A word by any other name ...

[The Squatter of Amon Rûdh]

If I were to say something for myself, I never thought about it that way. Most probably because the Z in "Nazgul" is certainly pronounced Z (as in "Zoom"), while in "Nazi" it is generally pronounced as C (as in... erm... oh, you English barbarians, why don't you ever pronounce "C" correctly! As in "Caesar" if it is pronounced with correct Latin spelling).

Precisely my point. In German, z is pronounced roughly ts, whereas in English (and apparently Black Speech) it's pronounced as you describe. Of course, not all of Tolkien's readers would know that, but my point was that Tolkien did know it, and had known it for a very long time before he decided that nazg would be Black Speech for 'ring'.

I promised that I would at least try to track down the word nazgûl, but it's proven more difficult than I expected. It would appear that the first time it occurs in The History of Middle-earth outside Christopher Tolkien's notes is in VII.389, where the word is used by JRRT in some rough notes for the continuation of his plot. As was Tolkien's regular habit during the composition of LR these notes were written in pencil and then partially inked over, almost certainly immediately afterwards. Christopher Tolkien notes:

In those passages where the original text was inked over the underlying text can be largely made out, and it is seen that Haradwaith was present... On the other hand Nazgûl, here first met with, was not, and nor was Dagorlad (the pencilled text had only Battle Plain)

HME VII, The Treason of Isengard, p.389 (The Riders of Rohan).

Using JRRT's habit of idly writing out names and phrases from the newspaper in elaborate calligraphy, CRT has dated this period of work to Winter 1941-2, so the first use of Nazgûl is at some time in late 1941 or early 1942. The nearest I can come to knowing what was on Tolkien's mind at this time comes from the doodled phrases used to date the notes and drafting for the previous chapter: 'Chinese bombers', 'North Sea convoy', 'Muar River', 'Japanese attack in Malaya' (HME VII.379). It was the Japanese offensive in Thailand and Northern Malaya in December 1941 and the crossing of the Muar River in January 1942 which dated these jottings.

This is scant evidence for ascribing a source to the word, particularly since Tolkien seems to have been unable to remember how he thought of it by 1967. From his letter he sounds fairly convinced that the Gaelic word is a likely source for his, but I suppose this will never be known. Personally I feel that the Gaelic origin is the more likely, due to its greater similarity in appearance and pronunciation. If Tolkien did use Nazi as his source then it seems an unusually and unwontedly clumsy link for him to make; and with his vehement denial of the connection between Moria and Morīah as a caveat, I'm inclined to treat the connection under discussion as extremely suspect.