The price of gold in NZ$ has now fallen to its lowest level since early November 2009, almost a four year low, on a nominal price basis.
In fact, an ounce of gold was also todays price back in November 2008.
The NZ dollar is rising faster than the gold price in US dollars, making the precious metal easier to buy here.
With today's release of CPI inflation data, we can also see that on an inflation-adjusted basis, gold is now 7.1% lower than it was in November 2009, an annual decline of 2.1% over that period. These results are for an investor who still holds gold purchased in November 2009, and uses the inflation calculator published on the Reserve Bank's website.
The movements in the gold price, especially given the high levels of uncertainty surrounding the US currency, are baffling many people.
The current low real price does make buying the precious metal now very attractive for investors who have decided to increase their holdings.
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4 Comments
So has someone thought to ask Newmont mining , owners of Waihe Gold mine , what the likely effects are for them?.
Newmont is an exceptionally well run mining house , so they may have sold their gold production on forward contracts , in which case the impact may not be too bad .
Newmont is an exceptionally well run mining house , so they may have sold their gold production on forward contracts , in which case the impact may not be too bad .
If so, would they not be contributing to the collapse in the price of gold and their own future profits? Read more
@ Steven Hulme Thanks for the link . Hopefully Newmont does have forward contracts that are legitimate, not fraudulent , and at a price that makes continuing operations viable.
I am led to understand that the mine is a very small operation by gold mine standards , and described by some as a marginal operation.
Newmont have two problems , a constantly declining gold price and a persistently high domestic currency . It must be testing management's resolve in a big way
Their wage bill must also be a problem , this is not Brazil with a weak currency and cheap unlimited labour resources , or South Africa where the Rand is 10 to 1 to the US$ , and mineworkers earn 227 Rand a day , thats LESS THAN THREE DOLLARS AN HOUR
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