thomas’s business daily aka skip this entry unless you care about theoretical commodities trading
Did you know: since Shakespeare’s time, the adage has been that “an ounce of gold buys a good men’s suit.” The corollary: if you look at the price of a good men’s suit, and the price of gold is less than that, you should buy gold. Higher, short it. I don’t have the guts or available funds to short-sell anything, but gold right now is ~$600 an ounce (just so you have that figure in your head).
Here comes the debate:
how much does a “good men’s suit” cost these days?
- Jos. A Bank sells three lines of suits, the most expensive listing for $1295 (on sale for $799) and the mid-range listing for $695 (on sale for $399).
- Calvin Klein suits list for $1800 but can be purchased for as low as 700.
- Armani suits are about the same price, 1000-1800.
Tell me folks, does that mean that gold is going to $1000? or is it going down to the sale price of a Jos. A Bank “Executive” suit ($199)?
I don’t expect a whole lot of feedback, but I read that historical reference and decided to run with it. FYI, the price of ETFs based on gold (GLD is a good example) is supposed to stay at 1/10 of the price of an ounce of gold. No clue how they do that, but it’s pretty close at $59.81 per share on 9/27 (compared to gold which closed at 598.60 per oz on 9/27).
In conclusion, if you think 1. the old adage is true 2. a “good men’s suit” is represented by the sale price of the top line of Jos A Bank and 3. ETFs accurately represent the price of gold, you should probably buy GLD and sell it at $79.90.
-tw
