Declining confidence in the U.S. dollar is pushing gold prices up, says economic geologist and mining analyst Brent Cook.
Mr Cook was speaking at the Noosa Mining & Exploration Conference this week, where he told delegates the gold price is the reciprocal of the US dollar.
“It’s all about the global confidence in the U.S. and its dollar and that confidence is declining. I think we’re seeing that in the rising gold price in all currencies,” he said.
U.S. trade wars, broken international agreements and a general slowing in world economic growth were key reasons for the turnaround in bullion’s value, Mr Cook said.
“Policy by tweet, a number of material political issues… it’s a long list,” he said.
The lift in gold price, however, comes amid “pretty poor” showings in North American gold equities markets versus the ASX, he said.
The ASX Gold Index is up 194 per cent over the past five years against declines in S&P, Van Eck NYC Gold indexes.
“There’s a big difference here and you (Australia) have done really well based on the major and larger gold producers,” Mr Cook said.
Surprisingly, he pointed to the rise in investor interest in cannabis stocks in North America for the divergence in gold equities on both sides of the Pacific.
He noted that $13.8 billion was raised for these so-called “pot stocks” stocks last year.
“Sixty per cent of all volume on the Toronto Stock Exchange in 2018 was pot stocks but only 12 per cent mining. That’s a big difference from what it usually is,” Mr Cook said.