Just doing some number crunching to figure out whether shares or gold are the better option right now. Ran a few scenarios and thought I'd share for discussion. Scenario 1 -2% Growth of POG to the $1000USD mark over the next 12mths as some predict. Assuming exchange rate holds would see almost 20% loss in real terms from today's purchase price Scenario 2 1% Growth POG back to $1400USD Assuming the exchange rate holds its a straight POG growth. Scenario 3 1% Growth POG back to $1400USD Exchange rate drops further to .90USD over the next year This is where things go in our favour and any POG growth is added to the devaluation Scenario 4 2% Growth POG brings us back to under still $1600USD - so its not unrealistic within a year Things really start to get interesting here - if the exchange rate tanks to around 80cents which many are now predicting then the real growth is over 40% Really makes money sitting in a bank look silly if you have no confidence in the AUD going forward.
Hard to come by all these scenarios, I'm trying to draw an insight from this and will catch up someday
Sorry I forgot about this - I did this quickly at work and although I checked over the figures I realised afterwards that the growth (POG) was stated as a monthly figure and not annually just in case it confuses anyone - so 1% growth would be 12% annual (POG). At face value 12% growth sounds like a lot but gold was much higher as we all know. So using scenario #3 as a conservative example - if POG climbs from $1250USD to around $1400USD over the next 12mths that's a 12% increase (1% mthly). Assuming at that point in twelve months our AUD has dwindled to around 90 cents USD (again a very conservative estimate) these two factors together will combine to see a final growth in AUD of 15.7% over 12mths. I'm a realist not a gold bull/bear and I'm getting just under 5% in our main savings account and I'm looking for better options so IF you think Ag/Au will rise and the AUD will decline it clearly goes in favour of PMs if the bottom really is in. If POG drops further to $1000USD and AUD tanks then depending on the exchange rate impact it may also go along way to softening the drop in real terms. As always DYOR.
