Australia's tough economy is saved by another gold rush

Australia has not yet avoided the threat of increased tariffs on U.S. exports, but it does have a world-class industry that has caused confusion in the commodity market and intoxication in gold.

Coupled with rising prices, the output has increased Australia’s gold, which has restored the country’s fourth most valuable commodity export, draining hot coal into the backflow to sit behind iron ore, liquefied natural gas (LNG) and manufacturing coal.

If two new investment banking studies are correct, the upward movement of gold may continue and potentially lift gold to third place in Australian commodity exports, which restores memories of past gold booms, which offsets the impact of a wider economic downturn.

Both Citigroup and Royal Bank of Canada believe that gold prices continue to rise, while the Australian government's Ministry of Resources predicts that national output will increase from 286 tons this year to 309 tons next year, cementing Australia's position as the world's third largest gold producer after Russia and China.

The return on gold is a reward from the Australian government, which convened the May 3 election, and the economy grew slowly, a key issue was raised by increased gold revenues to compensate for the price drop in iron ore, coal and liquefied natural gas.

In the past 12 months, iron ore prices have fallen 28% to $102 per ton as gold prices rose 36% to $3,089.

Australian gold price is close to $5000 per ounce

Gold's currency effect in Australia widens the 1,000 dollar rise, with the current exchange rate of 63 cents and the Australian gold price at $4,903 per ounce, a record that easily overshadows all early gold booms.

Shares of Australia's leading gold producers rose as gold prices rose. Polaris, the largest producer, grew 25%. The second producer, Evolution, performed better, with an increase of 87%.

But this is further down the pecking order, stocks such as Catalytic Metals recorded more impressive capital gains, up 660% and Spartan Resources, up 187%, thanks to a bid for a bid for rival Ramelius Resources, which has increased 33%.

Citi describes the current gold market as a “gift for 40 years for gold producers.” RBC said high levels of economic uncertainty could push gold to $3,496 an ounce later this year, with $407/oz or the latest gold price of $3,089 an ounce up 13%.

RBC said in a famous “Uncertainty is MIDAS Touch” that it is clear that economic sentiment has deteriorated, and in this environment, Gold’s attractiveness is more durable, meaning prices have increased.

Citi said three anomalies have caused gold producers to reach 40 years of profit margins. The abnormality is the high-priced spot gold price ever, with high interest rates in the United States and relatively strong US dollar.

Multiple abnormalities in driving gold

“This gift to miners is based not only on multiple anomalies, but on the uniqueness of gold,” Citi said.

Citi said the gap between the fare of $3,650/oz for five-year-long fare exists between the forward price and the 90th percentage point of the mining cost curve in the entirety.

The bank said Citi's abnormality was a gift to the Gold man.

“The disconnect between the long-term gold price and marginal cost of gold is because the producers' hedge does not have enough hedging compared to the stocks mentioned above,” Citi said.

“Consumer demand for borrowing stocks comes primarily from central banks, which means that the golden curve for long-term dating is also relatively fluid compared to other commodities.

“This gives gold producers a relative gift if they choose to accept it because in other commodities, five-year forward prices such as oil and copper are fixed at their marginal costs.”

RBC said gold continues to be priced based on uncertainty, especially tariff uncertainty.

“Although economic problems are rising, the atmosphere and sentiment are getting worse and the probability of recession is increasing,” RBC said.