Is Australian Gold the Best Hedge Against the US Dollar (GLD, SLV, ABX, GG)

Due to a breakdown in budget talks in Washington, DC, the exchange traded funds for gold, SPDR Gold Shares (NYSE: GLD), and silver, iShares Silver Trust (NYSE: SLV), both rose. That has certainly not been the trend, however. For 2013, SPDR Gold Shares is off by more than 20%. Over the same period, iShares Silver Trust has dropped by around 30%. It is the same story with major gold companies such as Barrick Gold (NYSE: ABX) and Goldcorp (NYSE: GG).

But this change in the trajectory for gold shares could be changing, to the benefit of precious metals companies such as Goldcorp, Barrick Gold, and Wishbone Gold PLC (PINK: WISHY).

According to a recent article in The Wall Street Journal, investors have been selling off Treasury securities. A piece in the Financial Times reported that China, owning over a trillion in Treasuries, is aiming to lessen the role of the US Dollar as a reserve currency. Should that happen, not only will the GLD and SLV most likely rise, so will Wishbone Gold PLC, Goldcorp, and Barrick Gold.

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That should happen due to the holdings of each in Asia, especially Australia. The two largest buyers of gold in the world are India and China. Australia, with its customer relationship with China for supplying natural resources, would seem to be supplying much of the gold demanded more of by the central banks and consumers of China and India.

With its holdings in Australia, Wishbone Gold PLC is positioned well to benefit from a soaring demand for gold and silver. Beaufort Securities just recommended Wishbone Gold PLC. Buffering this support for gold, there was a bullish article in Barron's recently about Barrick Gold.

The Australian Dollar will generally do well when other currencies falter. That is due to its strong natural resource base. The gold and silver in Australia becomes more valuable typically when paper money loses value. If matters do not improve in Washington, DC, that should be expected to happen along with surging share prices for Wishbone Gold PLC, Barrick Gold, and Goldcorp.