Ragnarok
2011-09-06 |  | Swiss frank news |  |
So, I just read that the Swiss have decided to peg their currency to the Euro.
http://blogs.wsj.com/source/2011/09/06/snb-omg/
Any thoughts on this from players in the EU? It all seems pretty dodgy to me that they are doing this. |
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Omegian
99+ day(s) ago | I am actually Bullish, but yes I am playing my options on the fed meeting. Because that market day and the days before it will be dead until they speak of their findings. Anfit I have been long on gold since 900ish ... because I knew it was going to be a huge speculation thing like how Oil was when I was in the Oil & Gas business >.>
Currencies wise Rag I stay pretty much up to date, but like all countries, new policies, meetings, other meeting crab can affect it just like anything else.
But meh, ive been pretty happy and safe from most forms of market manipulation like in the US. Sure, Gold is manipulated, but it is manipulated in the way I think most of us bullish will go.
Opinion: What I think they will do is make gold dip down right around (a resistence point like 1800 or 1750 the call of September options (try to get people to call off their options, like a fake selloff, though I can be way wrong >.>), Fed meets and announces its cräp, most likely a bad report of this or that, QE, Operation Torque or some not-smart 50-100 year T-Bond.
Edited by Omegian on 2011-09-09 |
TheDarkKnight
99+ day(s) ago | lol well warmonger unless you have a nuclear reactor with the materials needed to do it, printing fiat is still way cheaper and easier, plus if you were gonna start "making" gold im pretty sure the US and others would step in saying your making nuclear weapons or something... lol
http://www.zerohedge.com/news/un-security-council-finds-iran-violating-nuclear-weapons-program-ban |
Ragnarok
99+ day(s) ago | 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. |
Anfit
99+ day(s) ago | Gold does not interest me. Other people`s interest in gold though, that`s interesting. Luck, Rag, Omegian. I`ll stick to startups. |
warmonger11
99+ day(s) ago | http://en.wikipedia.org/wiki/Synthesis_of_precious_metals#Gold_synthesis_in_a_nuclear_reactor
alchemy! :P |
TheDarkKnight
99+ day(s) ago | long gold because you can`t just make gold out of thin air, but you can with fiat hehe |
Omegian
99+ day(s) ago | Rag, I am long on gold atm, but I am doing currently a butterfly spread while more weighted at this time in the Australian Dollar, Singaporean Dollar, and the New Zealand Dollar. I have been playing the currencies more against the USD/Euro and been very happy.
The thing about gold is, you biggest indicator is the consumption from India on gold, right now they still feel it is undervalued, but not heavily. But if anything will make the gold PPO go down it will be a strengthening currency of the dollar or lesser demand, which at this time wont be happening. So, gold long term works out fine for a good year or so, but I make better % gains elsewhere than going with gold now for the best bang for my buck. |
Ragnarok
99+ day(s) ago | 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). |
Ragnarok
99+ day(s) ago | 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 |
Anfit
99+ day(s) ago | Well, FD, nearly 60% of Swiss exports go to the EU which is the source of just under 80% of Swiss imports. They had little choice in that matter. As Greece`s example shows you don`t tie your currency to an outside peg purely domestic reasons. Anyway, the Eurozone is a USD12 trillion market, anything that can bounce that will bounce everything else... |
Ragnarok
99+ day(s) ago | 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. |
FlashysDomain
99+ day(s) ago | Short term it may be a small gain for the Swiss in easing the dangers of recession. The recession was garnered by its currency being highly sought after as a safe haven and driving up the cost of its exports.
Tying it as it did to the Euro seems to me problematic as the southern Euro countries are in deep over thier heads and not out of it by any definition. The exposure to long term inflation as well as the weakness of the Euro and the Euro economic mess makes no sense though in a "safe monetary policy` mode the Swiss have fostered throughout the past centuries.
What it`s telling me is that the Euro crisis is deeper and more problematic that what is being let out to the media and general investor market. There are things going on folks want to not let out for general consumtpion.
It will be interesting to see what Japan does with the Yen in reaction. And China....that`s a balloon with nothing but air behind the currency and domestic internal problems associated with a more knowledgable labor force, aging population, and widening awareness about to take China for a spin around the track...i`d say 5 years, 10 tops before China is a basketcase. |
Apollo
99+ day(s) ago | gold is the only currency that is stable, and increasing in value. |
Anfit
99+ day(s) ago | Frankly speaking ;) it was a good move.
With supply and demand for Swiss money going apepoo, without any increased demand for Swiss goods they can be printing as many franks as they want - as long they don`t spend them on anything but foreign currencies. That`s what the USA did for a couple of decades - with inflationary pressure of all those dollars floating abroad hadrly reaching domestic market.
Anyway, overpriced frank stragled the Swiss economy and several million central and east European households - most of us here took our lifelong loans denominated in Swiss frank, as the interest is really small. Well, anyone who took a loan in franks 4 years ago (2.1PLN = 1CHF) is sure sweating now (3.8PLN = 1 CHF). PLN was overprived while CHF was underpriced. Now CHF is overpriced and PLN is underpriced. Loan-takers from a couple of years back take a beating and ... wait. |
Omegian
99+ day(s) ago | From a financial perspective, this is all fine and dandy short term, but this will lead to currency inflation there ...
There is another blog on WSJ about what they did in 1970 about it:
http://blogs.wsj.com/source/2011/09/06/snb-omg/
If anything I tend to stray away from the European currency markets and focus more to the Singaporean dollar for now at least, that or gold (given I just do options, not actually buy gold in ounces) |
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