Australian dollar launches golden rocket

See the latest Australian dollar analysis here:

Macro Afternoon

The Australian dollar is soft in the circumstances of a falling DXY today:

Bonds are madly bid:

XJO is thundering towards record highs as the equity risk premium surges:

Dalian an outright bubble now, ignoring all bad news:

Not so much Big Iron:

Big Gas is ignoring bad news too:

Big Gold is moon shooting on the dovish Fed:

As the AUD price of gold surpasses $2k for the first time ever:

Big Banks are now yield desperation central:

Big Realty is mixed:

As said recently:

So, is an Aussie gold miner a good punt right now? A good miner offers terrific leverage to the price. There is a good argument for it:

  • trade wards are blowing back into the US economy forcing the Fed to ease which will pressure the USD;
  • the same trade wars are weighing very heavily on AUD meaning that both currencies could fall in the period ahead;
  • meaning that the gold price will rise and even more so in AUD terms.

There is one caveat and it is this: if the trade war escalation gets out of hand and turns global shock (or some other shock comes along), then the USD will likely enjoy a safe haven trade during the heat of crisis and gold will fall along with the AUD. During the GFC this proved to be bad for gold given it fell more than the local currency did.

Even so, afterwards, as the Fed launches mass rates cuts and QE, the USD will again sink and gold boom. Though at that juncture it might also be fighting a rebounding AUD, depending upon how far behind the Lunatic RBA remains.

The MB Fund is holding Newcrest.


Houses and Holes
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    • peterbruceMEMBER

      I bought NST way back in early’13 just in time for the gold price to tank!
      A bit depressing for a few years to say the least, but I kept the faith and for the last few years it’s just been getting better and better. Now I am a happy boy!

    • buy some longer dated calls…..not financial advice …dyor
      run a series of calendar spreads….not financial advice …dyor
      sell puts….not financial advice …no don’t I’m just being fkn silly now