Gold is breaking out in all currencies

Neil Charnock
We have been looking at global trends and the debt markets very carefully this year so as to remain prudent about our views on the direction of gold and the Australian gold sector. This may seem like a long bow to draw however the thigh bone is connected to the knee bone when it comes to global markets and capital flows.

We specialize on coverage of gold and the Aussie gold stocks that make up the Australian gold sector which is one of the important gold share markets due to our high level of gold production and another key reason I will get to shortly. Another important part of our work is on the currencies due to the importance of the AUD to our gold sector and also for our international clients. We have even taken on a leading Fx broker as an advertiser due to the importance of Fx for international capital flows at this point in history.

Our thesis for this year has been one that includes continued trends on global markets on the back of stimulus capital along with increasing sovereign debt trouble and contagion which will (and has) produce fear. We have seen this as a positive environment for gold along with extreme volatility and distortions in the currencies and see no reason to change that view at this stage.

Gold is breaking out in all currencies and I forecasted a rise to the US$1180 area a week or so back. It has not quite made that target and may not, perhaps it will overshoot. After hitting record highs in Euro terms the gold price consolidation of the past 4.5 months in USD terms appears to be drawing to an end with only a few weeks left before we see lift off. I am expecting one last dip in the USD POG (price of gold) which will be short lived and reasonably shallow. The US$1100 level is not out of the question on this hypothesised pull back. More...