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.
Graphic: Value of Thermal Coal vs Gold as a Percent of Australia Exports: Fiscal Years 2006-2011 (color representation hopefully is self-evident)
For those of you who watch coal, it should be pointed out, however , that the value of Australia’s thermal coal exports is only half the current value of its exports of metallurgical coal. “Met” coal accounts for 15.58% of total Australian exports. And, in combination with the value of Australia’s exports of iron ore, reveals that the current mix of Australian exports–while rich in food, grains, and even gold–is still very overweighted to the global production of steel. For currency watchers, once the value of Australian exports of gold rises into the double digits there might be a case for a much stronger correlation between the Aussie and gold. Until then, the Australian Dollar remains firmly leveraged to global industrial growth.
Disclosure: No positions