Is it possible to exploit (at a currency level) the trend reversal in terms of relative strength that has occurred in the relationship between gold stocks (HUI) and oil ones (XOI)? The answer is yes and the key to this is the AudCad exchange.
As we can see from the chart, in fact, the AudCad exchange (red candles) follows quite closely the trend of the relative HUI / XOI strength (black line). If we take the end of a trend favorable to the gold stocks in place since 2000 for granted, then there should be no doubts about the need to rebalance the medium-long term currencies portfolios with a preference for the Canadian Dollar (representative of the oil) to the expense of the Australian dollar (representative of the gold- stocks). In the past 16 years, this exchange ratio decreased in 13 cases during the month of August (Chart source: Bloomberg).
As we can see from the chart, in fact, the AudCad exchange (red candles) follows quite closely the trend of the relative HUI / XOI strength (black line). If we take the end of a trend favorable to the gold stocks in place since 2000 for granted, then there should be no doubts about the need to rebalance the medium-long term currencies portfolios with a preference for the Canadian Dollar (representative of the oil) to the expense of the Australian dollar (representative of the gold- stocks). In the past 16 years, this exchange ratio decreased in 13 cases during the month of August (Chart source: Bloomberg).
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