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Astex Pharmaceuticals, Inc. Message Board

  • freetoquestionu freetoquestionu Feb 2, 2013 9:23 AM Flag

    Exchange rates somewhat off topic

    I found this article this morning and it explains currency wars and how they can impact us in a very short time spam. I believe each and every investor better own some gold and silver, because currency wars end only one way and metals benefit tremedousily. One morning you going to wake up and find that there is no silver to be had. None, it will be hoarded and you will kick yourself. But here is a article explaining what happening between the YEN and the Euro and if you read the papers, you know Japan wants inflation. I stated this i9s somewhat off topic, Eisai sells dacogen in the USA, they sell it for dollars here and exchange it in yen, they get lot more yen for dollars, so basically Eisai will do very well over the next few years. Well until we see the rest of the world start deflating their currencies. After reading this article you will see the results of currency wars in just 3 months, what it means. Enjoy, the smart ones will buy some metals tomorrow the dumb ones will mock me.

    Here is article:

    Say you're a Doc, working out of NYU Hospital on 1st and 34th, and on October 29 you park your car in the lot next door. Sandy rolls in, and the next morning your car is 20 feet underwater. You've got insurance, so a week later, check in hand, you look at new cars and narrow it down to two. A decked out Lexus LS460 and very nice Audi A8. The walk out price on both cars comes to 80 grand. Which one do you choose?

    That was just three months ago. At that time the relative value of these cars was equal. If you assume that 80% of the cost of the car was the imported value, then you were "paying" 50,394 Euros for the Audi and 512,000 Yen for the Lexus. At the exchange rates in early November, the Euro component of the Audi was $64,000 (80,000 X 80% X EURUSD 1.27). The Yen cost was also $64,000 (80,000 X 80% /80.00). The EURJPY exchange rate was 102.
    Today the EURJPY FX rate is 1.2650. The dollar cost of those Euros and Yen have changed substantially. $68,900 is now the Euro component of the Audi (+3,900). The dollar cost of the imported Lexus has fallen to $55, 350 (-$8,649). Looking at just the FX rate changes, the cost of the Lexus is down to $71,350, the Audi is up to $84,910. In three months there is a $13,560 price gap. Now which one do you choose?

    I bring this up to make the point about how very rapidly the terms of trade have turned against Germany (all of the EU) and in favor of Japan. What is striking, is how quickly the adjustment has been. Consider this 15 year chart of the EURJPY:

    Sentiment: Strong Buy

 
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