gold value in US dollars, page-18

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marri

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04/10/18

19:50

Post #: 36001725
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Originally posted by timber1956 ↑

@marri

I am less pessimistic than you with respect to the impact of a weakening AUD on Australian gold miners (and the Australian economy in general).

Before passing a negative judgement I would like to know what proportion of the companies costs are denominated in AUD as opposed to other currencies (particularly the USD).

If the AUD price of gold remains relatively constant, then there should be limited stress in meeting these AUD denominated costs (principally wages) because those costs are falling in USD terms at the same time as the earning on gold are falling in USDs.

If there is likely to be stress it will come from the non-AUD costs, mostly capital items. My sense is that these are not huge part of the cost base, but I am happy to defer to specialists if they care to correct me. (What is @Andylgo's view?)

I think that there is a similar dynamic at work in the broad Australian economy. If you look at the AUD denominated price of iron ore during 2008-2009, it is not hard to understand why Australia was one of the few countries in the world not to go into recession following the GFC. (We should all say a small prayer of thanks to Treasurer Paul Keating for floating the AUD in December 1983.)

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Perhaps my post wasn’t clear. I said low AUD is good for Gold and maybe other miners, however a weak currency is never desirable overall. If a weak currency was a plus we should all move to Zimbabwe!
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gold value in US dollars, page-18

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