The article also says that the Aussie dollar has a 0.92 correlation to gold (did not know that, but not shocked). This chart shows what 0.92 looks like.
The Canadian dollar may have a closer correlation than the Aussie.
This has pluses and minuses. I am a big fan of both countries as investment destinations. Too much of them along with a gold stock or two may lead to more exposure to gold than desired.
Long time readers know that I think gold has a place in every portfolio but buying a Canadian bank along with an Aussie retailer might give you more correlation to gold than you think.
Just something to think about.
3 comments:
Roger:
What charting service do you use?
Thx.
Roger, Aussie and Canadian have long been called "the commodity currencies" due to the fact that they are big producers of base commodities. The correlation with the Canadian isn't as strong as the Aussie is with gold. But, Canadian is more storngly tied to the price of oil. That correlation is .82%. I think you are right on with your reccomendation for investors diversifying into these countires. The inflationary outlook will push these currencies higher as the price and demand of base commodities moves forward.
thanks David!
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