Tuesday, December 21, 2010

Coal, Gold, and the Australian Dollar

From Gregor. us:
One of the trends I’ve followed this decade has been the increase in exports of gold from Australia. Like many other regions around the world, however, Australia has struggled to increase gold production by volume. But with the rise in the gold price, the value of Australian gold exports has indeed been on the rise. This has had some moderate implications for the Australian Dollar. For example, I think it’s legitimate to ask whether a new (restored?) correlation is forming between the Australian Dollar and gold.

When the latest data was released this week on Australian exports (via ABARES) I decided to update this trend in gold exports and I discovered a small surprise. As a percentage of total exports, the value of the gold Australia ships is now matched by its thermal coal exports. I would have guessed that thermal coal exports dwarfed Australia’s gold exports. Not so. Both thermal coal and gold now compose about 7.4% each, of total Australia exports–by value.

Throw in wheat and it is, from an Australian perspective, almost scary how leveraged the Oz economy is to China's.