The Australian economy is in a far better situation than the rest of the G-20. Inflation is a bigger problem than contraction. Compared to America, Australia didn't even really have a housing crisis. Australia has benefited from a strong trading relationship with China(Rio Tinto problems notwithstanding), booming exports to Asia and the world of coal, iron ore, alumina, meat and wool. Domestic water scarcity and environmental problems remain a major downside risk, but with population so sparse, this problem seems minor compared to the rest of the world.
The currency trends over the last couple months hints at the strength of the Australian economy, as well as the fact that the rate move was widely anticipated. This chart, highlighting the pound/aussie exchange rate, is ironic when you consider the fact that Australia started as a British penal colony:
We're all gold bugs now
Not quite. Gold reached$1,045 Tuesday, but anyone who got in too late and overleveraged will likely feel a bit of pain as profit taking drives a pull back during the Asian Wednesday morning. That being said, going short gold at anytime leaves one incredibly vulnerable to a low probability high impact tragedy that leads to widespread panic. Take the spike in gold post 9/11 for example. Moreover, even if China scales back on buying raw materials, the Federal Reserve's loose policies will in the long term ceteris paribus make expensive anything tangible that is priced in dollars, even without a global conspiracy to "ditch the dollar."
*Israel raised rates in August, but it is not a member of the G-20
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