Aggregated Awareness

Some seven days ago as of this writing, back on the Saturday 16th July 2011 (or Friday 15th July to our European & American readers), I was doing my routine market commentary reading when I noticed something peculiar about one of the charts in GoldCore’s post for that day.

Australian Dollar Gold Chart

You see, being a native of the Antipodes, I take very careful note of the Australian & New Zealand Dollar precious metals prices.

And with having done so for the past 7 years, one develops a familiarity with the imprint of its chart pattern, in one’s mind. Particularly when it comes to the longer term weekly charts for gold & silver, going back 5 years or more, and particularly in the Australian Dollar.

Here is my longer term weekly chart, of the Australian Dollar gold price:

One feature of its distinctive shape that I wish to point out to readers now, is the extreme & absolute spike high at A$1565/troy oz. back in late February/early March 2009.

This story is a bit old. It is from last Wednesday 23rd Feb 2011. However, it is a very significant piece of news, little reported outside of financial news services, such as The Australian Online Business section, which is a joint venture with the Wall Street Journal.

The bigger picture view from this article, is that the current de facto global reserve currency, the US Dollar, is seeing a secular trend away from it's usage in trade. This trend has been ongoing for a few years now starting at the margin, however, it is now gaining momentum. And as such...

Perusing various news outlets can yield surprising results. As an example from today's Ninemsn.com:

"...The TD Securities-Melbourne Institute monthly inflation gauge showed prices grew by a further 0.4 per cent in November, the largest monthly increase since May.

This lifted the annual rate to 3.9 per cent, well beyond the top end of the central bank's two to three per cent inflation target band.

"With inflationary pressures already building, the next move remains up for interest rates," TD Securities head of Asia-Pacific research Annette Beacher said.

Ms Beacher said that while another 25-basis-point increase to a five per cent cash rate in the first three months of next year cannot be ruled out, given the central bank now has room to manoeuvre, this timing could easily slip into April or May without compromising its anti-inflation credentials..."

Source...

Once having read the above passage in red, we proceeded to take a wander over to the RBA's website, to see what that particular institution states inflation to be, and it didn't surprise us to see this:

In being curious as to matters concerning monetary inflation, and by extension, currency devaluation, due to the ongoing global 'competitive currency war' amongst the world's central banks, and the concomitant "quantitative easing" (aka 'money printing' aka 'Queasing'), we went about researching a few items in this area of monetary concern, from an Australian perspective.

We look at the devaluation of the Australian Dollar (AUD) vis a vis, gold, and the sovereign gold sales of Australia's gold, by the then Treasurer Peter Costello in 1997. A disastrous decision, and ultimately, a failure of fiduciary responsibility of the nations finances by the once Treasurer, with the ramifications of that action in light of Article 115 in the Australian Constitution...

From Tyler Durden of Zerohedge via Reuters comes great analysis about the close correlation of the AUD currency pairs with JPY, USD & EUR; and world major indices stock market movements, and what portends for them after this morning's drop in the AUD vs. USD, JPY & EUR.

From Christopher Pavese of Broyhill Asset Management via Zerohedge comes this well put together report on the Australian Housing Market, and where it might be heading.

Excerpt: "...The recurring theme in every case is that housing bubbles are almost always justified by “new era” thinking, land shortages, and are considered unique right up until the moment they pop. Most bubbles around the world have at least partially deflated in the wake of the Great Contraction, yet the property market Down Under continues to chug along ignoring the gravitational forces of mean reversion as Aussie consumers continue their American-inspired credit binge.

US housing prices nearly doubled in the decade leading to their ultimate peak as shown in the above chart. Australian real estate kept pace with these gains until US home prices lost nearly a third of their value as US home owners deleveraged their balance sheets. Since then, Australian households have watched their home prices appreciate by at least that much, while they continue to feast at the trough of easy credit..."