Fundamentals haven't changed, page-223

Silly me thinking gold rises with inflation. During the 2002-08 period gold boomed alongside increasing US rates. The reason for this anomaly is fairly simple, the 'real rate of return' on bonds was zero or negative for a large part of that period - inflation was running higher than the yield received on bonds.

I respect Druckenmiller and watched the interview last night. It has given me pause, however, it will come down to whether the Fed is infront or behind the curve and that is something we will not know for sometime.

As for the aussie gold sector, we need to look at our interest rate policy at home and where that sits in a global context. Inflation expectations and higher interest rates are now baked into US expectations, our RBA will be far behind the US in adjusting rates higher - the RBA will be forced into rate hikes despite the domestic outlook - they will be slow to move and the AUD will fall significantly. This in part will shield domestic gold produces profits, a pseudo hedge.

While there is selling now in a knee jurk reaction, I don't forsee a dire future for Australia gold producers. Stick with quality and those with expanding production which secure future profits regardless of a few unknowns.

I sit very happy with NST and its future.