Swiss frank news

Indeed, although they forgot to mention the part that it would be too extremely expensive to synthesize gold, and what gold can be made would be all radio active. XD

Omeg, I suppose as long as you`re aware of what the central banks and governments in those countries are doing, I suppose you could make a currency play like this.

But your option strategy is more the neutral kind (short term) instead of bullish. I could see you making this play with the September options since they conveniently expire right at the fed meeting, but if that`s the case it sounds like you`re somewhat bearish on volatility in gold in general at least for the next few weeks.

Of course, I do offer the caveat in my illustration. I specifically use the US economy and USD in my example, which has done relatively well vs other economies and currencies in the last 100 years. However, this is not always the case with every country and currency, especially small countries where the economy has always been terrible and the local currency isn`t convertible to others in the global market such as the British Pound, the Japanese Yen, the Euro, the Swiss Franc or the US dollar.

But again, my point is that the purpose of getting gold is to preserve and modestly increase purchasing power, esp in a society where production and growth always increasing (even if that production and growth occurs precisely because of a fiat currency duping everyone into producing and spending instead of hoarding).

Also apollo, it`s not so much that gold is stable or even a good "investment" as it is a bet against fiat currencies in general and is only "good" if the rate of inflation is greater than the amount of goods/services being produced.

To illustrate in nominal terms, let me illustrate what I mean. In 1911, if the DJIA was a stock, 1 share would have been worth around $62 according to this site:

http://stockcharts.com/freecharts/historical/djia19001920.html

In 1911, you could have also bought 3 troy ounces of gold with this money according to this site:

http://www.onlygold.com/tutorialpages/prices200yrsfs.htm

Now fast forward to 2011 with gold prices at 1900.

If you had held onto your gold for all these years, your $62 investment in gold would be worth $5700 today. If you had held onto your 1 share of the DJIA though, you would have $11,100.

According to http://www.usinflationcalculator.com/, a traditional item worth $62 in 1913 would have bought you an item worth roughly $1415 today.

So, either way, you would have won out. However, securities (or I should say index funds like DJIA containing all known stocks in existence) are generally a better bet over a VERRRY long period of time.

Of course, it goes without saying that the poor schmuck who stuffed that $62 under his mattress would be far poorer today than he would be back then unless that money somehow gained some sort of value as a collector`s item. :P

Omegian, I`ve been doing quite well lately with gold related options. The next date to look at is Sep 20-21 when the Fed has its meeting. Normally these are 1 day affairs, but the fact that it`s taking 2 days suggests that they are spending a whole extra day figuring out what "language" to put into their policy statement so they communicate EXACTLY what they want.

So, I`d say either out the money or in the money Octobers or Novembers are a pretty good "bet" (which is what options are if you buy/sell them like stocks). If predictions pan out, I will definitely withdraw my initial principle in this highly speculative endeavor and leave myself only the house money to play with. :P

I just wonder how long the Swiss maneuver will confuse investors before the reposition themselves out of the franc and more into gold. I`m thinking 2-3 days. Today or tomorrow to figure out what`s going on and sell the franc (if they haven`t done so), day 2-3, wait till the funds settle, then by day 3-4 they start buying gold ETFs and the like.

If you look at TLT (20 year US treasuries funds), the fund skyrocketed to record highs in spite of the downgrade for US debt, so you know that`s where some of the "safe haven money" is going.