up

Arbitrage this, this cannot possibly be the market line. I'd do what someone else suggested and buy tons of under and then buy a bunch of gold call options.

I wonder if we are going to see the general population getting involved in gold in the next few months, if for no other reason than lack of options. Where else can they go? Stocks? Not really. Real estate? Nice try. Government bonds? Sure, if you want to tie up your money for 10 years @ 2%

when I read some of the stuff in here - I really wish J.R was still posting

what happened to him? me too

...and back above 1900

He kind of went crazy.

1908 says hai.

19 hundooooooooooooooos

1920

1917 = Bolshevik Revolution. Coincidence?

Red Gold

Too fast for me.

I really think it's time to buy some ****ing gold, me buckos.

SNB just tied the Swissie to the bumper of the Eurobus as it's driving off the cliff.

Wow thats crazy. I thought the Swiss had a relatively well managed currency. Heres the link for others.

But, but, but, but somebody told me gold was a bubble at $1600! Still a bubble right guys?

Yeah I feel like I need to order some coins. Franc as a fallback currency goes away -> even more people fallback on gold.

Just posted this in the inflation thread

Jesus it's dropped 10% already! Did anyone see this coming? Sucks for any Swiss waiting to buy the dip - I hope my central bank isn't next to devalue.

Bruce Krasting with a good summary on why this was a suicidally stupid move on the part of the SNB, along with some other tidbits:

http://www.zerohedge.com/contributed/swiss-move

The Bernank must be stroking out atm imo.

Actually if the dollar strengthens and puts the kibosh on US GDP, that will be just the excuse he needs for Operation Twisty QE3 or whatever it is.

Why is a stronger dollar bad for US GDP?

Because the only thing buoying US GDP is government spending and a weak dollar. Where do you think all those magical corporate profits in the midst of 9+% unemployment come from?

ok thats what I thought, I just wanted to make sure before I ask my next question and I am asking it just to get your view on the topic as someone who has a better understanding of Austrian economics than me.

What exactly is the process that takes place when the US dollar is devalued increasing GDP but ultimately tanking the economy. The Bernanke, mainstream econ, view would be that becauase we are in a deflation we can afford to inflate the money supply and get stimulus without creating inflation. But it seems to me like there is more going on than simple aggregate analysis would suggest. Even though GDP remains stable under QE type programs the underlying health of the economy is slowly eroded. I guess I am having a hard time trying to figure out exactly what is happening in this situation and how a non aggregated theory like AE could apply its conclusions to mainstream aggregative theories, so to speak.

Since a large part of US corporations earn profits abroad in foreign currency they can convert it back for an ever larger profit.

Ex: JNJ is making 1B profit in Europe in Euros for the last few years (flat profit year over year) with exchange rate as of 2008 = 1.25 = $1.25 B in USD profit

If the USD weakens to 1.45 like it has been the same 1B euro profit is recorded on the books as $1.45B USD. Magically JNJ increased net profits by almost 20% with no change in underlying sales or margins.

Imagine what would happen in the USD gained 25%?? Corporate profits would take a humongous beating!!!

You're talking about Johnson & Johnson, correct? If so, I'm fairly certain they manufacture their products all over the world, so how would sales in Europe affect USA GDP unless at least some of the USA products were shipped over there?

I do agree with you about the "magic" behind converting their Euro profits into dollars before showing their EPS to investors, even though the Euro profits are probably never coming back to the USA.

Yes I was talking about Johnson and Johnson but some made up some numbers and picked them at random.

GDP is made up of goods and services. The breakdown of what a country gets "credited" with GDP is complicated. In a simplified description if JNJ makes shampoo in Taiwan at a cost of $1 a bottle then resells the shampoo in Europe for $3 and booking the profit of $2 a bottle. Then Taiwan gets "credited" $1 of GDP and JNJ makes $2 GDP as a US company providing a service and as profit. Obv its way more complicated with transport costs, input costs, etc

So in all corporate incomes are part of GDP. The only thing I am not sure about is if the GDP as income gets counted when its made or when it is repatriated.

GDP is the total value of goods produced within a country. So, the products JNJ produces outside the US borders doesn't come into the equation.