In the coming weeks I suspect gold will consolidate in USD terms, but expect the signs of a weaker global economy to feed into lower currencies for commodity producing currencies like the AUD, CAN, BZL, etc. The implication is that precious metal (gold, silver, platinum) prices will be strong in local currency terms. So I am expecting stronger gold stocks despite some consolidation in gold prices. I also this this week gold stocks will loose ground because of general weakness in the overall market.
In the chart below I am suggesting the gold price is in the formative stages of a 'flag structure', the implication of which is - when the wedge is closed, we are going to see a $80/oz increase in gold prices. For the unhedged gold producer, tha equates to around 10-20% increase in earnings. So I'm looking for $US940-950/oz gold price in the next 6 months, and likely $A1100-1150/oz in Australian dollar terms.
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