on how bitcoin has taken off maybe a lot better than gold but much more volatile. Also still questionable if supply is constrained like other digital currencies. Only takes a few strokes on the keyboard.

[stoploss]

Thought I would try doing a quick study kgs gold to house prices. Very brief and not confirmed but based on this article

https://www.oneroof.co.nz/news/ashle...ed-to-be-36862
https://www.qv.co.nz/price-index/
https://goldprice.org/

1966 average house price $8,400
2017 average house price $526,000 Gold per kg NZD $54,094 (roughly)
2023 average house price $920,366 Gold per kg NZD $100,000(roughly)

If my maths is correct 9.72kgs of gold to buy the average house in 2017 and 9.2kgs in 2023. Sadly 1966 best I could find is gold $35.13USD oz. I would need the USD NZD exchange rate then convert to kgs NZD. Maybe someone could help me with that one. History in the online financial world seems to stop in the 1990s.

Anyway the conclusion from such a tiny example is that gold has done what it is supposed to do. Hold its value. I would note that $NZ to house prices nearly halved in just six years and this trend could be accelerating with weak central bankers. Gold to house prices improved a bit. Not exactly a scientific study but would be interesting to see how many kgs of gold in $NZD to buy a house in 1966.

Have not done comparison with bitcoin but based on how bitcoin has taken off maybe a lot better than gold but much more volatile. Also still questionable if supply is constrained like other digital currencies. Only takes a few strokes on the keyboard.

Hi Aaron,
Data on RBNZ website back to June 73,1 NZD purchased 1.3272 USD !!!
1966 might be a tricky one , the date will be somewhere but we went decimal in 1967 so that might be an easier date.
https://www.rbnz.govt.nz/statistics/...weighted-index

[Aaron]

Hi Aaron,
Data on RBNZ website back to June 73,1 NZD purchased 1.3272 USD !!!
1966 might be a tricky one , the date will be somewhere but we went decimal in 1967 so that might be an easier date.
https://www.rbnz.govt.nz/statistics/...weighted-index

Cheers stoploss not sure how big a difference 7 years makes re the exchange rate with the US, but using that 1973 rate and I will need someone to check the maths.

$35.13ozUSD equals $46.62 oz NZD (1oz = .0283495kg) so multiple by 35.274 equals $1,644.47 $NZ 1kg gold. Divide by 1966 house price of $8,400 equals 5.1kg of gold. Can't really conclude much from this but if we were going to make up stuff based on very little information we could say house prices were cheap (almost half the price in kgs of gold) in 1966 compared to 2017 and 2023 in gold. The exchange rate might have played a part, I don't know. I was hoping it was going to come out at about 9kgs of gold for the average house in 1966 as well, so that theory may not hold. If you compare 1966 to 2023 then in gold house prices have increased 90% ((9.72-5.1)/5.1) whereas in dollars the increase is 10,857% ((920,366-8,400)/8,400). Wow possibly a miscalculation or a good reason to own gold and not hold dollars.

In the one roof article I got my figures from, I think Ashley Church is arguing because it is easier to service a mortgage at low interest rates housing "affordability" is the same now as it was back in the 70s. What a knob. Must be a big supporter of the trickle down theory and a cheerleader for crazy monetary policy and an out of control housing market.

happy for holes to be picked in my analysis.

[stoploss]

Cheers stoploss not sure how big a difference 7 years makes re the exchange rate with the US, but using that 1973 rate and I will need someone to check the maths.

$35.13ozUSD equals $46.62 oz NZD (1oz = .0283495kg) so multiple by 35.274 equals $1,644.47 $NZ 1kg gold. Divide by 1966 house price of $8,400 equals 5.1kg of gold. Can't really conclude much from this but if we were going to make up stuff based on very little information we could say house prices were cheap (almost half the price in kgs of gold) in 1966 compared to 2017 and 2023 in gold. The exchange rate might have played a part, I don't know. I was hoping it was going to come out at about 9kgs of gold for the average house in 1966 as well, so that theory may not hold. If you compare 1966 to 2023 then in gold house prices have increased 90% ((9.72-5.1)/5.1) whereas in dollars the increase is 10,857% ((920,366-8,400)/8,400). Wow possibly a miscalculation or a good reason to own gold.

In the one roof article I got my figures from, I think Ashley Church is arguing because it is easier to service a mortgage at low interest rates housing "affordability" is the same now as it was back in the 70s. What a knob. Must be a big supporter of the trickle down theory and a cheerleader for crazy monetary policy and an out of control housing market.

I think the imported component of a house would be larger now ( and a larger house) than it would have been in the 60's
We used to make quite a few of the components that are now imported.

[Aaron]

I think the imported component of a house would be larger now ( and a larger house) than it would have been in the 60's
We used to make quite a few of the components that are now imported.

In theory the imported components would be cheaper as the labour cost is lower but I agree more house is required these days and more bits and pieces. Since when did you need at least two bathrooms per house or better yet a bathroom for each bedroom. Certainly stand alone houses being built on average seem to be larger and flasher. Lucky KPG is building apartments for all the plebs who missed the housing market.

[blackcap]

In the one roof article I got my figures from, I think Ashley Church is arguing because it is easier to service a mortgage at low interest rates housing "affordability" is the same now as it was back in the 70s. What a knob. Must be a big supporter of the trickle down theory and a cheerleader for crazy monetary policy and an out of control housing market.

happy for holes to be picked in my analysis.

Totally agree. Top class knob!