Very useful information without all the jargon. Thank you.
Given the level of quantitative easing, do you expect a currency crisis in mid term and how do you think it will unfold?
Thanks for the question Timothy, I'll pass it on to Troy and get back to you.
Hi Timothy A currency crisis is not our base case for developed market currencies. Currencies are relative stores of value so their value depends on the relative interest rate differentials and terms of trade between two nations like say Australia and the USA. So if both nations Central Banks are engaged in balance sheet expansion (Quantitative Easing) in equal proportion then the FX rates may not change much. Given almost every Central Bank in the world is expanding their balance sheets currencies in aggregate are being devalued versus real assets such as gold and property. So as the supply of paper money increases (QE) investors look to alternative assets, and gold in particular, as a store of value to protect against currency devaluation. This is why we like gold.