Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench

Double Boost For Aussie Gold Ahead?

IMG Auteur
Published : May 08th, 2012
465 words - Reading time : 1 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : GoldWire

 

 

 

 

BLOG WATCH

Dr. Alex Cowie at Money Morning has a piece on gold noting that while gold has been range bound recently, during its 12 year bull-run, gold has often made its next move up after it has ‘done some work’ in a particular price range for a while.”

What is more interesting for Australian investors is the discussion of the impact of the AUD/USD foreign exchange (FX) rate on the Australian gold price. In our Depository business we have often seen Australian investors fail to consider the impact of our FX rate on the local gold price, which is (assuming USD gold stable):

• FX rate rises, Australian gold price down

• FX rate falls, Australian gold price up

This sometimes results in clients calling up to sell after a rise in the USD gold price and expecting a profit, but then find we are quoting an AUD gold price lower than their purchase price – all because the effect of the FX rate rising since they bought being greater than the increase in the USD gold price.

A good example of the effect of FX rates was in 2008. Consider the four month period illustrated in the table below.




Whilst US based investors experienced a loss, gold was positive for Australian investors. Dr. Cowie gives a long term example of this effect, noting that “the Aussie dollar gold price has gone up an average of just 11.0% per year for the last ten yearscompared to the US dollar gold price, which has gone up an average of 17.2% per year.”

However, he sees a good opportunity coming up, with the Aussie dollar havingnow dropped from $1.08 to $1.02 in just a few months. The Reserve Bank of Australia’s 50 basis point interest rate cut last week has really taken the wind out of the Aussie. Judging by the down-leg in previous interest rate cycles – not to mention the state of the Australian economy – more cuts are coming. Which should mean the Aussie may have further to fall yet.”

If that fall in the Australian FX rate coincides with an increasing USD gold price (as some analysts expect), then Australian gold investors are looking at a very good opportunity to buy gold.”

So as an Australian investor you have to consider not just what the USD gold price will do, but also what the Australian dollar will do relative to the US dollar.

Download today’s full Blog Watch (pdf 185kb) for more reviews, including:

PRO MARKET FEEDBACK

Some feedback from professionals in the gold market as reported by Reuters.

SILLY YELLOW TRINKETS

John Mauldin on gold as “insurance”.

INDIAN GOLD TAX SCRAPPED

Wall Street Journal reports that India has removed the excise tax on sales of all gold jewelry.”

 

 

Data and Statistics for these countries : India | All
Gold and Silver Prices for these countries : India | All
<< Previous article
Rate : Average :0 (0 vote)
>> Next article
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Vena Res.(Ag-Au-Cu)VEM.TO
Provides Update With Regards to the Arbitration Concerning the Azulcocha West Project and Enf
CA$ 0.04+0.00%Trend Power :
Exploration and drilling
Rockwell(Cu-Gems-Ni)RDI.TO
Announces Delay in Annual Meeting and Meeting Date
CA$ 0.20+0.00%Trend Power :
Corporate news
Eldorado Gold(Au-Fe)ELD.TO
Reports 2015 Second Quarter Financial and Operational Results
CA$ 4.45-1.11%Trend Power :
Financials
Endeavour Financial(Ag-Au-Co)EDV.TO
Mining Q2 2015 AISC/oz of $898, Profit of $33M And $20M Debt Payment in July
CA$ 0.50-2.94%Trend Power :
Corporate news
Mawson Res.(Au-Ur)MAW.TO
Restarts Drilling at the Palokas Gold Prospect in Finland
CA$ 0.19+11.76%Trend Power :
Corporate news
Goldcorp(Cu-Le-Zn)G.TO
Achieves Record Quarterly Gold Production; Updates 2015 Cost Guidance
CA$ 17.66+1.20%Trend Power :
Production
Claude Resources(Au-Cu-Ngas)CRJ.TO
Provides Date for Q2 Results and Conference Call
CA$ 0.64-1.54%Trend Power :
Corporate news
Richmond Min.(Ur-Au-Gems)RMD.V
- Exploration Update
CA$ 0.09+0.00%Trend Power :
Corporate news
Arianne Phosphate(Ur-Mo-Ti)DAN.V
Extends the Term of Warrants
CA$ 0.87-1.14%Trend Power :
Financings
Anaconda Min.(Au)ANX.TO
Reports 12.83 g/t Gold Over 4.38 Metres and 8.55 g/t Gold Over 4.97 Metres from Channel Sampl
CA$ 0.04-10.00%Trend Power :
Corporate news
Comments closed