Forum Archive Index - February 2004

["Baa Baa" <baa_baa@hotmail.com>]

... Checking out the POG in $Aus shows a steady decline since late Dec03 in 
an overall declining market. 
http://fx.sauder.ubc.ca/cgi/fxplot?b=XAU&c=AUD&rd=365&fd=1&fm=1&fy=2003&ld=31&lm=12&ly=2004&y=daily&q=volume&f=png&a=lin&m=0&x=

Aus Miners will continue to experience weakness until the POG in $Aus 
recovers. (same deal for the SA's, NZ's) This is a factor of:

- dig up the gold in $Aus = expenses
- sell the gold in USD = income
- convert USD income to Aus, minus expenses = P&L

Until the Aus declines significantly against the USD, or put another way, 
until the POG in $Aus breaks trend and goes upwards, revenues after Forex 
will decline (for the same volume) and P&L will suffer. This is compounded 
by FA valuing reserves in a strengthening currency environment, i.e. 
Reserves @ $US-oz / forex rate = declining value of reserves in local 
currency = FA weakness.

The trigger event we're all waiting for is when the countries with the 
strongest currencies against the USD realise they're importing US inflation 
and their economies, esp exports, -ergo balance of trade, is suffering ... 
AND ... their response has to be to intervene through competitive currency 
debasement.

We've talked some already about phase two being competitive debasement. By 
all accounts, it would appear that it hasn't really started yet, so in the 
interim, we can only look for the pain to continue, or, hope that Gold 
appreciates in USD faster than the Forex effect takes it away.

"What Gold bringeth, the Forex effect taketh away".

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