The small cap minors have shown good responses to the POG, I can't really understand why as the $AU has risen at even greater rates.
On the other hand, any retracement (and I feel one is overdue before the next rise) should be doubly magnified if the dollar continues to rise. The exchange rate for Australian companies exporting minerals is now being adversely effected.
Where do we go from here? The ROB will undoubtably increase interest rates in the belief of assisting exporters, where in actual face the dollar has been unrealistically low against the greenback for some time. This all stems from the American market and greenback ruling the world and being artificially kept high.
If the market ran it's true course all stocks would eventually show true valuation. Unfortunately this is not the case, with governments trying to artificially push it to where it suits them. We see intervention by central banks dumping currencies, interest rate increases, but this time I believe that in the long run the enevitable must happen.
Meaning a considerable bear market in the DOW and a much weaker greenback, coupled with significant rises in the prices of gold and silver and a stronger aussie dollar. Will the RBA start dumping $AUD as we have seen the BOJ dumping yen? Time will tell how artificial the market can be kept in this day and age.
