Morgan Stanley calls AUD 62c

Morgan Stanley shot a stark assessment of the future across Australia’s bow yesterday predicting the Aussie Dollar will drop to 68c by the end of this year and drop even more in 2016 to just 62c.  They are also predicting the cash rate will be cut to 1.75% in the fourth quarter of this year as Australia launches fully into the global currency war that has been raging since the GFC.  Macquarie Research have stated we are unlikely to see any increase in rates until at least 2018.

The implications for gold & silver are essentially 2-fold.  Firstly as we’ve covered many times, a drop in the AUD means a proportionate increase in the price of gold & silver in Australian dollars (from the current 77c to 62c would see a 24% increase in the AUD value of your gold & silver without any change in spot price).  Buy your gold & silver now, at both a relatively low spot price and prior to further falls in the AUD and you stand to win on both spot price increase and AUD value increase – the proverbial double whammy.  Secondly, as long as somewhere else in the world doesn’t start the crash first, Australia could see an ultra low interest rate fuelled surge in property and shares creating non fundamental based asset bubbles that will crash harder sooner.  Getting your gold & silver now at these low prices puts in place your insurance for that crash, and insurance that could pay up big as it’s done in previous crashes.