Baht becoming ridiculously strong

[impulse]

Someone please set my little pinhead straight.  I contend that the only way to gage the strength of a given currency is to compare how much of a sturdy commodity (like gold) it will buy.  If a USD buys 35x as much gold as a THB, that's the relative value, even if the "exchange rate" is something different.

 

And if the THB buys less gold than it did a year ago, it's losing value, maybe more and maybe less than the USD.  They may both be tanking, so calling one "strong" isn't really accurate.

 

Of course, that's my engineering bent, and not a financial bent.  Where is that wrong?

 

 

 

[jas007]

2 hours ago, impulse said:

Someone please set my little pinhead straight.  I contend that the only way to gage the strength of a given currency is to compare how much of a sturdy commodity (like gold) it will buy.  If a USD buys 35x as much gold as a THB, that's the relative value, even if the "exchange rate" is something different.

 

And if the THB buys less gold than it did a year ago, it's losing value, maybe more and maybe less than the USD.  They may both be tanking, so calling one "strong" isn't really accurate.

 

Of course, that's my engineering bent, and not a financial bent.  Where is that wrong?

 

 

 

 Gold has been “real money” for thousands of years, but the US closed the gold window in 1971.  The dollar is now backed by only the full faith and credit of the government.. Countries now use fiat currencies backed by nothing.  Gold has been derided as a “useless relic.”  Of course, this arrangement allows central banks to create  money out of thin air.  The problems with that process are obvious.  The world is now awash in debt that cannot be repaid. Currency fluctuations are related to debt and interest rates, military power, trade patterns, etc.  So you can use gold as a measure if you want, but even the gold price is manipulated, at least in the commodity market.  
 

 

[Cameroni]

6 minutes ago, jas007 said:

 Gold has been “real money” for thousands of years, but the US closed the gold window in 1971.  The dollar is now backed by only the full faith and credit of the government.. Countries now use fiat currencies backed by nothing.  Gold has been derided as a “useless relic.”  Of course, this arrangement allows central banks to create  money out of thin air.  The problems with that process are obvious.  The world is now awash in debt that cannot be repaid. Currency fluctuations are related to debt and interest rates, military power, trade patterns, etc.  So you can use gold as a measure if you want, but even the gold price is manipulated, at least in the commodity market.  
 

 

 

Yes, the gold price goes up and down as well, so not sure how that is proper measurement that's set in stone really

[jas007]

36 minutes ago, Cameroni said:

 

Yes, the gold price goes up and down as well, so not sure how that is proper measurement that's set in stone really

The theory is that while the price of gold will fluctuate, the “value” remains relatively stable. For example, the cost of a quality men’s suit = one oz of gold.

[mogandave]

[Cameroni]

20 minutes ago, jas007 said:

The theory is that while the price of gold will fluctuate, the “value” remains relatively stable. For example, the cost of a quality men’s suit = one oz of gold.

Not at my tailor in Phuket. It's  more like 2 gram.

[impulse]

1 hour ago, Cameroni said:

 

Yes, the gold price goes up and down as well, so not sure how that is proper measurement that's set in stone really

 

Does the price of gold go up and down, or does the value of the currency go up and down?  I contend that the value of gold is set in stone.  And the value of currency is what goes up and down.   And has for thousands of years.

 

That's why I refer to gold as a sturdy commodity (my terminology, I'm sure economists have a better description).  It's not like a bushel of wheat that may go up and down depending on the weather, or a pork belly that may be affected by swine flu, or a pound of lithium that depends on vagaries in market demand for EVs.  You get the gist...

 

[Chivas]

7 hours ago, chiang mai said:

Brits should be aware that the value of GBP/THB is calculated from USD/THB and GBP/USD, there is no direct GBP/THB rate, instead it is a cross rate. That means that if USD falls and GBP rises as a result, the impact on GBP/THB is less than the impact on USD/THB.

 

Hells Bells one or two actually do listen to me !

You are perfectly correct and so many on the thread are completely wrong. Quite hiarious at times reading comments

[Cameroni]

3 minutes ago, impulse said:

 

Does the price of gold go up and down, or does the value of the currency go up and down?  I contend that the value of gold is set in stone.  And the value of currency is what goes up and down.   And has for thousands of years.

 

That's why I refer to gold as a sturdy commodity (my terminology, I'm sure economists have a better description).  It's not like a bushel of wheat that may go up and down depending on the weather, or a pork belly that may be affected by swine flu, or a pound of lithium that depends on vagaries in market demand for EVs.  You get the gist...

 

 

I don't think Gold is exempt from the economic laws of supply and demand. For instance in times of war there is a greater demand for gold, so its value goes up.

 

In times of financial crisis too the price of Gold jumps up.

 

 

[impulse]

14 minutes ago, Cameroni said:

I don't think Gold is exempt from the economic laws of supply and demand. For instance in times of war there is a greater demand for gold, so its value goes up.

 

In times of financial crisis too the price of Gold jumps up.

 

In both of those cases, the price of gold may go up, but the value stays the same.  By definition, one oz of gold is worth one oz of gold.  It's the currencies that fluctuate. 

 

My point is that you need to have a standard measure to compare currencies to each other.   The standard that's been used for millennia is a troy ounce of gold.  Going back to my original statement, if a USD buys 35x as much gold as a THB, that establishes the relative value of THB vs USD.  Any variation from that in the exchange rate represents an arbitrage opportunity that algorithms all over the world look for.  Just like they look for arbitrage opportunities in pork bellies and bushels of wheat and Bbls of oil and MMBTU of gas, or JPY or RMB. 

 

If the THB goes up against the USD, you can't claim it's getting stronger.  Just that it's stronger than the USD.  They may both be tanking, just one faster than the other.

 

[jas007]

10 minutes ago, Cameroni said:

 

I don't think Gold is exempt from the economic laws of supply and demand. For instance in times of war there is a greater demand for gold, so its value goes up.

 

In times of financial crisis too the price of Gold jumps up.

 

 

 Over time, even the value of gold has fluctuated.  For example, if there was a big gold strike, that would increase the supply and thus decrease the value a bit.  Consider Bitcoin. There’s a fixed supply of that. No more can ever be made.  That’s the attraction.  

[chiang mai]

37 minutes ago, Chivas said:

 

Hells Bells one or two actually do listen to me !

You are perfectly correct and so many on the thread are completely wrong. Quite hiarious at times reading comments

In fact no I don't, never have and am highly unlikely to in the future.

[GammaGlobulin]

I will need to stop buying using AmEx Card from Amazon, now, it seems.

 

My AmEx Card is not a Thai AmEx card.

 

I liked it far better when Baht was like.... 38....many months ago.

 

How long will I need to wait for Baht to return to 38.....would you imagine?

 

 

[Chivas]

12 minutes ago, chiang mai said:

In fact no I don't, never have and am highly unlikely to in the future.

 

I absolutely adore your posts and follow with immense interest.................xx

[mogandave]

7 minutes ago, GammaGlobulin said:

I will need to stop buying using AmEx Card from Amazon, now, it seems.

 

My AmEx Card is not a Thai AmEx card.

 

I liked it far better when Baht was like.... 38....many months ago.

 

How long will I need to wait for Baht to return to 38.....would you imagine?

 

 

I liked it better when it was 44 to the dollar 

[jas007]

Since when does Amazon care what kind of credit card you use?  
 

As for a return of the dollar to 38 baht?  You never know.  From what I know of the U.S. economy, the dollar is being devalued, and that doesn’t bode well for a return to 38 any time soon.  Anyway, I certainly don’t know any about the Thai economy, really.  Could there be another Asian financial crisis?  
 

Nothing would surprise me.  I can imagine the baht at 25. I can also imagine it at 45. Fortunately, I’d be ok, either way.

[Cameroni]

6 minutes ago, jas007 said:

Since when does Amazon care what kind of credit card you use?  
 

As for a return of the dollar to 38 baht?  You never know.  From what I know of the U.S. economy, the dollar is being devalued, and that doesn’t bode well for a return to 38 any time soon.  Anyway, I certainly don’t know any about the Thai economy, really.  Could there be another Asian financial crisis?  
 

Nothing would surprise me.  I can imagine the baht at 25. I can also imagine it at 45. Fortunately, I’d be ok, either way.

If there is another Asian financial crisis it won't be in Thailand. They've learnt their lesson very well and have been fantastically conservative.

 

Great job by the financial regulators here.

[Patong2021]

9 hours ago, Cameroni said:

Your statement that the Japanese Yen has fallen against the Baht in the same way as the Euro, Pound etc, is simply false. Anyone can look at the chart of the JPY/THB and see that you are wrong.

 

The Japanese Yen was trading at 1 yen to 0.25 baht last October. It fluctuated over the past year going to 23 yen and rising to 24 yen and now it is back at 0.235 baht to 1 yen. The yen has lost value against the Thai baht.

[Cameroni]

53 minutes ago, Patong2021 said:

 

The Japanese Yen was trading at 1 yen to 0.25 baht last October. It fluctuated over the past year going to 23 yen and rising to 24 yen and now it is back at 0.235 baht to 1 yen. The yen has lost value against the Thai baht.

 

Actually from early July to early August the Yen gained against the Baht, only after early August did it fall. In fact earlier in the year it was falling against the Baht when the other currencies you mentioned were not declining against the Baht.. So unlike the other currencies you mentioned the Yen's decline has not tracked those currencies fall against the Baht in the same way, it was going up when the others went down, and it went down when the others went up.

 

 

The AUD/THB also did not track the decline of the Chinese Yuan, CAD, Euro, but instead was going up against the Baht when the others were going down.

 

 

https://in.marketscreener.com/quote/currency/EURO-THAI-BAHT-EUR-THB-88940/graphics-comparison/

[Patong2021]

4 hours ago, impulse said:

 

Does the price of gold go up and down, or does the value of the currency go up and down?  I contend that the value of gold is set in stone.  And the value of currency is what goes up and down.   And has for thousands of years.

 

That's why I refer to gold as a sturdy commodity (my terminology, I'm sure economists have a better description).  It's not like a bushel of wheat that may go up and down depending on the weather, or a pork belly that may be affected by swine flu, or a pound of lithium that depends on vagaries in market demand for EVs.  You get the gist...

 

 

Your position is based upon gold having a fixed supply. As has been pointed out,  supply and demand  is a major  factor in determining a commodity's value. Australia and Russia have the largest  gold reserves in the  ground (about 2/3 of the worlds unmined reserves),  If they so wanted either one of them could flood the market and crash the value of cold.  The US holds the largest gold reserves in the world, and if it wanted could release some gold and manipulate the  price of gold.  I offer that the value of gold is  inflated through manipulation. It is not as bad as the ridiculously false high value of diamonds, but it is there.

 

Some countries do not bother with gold reserves. It's an expense to hold and to store and for what? Gold is only one commodity. Canada does not have gold  reserves, although it has  about 6% of unmined world reserves. Its reasoning is sound. The country holds US$10+ billion in  foreign exchange reserves, consisting of a diverse number of foreign currencies. Canada also holds massive commodity reserves in oil & gas, lumber, minerals, water, food and power generation. The  Canadian government holds billions of assets in financial instruments that are used to  respond to market pressures. Gold is one single commodity. A basket of diverse valuable commodities spreads risk and is far better to respond to catastrophic  incidents. You can't eat gold, but you  will need electricity and   petro products to operate, and you will need potash to grow crops, fish to eat and lumber to build with etc. Modern wars are more likely to be fought over food, water and energy. They are not fought over gold.

 

 

[ukrules]

11 hours ago, FritsSikkink said:

The issue is the THB against multiple currencies, not just trading with 2 currencies.

One could even say it's a 'basket of currencies' competing with each other 🤣

[chiang mai]

6 hours ago, Chivas said:

 

I absolutely adore your posts and follow with immense interest.................xx

Loved your response and thought it was very cleverly done.

 

:))

[bigt3116]

17 hours ago, Cameroni said:

All the currencies of the world are valued against the dollar.

 

No, not all currencies of the world are valued against the dollar. While the U.S. dollar is a widely used reserve currency, it's not the only benchmark.

Many currencies are valued against other currencies, such as the euro or the British pound.  

1. 7 Currencies Worth More Than the U.S. Dollar - Investopedia

www.investopedia.com

 

Here's a breakdown:

• Direct Quotation: This is when a currency is quoted in terms of the U.S. dollar. For example, "1 EUR = 1.10 USD."
• Indirect Quotation: This is when a currency is quoted in terms of another currency, such as the euro. For example, "1 USD = 0.91 EUR."  
  1. A Comprehensive Guide to Decoding FX Direct Indirect Quotes - Axiory

  

  www.axiory.com

So, while the U.S. dollar is a significant player in the global currency market, it's not the only one.

[Andre0720]

Kamala....

[stoner]

16 hours ago, John Drake said:

Well, one thing. Now that the baht is stronger, imports of things like foreign food will be cheaper. That block of imported cheese that went from 169 baht before Covid to 239 baht today will drop significantly. Right? Right? Right?

 

i would like to short your bet. 

[stoner]

5 hours ago, Patong2021 said:

power generation. The  Canadian government holds billions of assets in financial instruments that are used to  respond to market pressures.

 

watched a show the other day that said canada produced 60 percent of its power through hydro power. quite impressed i didn't know. 

 

could you also help me. canada also works on a fractional banking system right. how different are our banks in regards to deposits and coverage vs  the american system. 

 

my friend seems to think that i can walk into royal bank and say i want to close my account please give me my 300k dollars. and that they will have it there in the bank. 

 

i said no way. pretty sure most banks don't carry that kind of cash anymore it would need to be special order kind of thing. 

 

do you know ? 

[Cameroni]

4 hours ago, bigt3116 said:

 

No, not all currencies of the world are valued against the dollar. While the U.S. dollar is a widely used reserve currency, it's not the only benchmark.

 

Many currencies are valued against other currencies, such as the euro or the British pound.  

 

www.investopedia.com

 

Here's a breakdown:

• Direct Quotation: This is when a currency is quoted in terms of the U.S. dollar. For example, "1 EUR = 1.10 USD."
• Indirect Quotation: This is when a currency is quoted in terms of another currency, such as the euro. For example, "1 USD = 0.91 EUR."  
  1. A Comprehensive Guide to Decoding FX Direct Indirect Quotes - Axiory

  

  www.axiory.com

So, while the U.S. dollar is a significant player in the global currency market, it's not the only one.

 

I was  not talking about the US as a reserve currency or purchasing power. Very obviously I was talking about exchange rates. The price of every currency in the world that matters and is traded in the exchange markets is determined by reference to the US Dollar.

 

This very much includes the Euro and British Pound, their price in the exchange markets is determined against the USD.

 

In the exchange markets the US Dollar is the only "significant player" in terms of currencies, for the simple reason the prices of the others  are determined by the US Dollar to a very large degree. 

[KhunBENQ]

9 hours ago, Patong2021 said:

The  Canadian government holds billions of assets in financial instruments that are used to  respond to market pressures.

116 billion

Pocket money 

 

Incl. gold:

China 3.5 trillion (Hong Kong another 425 billion)

Japan 1.2 trillion

Switzerland 795 billion

...

Thailand 230 billion

 

https://en.wikipedia.org/wiki/List_of_countries_by_foreign-exchange_reserves

 

[Patong2021]

4 hours ago, Andre0720 said:

Kamala....

 

Situated 14 km north of Patong it is considered the poor man's Surin Beach and is preferred by those who wish to avoid the  noise and congestion of Patong.

[dddave]

22 hours ago, John Drake said:

 

The 800,000 you can't touch until you leave the country, which will just sit there otherwise until you die?  Meanwhile, what about the money you're bringing into Thailand in order to live on that retirement visa? That's going down. You're losing both ways.

Not true.  You can draw up to 400,000 baht off your deposit 90 days after issuance of the extension. It must be fully replenished at least 60 days prior to next renewal.