So the currency battle for Australia is on. Last night gold held at $A1362 but lost $US8.30.This was reported as gold falls but in fact its getting set to rise and what really happened is the US$ increased in comparison to other currency.
It could be a volatile ride but its very unlikely the Abbot government will have the stomach for holding the Aussie currency, that would require ceasing to suck up to Uncle Sam and pursue better trade policy with China. Secondly the Business Council of Australia would like a weaker $A as also would farmers. Finally the embattled WA government needs a miracle and its strategy of increasing miners costs with royalties can only not destroy real value unless the $A Dollar falls .So its fate is sealed and with it will come a resurging gold price in Aussie terms.
And that will be very good news for gold and Iron ore resource stocks.(in fact the Iron guys are predicting a very sharp up turn on the back of currency and increased activity in China)We should see some strong volume increases in the resource sector and would be a good time for TJ to take a tour of the USA and promote Mutiny.
MYG Price at posting:
3.8¢ Sentiment: None Disclosure: Held
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