Extracted from an article by Jason Cadden, AAP re what Shane Oliver, chief economist for AMP said:
"Dr Oliver said is was inevitable that the Australian currency would fall because it has been overvalued in the past few years.
He cites the purchasing power parity (PPP) theory, which is the basis for the better-known Big Mac Index compiled by The Economist magazine.
It is based on the assumption that 100 Australian dollars ought to buy the same basket of goods and services in other countries, once it's converted into foreign currency, as it does in Australia.
Dr Oliver said that, based on PPP, the Australian dollar was currently around 35 per cent overvalued, but if you buy only a Big Mac hamburger it was about 12 per cent overvalued."
Shane Oliver has a history of usually being more right than wrong!
If the $A goes down, marginal gold mines become less marginal, even if the gold price remains static. Even if the $A only goes down 12%, that's an increase in the $A pog to around A$1640. If 30%, that brings the pog to over A$2000. Speculators - imo, time to buy in the coming weeks for TAM & other currently marginal gold producers now! Once the $A gets down to more reasonable level, it may revert to tracking more or less with the pog, as it used to do.
Ladies and Gentlemen, place your bets. Odds may shorten as time goes by.
(All just speculators opinion)
TAM Price at posting:
7.1¢ Sentiment: Buy Disclosure: Held
