Way back when Dave introduced “The Dave Index” (aka the golden monkey) it was the price of an ounce of gold divided by the price of a barrel of oil. When Dave introduced the index on October 26, 2010 the ratio was 16.34. Today the index rests at 17.45. Dave has been trying to figure out what to do about his famous index, particularly in light of the introduction of the gold renminbi kilobar at the new Hong Kong Mercantile Exchange oriental gold fix. You see to publish an index, it has to be relative to something.
It’s really been bugging Dave that there is an onshore Renminbi (CNY) and an offshore Renminbi (CNH) but there isn’t an offshore Big Mac and an onshore Big Mac. What’s an index publisher to do when the Chinese solution to being excluded from the IMF’s currency pic-a-nic basket (think Yogi and Boo-boo) is to introduce a second currency while trying to convince us that a “Y” is an “H”. Dave’s smarter than the average bear and he’s working on an answer.
Take a look at the most recent report out of the famous Economist Magazine and you’ll notice what’s been occupying Dave’s mind of late. You see the folks at the Economist published the Big Mac Index in Hong Kong Dollars and in a five-city survey of China. That means that they only published the BMI in CNY (and only in a 5 city survey at that). The decision to bypass the CNH and to avoid regions of China outside the largest five cities is no picnic for the millions of unemployed in the less developed areas of the mainland.
Dave’s plan is to republish The Dave Index and to add to what was previously just a ratio of gold and oil and introduce a factor of the Big Mac index in both USD, CNH and CNY. Not only that, but will Dave be able to go a step further and survey select cities in China that are not part of the “Big 5.” What will this tell Dave? It will tell him what’s really going on behind the wall in Jellystone.
If you are having difficulty following the plan for China to break out of the mainland with its currency intact while such animated Western corporations (think Ronald and McDonald’s) are trying to break-in to the Chinese market, maybe this original Yogi Bear cartoon will help. You see, the key is maintaining a steady flow of Western gold imports into China while managing to get the honey out of the honey jar (selling to the Chinese growth market) all the while not getting stung by unexpected capital controls (i.e. Ranger Smith).
Here’s a report on the most recent pricing of the Big Mac Index courtesy of the Rothschild controlled Economist magazine: http://www.scribd.com/fullscreen/78055840
Prof. Antal Fekete explains the West to East migration of gold and its relationship to Chinese unemployment: http://www.professorfekete.com/articles%5CAEFWhatChineseUnemployment.pdf
The origins of “The Dave Index” (aka the golden monkey) Oct. 26, 2010 http://tradewithdave.com/?p=3018
Here are links to some recent posts on the subject: