A month ago the NST share price was $11.50. The A$PoG is about the same now as then. The Company is going great.
Everyone's a genius in hindsight but the clues were there.
Luke Gromen set out possible gameplay scenarios stemming from the US/Russia War, a month or so ago.Russia linking the Ruble to Gold and eventually Oil. He said the USA might fight back by strengthening the US$. To do so though, would weaken the US economy and by extension the world economy.
The US Fed isn't raising interest rates to fight inflation, they're doing it strengthen the US$. It wants to restore some confidence in holding US$s. If they were trying to fight inflation, they would have gotten ahead of the curve and started in Apr21.
The A$/US$ comparison of the PoG, shows it isn't the PoG falling but the US$ strengthening.
While the operations of Australian Gold equities are unscathed, they are sold off by the US Instos and Fundies because of the exchange rate loss. When Gold ETFs sold off, they sold everything, jurisdiction irregardless.
This is a great opportunity for Australian investors to invest in Australian Gold Equities. No exchange rate considerations and dividend imputation credits.
From here the question remains ... what now?
Will the US Fed keep raising interest rates? Their trade deficit hit a record in Mar22 of US$110b and that's for one month! If the US Fed keeps raising rates, they're going to need to raise their debt limits. Plus in an election year with a pork barrelling administration.
If they fight inflation, they let unemployment rise. Layoffs have already begun. As bad as it is for the US economy, its worse for the world economy.
China doesn't have a COVID problem. The Chinese COVID policy is purely to deliver a reality check to its citizens. They forewarned last year advising citizens to stock up on long life food. They want to bring down out of control commodity prices. They also want to prepare for USA backlash when a new world reserve currency rival to the US$ is announced.
The wheels are in motion for the BRICS/OPEC and other countries outside of USA Inc, to create an alternative to the US$ and supported by something tangible. Gold has 5,000 years of network effect and is not subject to the demand/supply volatility of other commodities.
China does all the work and Oil is the most important commodity. The US$ is losing its relevance. The USA treats the ROTW world as slaves, while self flagellating itself. Its all hypocrisy and lies. The USA thinks they can pay their citizens a UBI and let the rest of the world (ROTW) do all the work. This has been going on for a while now and the ROTW is sick of it.
The US Fed will keep raising rates however, sometime this year, the US Fed is going to have to decide between crashing their economy (and in turn the world economy) ... or crashing the US$.
Q1CY22 has already delivered a negative 1.4% GDP. A negative Q2 result (aka recession) is almost a given. In an election year, the administration will want to be seen to act and stimulate the economy. In that eventuality the US$ must fall. Look at the DXY. Its around 105 but its moving average this century, is around 85.
The continued march towards bifurcation of the world reserve currency, will see a BRICS/OPEC/ROTW (Gold supported) accredited challenge to the US$. The USA will continue to champion the US$, however the new challenger will cause the PoG to rise significantly. If the PoG rose to US$100,000, then the USA could wipe out its entire US$30t in debt in one fell swoop (based on its disclosed Gold holdings ... ahem ... unaudited).
However the USA would then lose its economic dominance and would have to go back to work. Standard of living would plummet. Its already a tinderbox of diversity.
So, in summary, my guess is that this is a great opportunity for Australian investors to buy NST shares. When the exchange rate movement inverts, those same US Instos and Fundies will flood back into Australian Gold equities.
AIMO, of course.
NST Price at posting:
$8.62 Sentiment: Buy Disclosure: Held
(20min delay)