You won’t lose your job hedging at these levels

When the price of Gold in Australian Dollars trades at 50% above its weekly 200 moving average……it may be time for Aussie gold producers to hedge.

Similar to my previous work on the USD price,
https://lnkd.in/gK9hj-P

…..the chart below shows the various percentages that the XAUAUD price is relative to its 200 dma.

If you combine the recent surge in the gold price with the historic peaks of the CME gold futures margin requirements, a long term overbought reading in the AUDUSD and my other extremes seen in Gold……

you’re unlikely to lose your job, hedging your gold resource and reserves at these prices.

Incidentally, when the CME hiked margins requirements on August 11th, 2020, the AUD gold price fell and closed at A$2,676.

Today, it’s trading at A$2,636. Much of a muchness, although mean reversion and probability can be unpleasant.

September 28, 2020
by Rob Zdravevski
rob@karriasset.com.au

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