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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (3858)	5/17/2001 5:05:51 PM
From: John Pitera	Read Replies (3) \| Respond to of 33421

I was commented the $AUD was strong today, in harmony with the strong Gold price today, and I was asked about the relationship between the AUD and Gold, and why they would move together. Here are my thoughts. Australia produces quite a bit of gold and they have lots of gold mines in Australia, and the AUD often moves just as gold does, they are highly correlated. So it just confirms the move in Gold a bit more to have the AUD strengthening as Gold does, much as if you are bullish when bonds are going up in price, and you think interest sensitive stocks will go up you want the BRK and XBD to be also going up and not diverging. It's not rocket science but, it can be a tell. Australia, produces quite a few commodity products, Copper and other base metals, Crude, wheat, wool, etc so also since Gold is said to be a proxy for inflation building in the system, the Aus economy and hence the dollar are positioned to benefit from greater inflation. They can sell more commodity products, at a higher price and as they convert foreign currency into AUD, it would bid up the price of the AUD. John