AUD to Appreciate on Hawkish RBA, Resilient Economy

Before the June RBA meeting, the market was predicting even chances of a quarter and half point cuts. This was despite the fact that relatively speaking Australia's economy has been faring quite well despite the recent weakness in China. Well so much for that, as the minutes of RBA's monetary policy meeting showed today.

The Board considered whether the recent information warranted a further reduction in the cash rate. The arguments were finely balanced.

Cutting aggressively was apparently not even discussed. The question was whether to cut at all.

The Gold Bubble has Burst

By now it is clear to everyone that there is nothing fundamentally "safe" in Gold or any other precious or industrial metals. As a non-productive asset its value is only based on expectations of future demand. There is nothing inherently wrong with that, if the demand was real - say for jewelery or industrial uses. However when an investment's value is only derived from expectation of even more investments chasing the same asset, it becomes pure speculation. Or to go to an extreme, even a Ponzi scheme.