NZ’S gold price hits record high
Gold traders reported hectic buying and selling on Monday as coronavirus fears push the New Zealand gold price to a record high.
Sellers were racing to cash up on gold bought in previous years, while others were hoping the metal would go higher or seeking a traditional ‘‘safe haven’’ investment.
The New Zealand gold price struck an all-time high of NZ$2673 an ounce on Monday, edging down to NZ$2592 yesterday, on coronavirus jitters and the prospect of an economic downturn.
The United States gold price also surged, hitting a seven-year high of US$1688 on Monday before slipping to US$1645 as profit-taking took hold yesterday.
Tony Coleman of NZ Gold Merchants said business had been brisk, but the general public was probably not aware.
‘‘I don’t think a lot of people know what the price is and they are not as cash-strapped as they were [after the global financial crisis, when the last high occurred].’’
Morris and Watson treasury manager Adam Van Sambeek said gold could be slow to move and people tended to ‘‘bottom drawer it,’’ but ‘‘when it goes, it goes’’.
‘‘It is a longer term investment ... they do take a while to come to fruition, but now you’re starting to see people getting some very good gains in there.’’
He said gold could go higher if sharemarkets did not recover quickly from yesterday’s plunges.
Gold prices have actually been creeping up steadily in New Zealand dollar terms for the last few years. The precious metal last hit a high 9 years ago, before going into a sharp reversal. But last year gold shot up nearly 32 per cent from NZ$1820 to $2400 an ounce, and it has increased a further 8 per cent during the past six weeks, stoked by fears of recession if the coronavirus spreads.
Other factors are low returns on interest rates and a concern equity markets are overvalued.
A fourth reason, Sambeek said, was that gold was outperforming the weakening Kiwi dollar, making gold more attractive but also more expensive.
He was seeing more selling than buying at present but if the price held, people could start shifting some of their money out of property and stocks and into gold.
‘‘No-one’s going to be clearing out of everything, they might just opt to diversify.’’
In New Zealand, investors buy both coins and bars, but Coleman said investors tended to buy bars because the coins carried a higher premium. Currently, a 1kg bar was fetching NZ$87,000, compared to $56,000 two years ago.
The difficulty came not with buying gold but selling it again, as there were not a lot of companies that would buy it back, he said.
However, he warned there were many forgeries around.