Gold stock sentiment indicator. Carnage. No better word for it. When the US prophet (after all, the only god in the US is money) JP announced that commodities need to be trashed just like lumber, all hell broke loose. All in the name of controlling inflation. There is a cycle of events that occur and in this respect, Australia can be considered an emerging market as commodities (mostly raw) are the mainstay of our balance of trade. Futures are used to kill commodity prices and the AUD dips because it is umbilically attached to these prices. Commodity stock prices fall. Even worse for juniors. The real issue is for the 'professional and sophisticated' (note: foreign) investor. Particularly those that have invested USD in Aussie commodity stocks. Price falls are compounded by falling stock/commodity prices AND falling AUD. Like rats from a sinking ship, they abandon our market and cause a mini-crash in the commodities sector. This money leaving our market is converted into USD, pushing the USD higher. I wonder if there is going to be a ripple effect with margin calls, etc causing a broader Aussie market sell-off. It would not surprise me in the least if within a few weeks we start hearing about an Emerging Market (EM) crisis. If this is happening in our market then I wonder what the impact is like in South America and SE Asia that are less resilient and diverse? Commodity prices (except for oil and food) are a very minor components of inflation with very little correlation (house prices excluded). At the end of all this, US hedge funds with their buckets of free cash will walk in and mop up our commodity stocks at bargain basement prices, supported by all governments (Aussie, any party) dumb-as-dogshit politicians saying we need foreign investment. Don't forget to continue the story of how risky this investment sector is. They are not really dumb, just uneducated or unknowledgeable and get all their advice from those with the buckets of free cash. . Something else to consider - building a strategic reserve of refined metals. If done properly it would work well. Get your advice from JPM or GS and we will be ripped off or end up like the old wool pool. When prices are artificially fiddled, we have a buffer. A note on hypocrisy - the US are bitching and moaning about not being able to source strategic metals. Stop fiddling the markets DH's. No mines will be built if the sector is constantly considered too risky. Increases the cost of funding and therefore end products. . How do we stop this rot? Step 1. Take a leaf out of the BASEL lll book and elevate the status of commodities. A simple thing Australia could do THAT COSTS NOTHING is to report commodity prices in Aussie media in AUD. USD prices are irrelevant and once Australian mums and dads are aware how much money commodity companies are making and how safe an investment can be in good commodity stocks, we displace the 'professional and sophisticated' investor with local investors. Dividend returns need to be promoted. That would be a useful first step. . Gold has fallen 7.7% in USD and only 5.1% in AUD. You might think the end of the world in nigh. There needs to be a reality check but this will never happen while our reporting is determined by Rupert - and that includes you, ABC. Some juniors are holding up well. Have a look at the major shareholders for some insight. For a counter-cyclical move without a market crash, sentiment is as low as it has been in 6 years. All the talk now is about how low gold is going to go. Support is holding well on my major charts so not even close to any issues. Actually they have not changed so a bounce is imminent. Here is the indicator. .
