Why buy gold now?Simple because even while the US gold price is...

Why buy gold now?

Simple because even while the US gold price is dropping fast, because of the decline in the AUD the fall is offsetting a large part of the decline. When gold dropped to USD1325 last month the AUD price was below $1300. Now it is still around AUD1400 even after last night's drop.

SLR have reconfigured their business model to operate in a AUD1300 environment. We are still well above that. Obviously the price is very volatile at the moment and long term value in SLR will depend on the gold price.

At current levels it is very cheap. At AUD1300 it is still cheap. But if it falls to AUD1100 and holds long term, SLR probably isn't cheap. Gold stocks are risky!

Don't get me wrong I expect SLR to drop again on Monday. But the headlines ignore the decline in the AUD.

Keep an eye out for announcements on completion on Murchison and Mt Monger business optimisation - should be some good news there.

Also, keep in mind that SLR will go from being an average cost producer to a low cost producer as synergies are integrated and production ramps up.

Plenty of potential longer term if gold holds above AUD1300, but short term this will be volatile.