This morning Bloomberg radio was espousing the virtues of U.S. government bonds as a safe-haven investment, almost as if their copy had been written in the middle of last week instead of today when stocks are already turning higher and U.S. T-bond futures are starting to lose a bit of their recent lustre. Does anyone really think that a ten- or thirty-year investment at sub 5.5% is really that attractive? We certainly don't -- particularly given our bullish outlook for gold.

But for those so burned by the equity market of late not to trust jumping back into the current rally, what might offer a more attractive place to park some money? At sub-.50 cents we think the Australian dollar looks pretty attractive. At least on a daily basis, we think the Fibonacci rhythm of the AUD looks complete, and the RSI is turning upward. After a relentless fall that has seen the Australian dollar decline from above .80 cents in 1996, the current region represents approximately 61.8% of those former highs. Japan is reflating, and some of that excess output of their printing presses should migrate southward within the Asian time zone. Although the Australian economy is still soft, the RBA is also likely to lag any further FED easings given how weak the Aussie dollar has recently been.

The Australian dollar is also fundamentally cheap by almost any measure: approximately 20% undervalued to the U.S. dollar on a purchasing power parity basis, and with a falling current account deficit as opposed to the burgeoning one in the U.S.

And oh yes, Australia does of course produce gold, and should benefit from any coming price improvement in that metal.

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