Gold and the AUD/USD exchange rate

Problem is that for Aussie gold fans they are getting the exact opposite effect.

Personally, I’m laughing, with a mixed basket of Aussie gold miners, silver miners and physical gold and silver stockpiled over a long time. My attitude to gold $1200 was the same as it was to gold $600 or gold $300 and the “effect” I am getting, is just great.

When I see the people on this forum talking about the likes of IAU, TRY, IGR, etc I laugh. I bought those in 2008/2009 for 0.185, 0.68, 0.135 and after an initial takeprofit they have been sitting in the bottom drawer ever since!

As always, I am happy to convert a portion of my productive efforts into gold or silver at whatever the spot rate is that day. I don’t care whether it’s a 30 year high or low or a 20 year range. As long as there is a sucker willing to take some of my paper and give me metal, I’ll be playing along.

The AUD has been going up cancelling the gold gain against USD. Making it a **** traded recently. Not that they ever mention that. No one loses when investing in gold. ;)

The ASX:GOLD ticker has acted as a highly negatively correlated hedge instrument against the ASX200 cash close for 2-3 years. I am unsure why any investor worth their salt wouldn’t be examining it as a tool to hedge market exposure. I am always on the lookout for instruments which are negatively correlated to the broader market.

You could have bought STW and GOLD together on the open every week and been fine.

Picture 3.png

Basically its not that gold has been the great trade but rather short USD.

Gold has consistently outperformed everything (except probably junk bonds) since the beginning of the year. It went up while the Euro dropped from 1.5 to 1.2. It went up more than the USDX on the night of the flash crash (although admittedly the USDJPY flashcrash that night might have something to do with that). It went up while AUD lost 10% to the mining tax.
Basically it’s not that short USD has been the great trade but rather long gold all year long.

Picture 2.png

I checked NDX100, SPX, AORD, Crude oil, Copper, Euro on that perf chart and copper is the only thing coming close to gold for 2010. When you view all those things relative to gold, they are DOWN on the year.

Might get together my own AUD Si chart out of interest tomorrow.

Funny. You are of the type that claims ZeroHedge and the like are doomsday self reinforcing washed out traders or something. Yet they were claiming silver manipulation from day one along with others.

Now that a RICO lawsuit against JP Morgan and HSBCs fraudulent activity in the silver market is pushing it to 30 year highs – basically vindicating all those doomsday washed out traders overnight – you are interested. Mate, you are late to the party. Those of us buying with both hands in 2008 are already drunk and passed out on the floor thanks to the gradual liquidation of 40% of the entire silver market short position owned by the likes of JPM and HSBC. Some of us were lucky enough to buy silver $18 straddles in July. We knew something big was coming down the pipe.
Picture 1.png

But you know what? I’m not gloating over profits on this one. I’m not happy to be right. I would prefer to be wrong on gold and the more right it gets, the more worried about my friends and family I get.