Brickell Analytics and Isaac Gilinski, the company’s Owner, use a combination of short-term sentiment analysis and long-term wave theory to achieve accurate financial forecasting results.
The path to Overheating of the Australian economy
The Federal Reserve cut interest rates between 2000 and 2008. First, after the dot-com bubble busted in 2000, and then, after the 2007-08 financial crisis. All in all, the Fed Funds rate dropped from a high of 6.50% in May 2000 to an all-time low of near-zero or 0.25% in December 2008. Rates remained at 0.25% for seven years or until December 2015. The low-interest rate environment led to a devaluation of the dollar. The depreciation of the dollar fueled a commodity boom, a rally in emerging markets, and a rally in the currencies of commodity-exporting nations.
For example, oil rallied nearly 800% from a low of $16.70 in November 2001 to a high of $147.27 in July 2008. Gold rallied 650% from a low of $255 in February 2001 to a high of $1921 in September 2011. The Brazilian Bovespa rallied nearly 2000% between October 2002 and April 2011. And lastly, the Aussie-USD exchange rate rallied 132% between the 0.48 low in April 2001 and the 1.1081 high in July 2011.
Australia is one of the world’s leading commodity exporting nations. For example, Australia is the world’s leader in terms of exporting iron ore and coal briquettes, the fourth largest exporter of wheat and copper ore, and the sixth largest exporter of gold. China and Australia are also large trading partners. China is Australia’s largest export trading partner, and Australia is China’s fifth largest import trading partner.
Separately, in 2018, Australia overtook Switzerland and became the country with the largest median wealth per adult. Foreigners and locals invest in Australia’s real estate and housing market considering it a relatively safe investment, especially because Australia is a wealthy nation.
So, going into 2011-2012, Australia was in a credit, a commodity, and a housing bubble. As expert Dylan Grice stated, Australia was “a credit bubble built on a commodity market built on an even bigger Chinese credit bubble.” The overvaluation in Australia led to the most overvalued AUD-USD exchange rate since March 1982; in July 2011, the AUD-USD reached 1.1081. After reaching a 29-year high in July 2011, the AUD-USD remained overvalued for another two years. In April 2013, the AUD-USD was still at 1.0582, less than 5% below its 30-year high.
Shorting the Overvalued Aussie in 2013
On April 11, 2013, Isaac Gilinski’s Brickell Analytics spotted the overvalued AUD-USD exchange rate, when the AUD-USD was at 1.0541 and called for a 20% drop to 0.85 using waves and technical analysis.
As stated in a Forbes article released on May 8, 2013, George Soros, a billionaire investor, sold short the Australian dollar by $1 billion around the same time as Brickell’s prediction, ultimately believing that the currency was over-valued. Both parties, it turns out, were correct and the AUD-USD exchange rate dropped significantly. In fact, between April and August 2013, the AUD-USD dropped 16%. Ultimately, from April 2013 until January 2019, the AUD-USD dropped 36%.
Stanley Druckenmiller, a former chief strategist for Soros, also called for a drop in the AUD-USD. Just as Gilinski and Brickell Analytics predicted a dramatic drop in the AUD-USD exchange rate in April 2013, on May 8, 2013, as per Bloomberg, Druckenmiller came to a similar conclusion, stating “We think the Australian dollar will come down and will come down hard.”
Making Solid Market Predictions
When predicting market movements, many economic indicators need to be taken into consideration. Isaac Gilinski of Brickell also examines sentiment or non-tangible forms of measurement to enhance predictions. These exclusive data items increase the accuracy of Brickell’s predictions. Anyone who has a vested interest in economic data should become well versed in the strategies of experts like Isaac Gilinski and Brickell, George Soros, Stanley Druckenmiller, and Dylan Grice.
Disclaimer from the Author
All views, thoughts, and opinions in this article belong solely to the author and do not necessarily reflect those of Isaac Gilinski, Brickell Analytics, George Soros, Stanley Druckenmiller, Dylan Grice, or Prague Post. Additionally, the prediction made by Brickell Analytics discussed above was one of many predictions made by the company and not all predictions are accurate. Brickell Analytics does not provide any personalized investment advice, nor does it engage in the trading of securities. The content of this article should not be considered investment advice or an offer to sell or the solicitation of an offer to buy any securities. Soros, Druckenmiller, Grice, and Brickell Analytics are not related parties, and all make their own investment decisions. Neither the author nor Brickell Analytics can verify any profits or losses made by Soros, Druckenmiller, or Grice. All profits are for demonstrative purposes and are not a suggestion that similar or future profits may occur. Past results are not necessarily indicative of future results. All investments involve risk and potential loss of principal. It should not be assumed that future investors will experience returns comparable to those of the research discussed above.