Commentators butcher gold and Aussie dollar

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Some pretty throwaway stuff at large yesterday on gold and the Aussie dollar. At the top was Adam Carr whose economic creatism knows no bounds:

Policymakers may lament the ‘strong’ dollar, but the truth is, the dollar is already very cheap relative to fundamentals. Notwithstanding this, the recent drop in the Aussie dollar below US74c has set tongues wagging about its new terminal value — or the new cycle low-point. It’s a moving feast and the lower the Aussie dollar goes, the lower the new dollar targets become. Some are talking US65c now over the next year. That’s not a criticism — forecasting currencies, as the old saying goes, is a fools game.

No, it isn’t. It just takes more effort than this. Doing snap shots in time on any given input and extrapolating conclusions is ridiculous for forex (beyond trading data releases). The dollar’s value is a continuum of forces that perpetually evolves and includes intangibles such as sentiment and tipping points. Over time it will make sense as a discounting mechanism of all of the inputs. That it’s complex doesn’t make it impossible or nonsensical.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.