au dollar could reach 1976 level of $1.40

Gold producers in australia would become marginal and some gold mines would be on care and maintance. There is market sentiment that the gold price will fall to low 1200s.

Different returns based on average cash cost
assuming a cash cost of 750au

GOLD $us EXCHANGE GOLD $au PROFIT
1800 1.40 1285 535
1800 1.10 1630 880
1800 .99 1818 1068
1800 .80 2250 1500

1400 1.40 1000 250
1400 1.10 1272 522
1400 .99 1414 664
1400 .80 1750 1000

1200 1.40 857 107
1200 1.10 1090 340
1200 .99 1212 462
1200 .80 1500 750

http://www.theaustralian.com.au/business/markets/mixed-response-to-dollars-run-to-parity/story-e6frg916-1225939476005

Someone is going to say that $1.40 was before the dollar was floated. That is true but it doesnt change the fundamentals of todays market conditions.
I see all the new mines coming into production the $au will be in high demand.

There is a currency war occuring.

http://www.theaustralian.com.au/national-affairs/wayne-swan-joins-us-to-advance-currency-war-on-china/story-fn59niix-1225952390687

The real problem is Gillard wants to leave the $au to market forces. This is going to put our multi billion dollar profits from gold at risk, which is highly volitile to institutional manipulation.

This will also effect marginal cost producers in other comodities like nickel, zinc and copper. When the next comodities correction occurs, china could snap up more resouces at a discount.