For the past six moths or so I’ve suggested that buying Australian gold miners on any dips was a good idea. The rationale for this is the usual one for gold. Given gold is priced almost exclusively relative to the stability and value of the US dollar, the Fed tightening cycle was going to sooner rather than later trigger an end of cycle shock resulting in QE4. That would see gold soar as the US dollar tumbled.
As well, given Australian gold miners price their costs in AUD, they’ll also benefit as the local currency falls versus the US dollar and gold. The local miners also make a great pair trade with an Aussie dollar short.
I have also warned that any end of cycle event will probably kick this trade in the guts for a short while, as it did during the GFC, which would be a great opportunity to collect some more miners.
