China has a very small middle class, 70% of chinas growth is...

China has a very small middle class, 70% of chinas growth is created from building fixed assets. They are building low income housing to rent at $11 month, that sounds very poor.

This middle class has no spending power. China is all investment and no growth, the inflation has been created by fixed asset investment.

http://video.cnbc.com/gallery/?video=3000022032

When the usd is low, producers are paid less for their commodities and the profit margin is less.

EXAMPLE
GOLD price at $1000 US

$800AU cash cost and exchange rate of .80au, the gold price after exchange is $1250 and the profit would be $450

$800AU cash cost and exchange rate of 1.06au, the gold price after exchange is $943 and the profit would be $143


At $1500oz USD with exchange of $1.06au, the gold price would be $1415 and profit margin $615. Therefore if we say a resonable margin is around $400au, I would suggest share price is still over valued by at least 25%.


The U.S. print money and causes commodites prices rise and inflation. Commodites prices rocket as margins become reduced.

Gold is used as a hedge against inflation, the market builds momentum and creates a large asset bubble. Its easy money, exciting and it ends with a bang.