|
|
| A View From "Down Under" I recently spent two weeks in Perth, Kalgoorlie and Brisbane, Australia. I can report to you that things look much brighter in Australia than in the United States. The purpose of my trip was to visit with GoldCorp Australia to view the gold, silver, platinum and palladium stored in their vaults for the Perth Mint Certificate Program. Also, I visited a friend's gold mines in the Australian “outback,” and finally, I attended the Rotary International Convention in Brisbane. Let's look at the Australian dollar, a currency I have been very keen on for the past three years. While I was in Perth the Aussie dollar rose to its highest level in 3 1/2 years. The currency reached a high of (US.6652), an increase this year of 18%, the third best performing currency in the world. This commodity based economy is growing strongly. But, the interest rate differential is still the key issue for the Aussie dollar. At the time, the Bank of Australia's Board's overnight cash rate was at 4.75%. The European Central Bank's (ECB) benchmark rate was 2.50% and the US FED rate was at a 41-year low of 1.25%. Of course, both the ECB and the FED have both just recently reduced their rates further. Australia is the third largest gold producer in the world today. In part, the weakness of the US dollar is pushing the gold price higher. However, over the past two years, the major reason for a higher gold price has been reduced producer selling rather than strong buying. Gold producers have been aggressively reducing their gold hedge positions and selling less gold forward. Also, European central banks have capped the liquidation of their massive holdings of gold to 400 tones a year through September 2004. All of this is very positive for gold and thus for the Aussie dollar too. My third visit to GoldCorp and the Perth Mint since 1998 was again a very positive experience. The current Chairman and friend, Don Mackay-Coghill retired on June 30, and he is being replaced by an excellent management team of Edward Harburz, CEO and Richard Hayes, CFO. They both are very knowledgeable and have years of experience in the industry. The Perth Mint Certificate Program (PMCP) which ASI helped create and develop continues to grow through a worldwide Approved Dealer network. The PMCP remains the only government guaranteed precious metals program in the world today. Another good friend, Ron Manners, Chairman of Croesus Mining NL invited me to tour his gold mining operations at the Central Norseman Goldfields (CNG). Ron's CNG holds the record as Australia's longest continually operating gold mine now in its 68th year of operation. In November 2002, CNG poured its five-millionth ounce of gold and it’s reserves are far from being depleted. I will be telling you more about Ron Manners and his gold mines in an upcoming article. In short, I spent an intense day touring his Phoenix Mill, the Daisy, Golden Dragon/Gladstone Open Pit Mines; plus, I went 650 meters into the Harlequin Underground Mine. To say the least, it was fascinating seeing tons of ore being mined in order to get ounces of gold out of the ground. Western Australia, where Perth and Kalgoorlie are located, is growing. Robust growth in business investment is a key component of economic activity. However, there is much activity going on in Brisbane, Eastern Australia on their “Gold Coast.” Eastern Australia is less reliant on natural resources and more dependent on tourism. There has been no outbreak of SARS in Australia but tourism has still been effected. However, any slowdown has not been seen in the housing market. Like the US, the Aussies are experiencing a boom in their real estate markets. Indeed, all is well “down under.” In fact, they are even benefiting from joining the “willing alliance” with the US for its campaign in Iraqi. President Bush invited the Aussie Prime Minister recently to his home in Crawford, Texas and promised economic benefits. I plan to brief you further this fall about my views on my most recent “walk about.” So, look for my comments on ways you can continue to grow and protect your wealth through alternative investing and diversifying assets internationally. |
