Gold, gold, pure Aussie gold.
No, that wasn’t the chant from 87,000 footy fans who lit up the MCG last night as Collingwood kicked off its 2023 AFL season with a pulsating 22-point win over reigning premiers Geelong.
Rather, it was the cheer of gold bulls coast-to-coast this week after the Australian dollar gold price soared to an all-time record high of $2,874 an ounce.
And with concerns about the state of the global economy and rising geopolitical tensions – just think Silicon Valley Bank, Credit Suisse and First Republic Bank; worldwide inflationary pressures; the Asia-Pacific arms race; and Russia’s downing of a US drone over the Black Sea – many pundits believe the price of the precious metal could keep on soaring.
Dropping in at AOG:
- Resources Minister focused on energy future
- Collaboration key to energy sector challenges and opportunities
And elsewhere around the grounds:
- MinRes extends Norwest takeover deadline
- Northern Star updates on Pogo
- FBR funded to manufacture Hadrian X® robots for the US market
Aussie gold’s new peak on Thursday eclipsed the previous high of $2,868/oz recorded on 6 August 2020.
“Gold is the ultimate safe haven, it is no one’s liability,” Sandra Close, of Melbourne gold mining consultancy Surbiton Associates, said.
“If you own gold, it is not a piece of paper, not bank note and not a promise to pay the bearer – it is all yours. Also, it is virtually indestructible, easily transportable and recognised all over the world.”
The Aussie gold price is calculated using the London Bullion Market Association’s gold price fix and the RBA’s official exchange rate.
By last night, based on the LBMA’s Thursday afternoon fix of $US1922.75/oz and an RBA exchange rate of US67.14¢, locally denominated gold was still worth $2863.79/oz.
The US dollar gold price is up three weeks in a row now. It has gained almost $US100/oz in 2023 and is fast approaching the $US1976.75/oz peak reached last April.
The big question on every gold bull’s lips is whether the US benchmark can crack the $US2000/oz mark.
All this excitement around gold is manna from heaven for ASX-listed gold producers, who have endured a surprisingly subdued bullion price over the past few years.
Faced with rising inflationary pressures that are outpacing any movement in the Aussie gold price, many producers are finding their free cash flow hard to come by and investor support on the edge.
This week’s record showing by gold, of course, does not deliver immediate relief on the cash flow front.
But the clouds that continue to gather over the global horizon have at least some analysts and economists predicting there is more wind in gold’s sails to herald in a prolonged bullion bull run.
Questions are being asked whether central banks, including the RBA, are able to rein in inflationary pressures with rolling interest rate hikes without plunging economies into recession. Rising rates are usually a negative influence on the gold price though the looming prospect of an easing of the rate hike cycle – and even worse, potential economic set-backs – can send investor demand for the precious metal up the ladder.
Add to that the geopolitical tensions that show no signs of abating – think AUKUS, Ukraine, Taiwan – and the global picture is far from one of rude health, much to the joy of those convinced of gold’s long-term investment merits.
After all, no one enjoys global turmoil more than a gold bull.
