Quote"The common factor for both the Australian dollar and the Canadian loonie is that they benefit when risk appetite returns," said Mark Chandler, head of Canada fixed income & currency strategy, RBC Capital Markets. The Aussie dollar, in particular, is expected to remain attractive as a proxy currency given its close links to gold and commodities prices. By Sue Chang, MarketWatch SAN FRANCISCO (MarketWatch) The unlikely trio of the Australian dollar, the Canadian loonie and the South African rand have closely tracked gold in recent weeks, and with the precious metal expected to test new heights, the so-called proxy currencies may go along for the ride. http://www.marketwatch.com/story/gold-rally-helps-ascent-of-proxy-currencies-2011-04-07?link=kiosk
wpWith the possibly (or is that inevitable) continued printing of USD into the forseen future and gold/silver being priced in USD this makes for a sort of stand still for us aussies? The question is will this continue or reverse. I can see that it will continue as monitization of US debt in unavoidable, but if there is a downturn AUD could tank... But where is the money going to flow to? Surely not the USD forever... Eventually the effect of printing so much fiat should make the USD unattractive? Will this the make other countries whose economies have not had to resort to fiat printing more attractive? Is this a discription of the AUD? Are we not printing aswell? Or is it to a much lesser extent? Could the AUD become a safe currency? or what would be a safe currency? Surely not the euro? Well that what a ramble apollogies
This happening is like money in the bank for us,I think. When the big downturn occurs,AUD will fall,it being a speculators currency and depending on world economic growth demanding our raw materials. Initially the POG in USD would fall,but AUD would fall much more,I think, so the POG in AUD would rise. Then POG(price of gold) would rise against both currencies. I think 75% sure. As long as POG remains the same in AUD until the downturn ,I'm happy.
If they don't run for the US dollar then batten down the hatches for a financial storm and don't sell your metals no matter how much they rise to - trade for things but forget cash. I'm one of those who believes the oz dollar could go to 50c in another GFC, even if the RBA tries to buy it out of trouble. Oz is a toddler in the room and will be knocked flat when the big boys start running around in circles trying to save themselves.
The aud is not large enough to be a safe currency. It is a 'risk currency' and when that risk appetite fades. So will the AUD.
Australia is a nothing country, a blip. I believe he's referring to the amount of AUD traded daily which is nothing compared to EURO/Yen ect... can't really compare it to the USD being that its the reserve currency(for now). I think the AUD has been rising too fast as well and will have some sort of correction, but for it to correct there needs to be a currency that money can be shifted to or a metal ect(so far gold/silver are only attracting small money). The yen is not good because the government wants it weak, the USD is not good because Obama and Bernanke are morons and Euro is having issues with potential future defaults. We could see money shift to Brazil or Canadian dollar and the cockroach of currency the swiss franc.
Your right, Gold heres the figures. I expect the CAD to get some attention again soon also i expect Brazil to get quite allot of attention soon. Of course most these would mean nothing if China floated there currency.... untill then.. USD - The US Dollar EUR - The currency of the European Union "EURO" GBP - The British Pound JPN - The Japanese Yen CHF - The Swiss Franc AUD - The Australian Dollar CAD - The Canadian Dollar
Recently everyone was running to the Swiss Frank, which can not handle that amount of influx. Gold is more sideways in the AUD chart, where as USD chart is classic bull shape. Silver on the otherhand is bull shape in both because its run was later. When (not if) the USD goes into hyperinflation, their population will flood to physical gold, that when we will see gold go through the roof in AUD. When the demand for physical overtakes the lift the AUD gets from being a 'hard(ish) currency'. Watch out though because Gillard and Swan are saying 'all of Australia should benefit from the mining boom' roughly translated 'we need to redestribute wealth from rich to poor' - they'll do that through tax. It could put an artificial cap on how big Aussie mine companies mining in Australia can grow. Also dont write off a dip in the AUD, if China stalls AUD will fall and Gold will increase. Base metals will fall and PMs will go up. Japan could have tipped an AUD crisis but didnt, if Japan happened and the housing bubble in China blew at the same time - that would have, and we would all be talking about how much we lost in stocks but gained in physical
Also one thing that i thought was interested was in the RBA minutes last month or the month before that it suggested the possibility of forex intervention, which imo translates into selling AUD into the market to devalue it. I would think this would be considered if the high dollar starts to impede on growth and is clearly shown in stats.
I can't see AUS printing money, i think its referring to selling currency reserves into market or even something like what Japan did recently and get other G6 nations to sell Yen.
By large enough, I mean that australia is small on the global scale. I know some people here have mentioned it being the 4th most traded currency, which is true but highlights to me just how much of a risk trade the aud is and is overeached beyond its 'fair' value. Our GDP on a global scale is far to small to ever be a 'safe currency' as our gdp can be whipped about so easily by other currencies. just my thoughts on it. Im sure others can dig out some stats on it but i recall that relative to capital flows, the aud is over 30% fair value. The markets can remain irrational longer than you can remain solvent. But with the euro/yen/us dollar all up the proverbial creek, what other options do you have? (Precious metals are the obvious answer here)
