THINKING OUT LOUD

Lock in your AUD Gold price

12 February 2020

by Rob Zdravevski

 

If you’re an Australian gold producer, it’s an awfully prudent time to hedge or lock in your gold sales at the current AUD price.

Gold’s price is wonderfully mean reverting.

Its “pendulum” swings to extremes before reverting back and then deciding whether it changes trend or resumes what was previously intact.

Today, the price of Gold in AUD is at extremes whether I measure against a 200 day moving average or in Standard Deviations. Probability is high that it declines from its current A$2,329 level.

The chart below shows that it hasn’t been this many “percentages” above nor below its 200 day moving average over the past 10 years.

Throw in last week’s “outside reversal” and an oversold AUD and the case builds for a pullback.

“Don’t look a gift horse in the mouth”