RE: RE: RE: RE: RE: RE: SLX or GGCRFYour friend who bought Citi and is even (in $US terms) has really lostmoney, because Citi, quoted in $C has gone down. I don't know if Cititrades on a Canadian exchange, but if it did, he's be able to see on adaily basis that he was losing money on that position. Instead, he seesit holding steady when quoted in $US, so the fact that it is reallylosing is hidden from him.
But this thread started comparing SLX to GGCRF (see the subject line).So let's illustrate with that stock. Today SLX has ranged between .79and .83. GGCRF has ranged between .801 and .855. This is right in linewith the current exchange rate of $1.0201.
Say the exchange rate went to $2 (just to make a point) next week, andthe price of SLX stayed at $.80. GGCRF would then be trading at $1.60.
If you bought today, in $US, it would look like you had doubled yourmoney. If you bought today in $C, it would look like it had stayed thesame. But if you sold in either case, and converted back to $C (so youcould spend the money at Timmies, assuming you`re Canadian) you`d findout you were in exactly the same position either way.
Buy and or sell in either market, in the end your profit will beidentical. Because when you own the stock, you no longer own currency,you own an asset that is independent of any currency. (There is somecurrency risk in some companies because of the various countries thatthey do business in - I used to work for a company that had most of itsexpenses in $C and most of its income in $US, making the exchange rateimportant to it's bottom line. In SLX's case, there might be some riskin terms of the Peso exchange rate. I don't know whether there is ornot, or which direction it might work, if it exists. But in any case,this is a completely different issue than what currency you use to buyor sell the stock).
The cases you cite of buying a US stock and watching it either gain orhold even, but finding that the exchange rate has "eaten up" the profitsis an illusion. There were no profits. The stock didn't go up, thevalue of the US dollar went down. If the value of that stock had beenquoted daily in $C, it would have been more obvious.
The source of this confusion is that the value of the unit of measure($) keeps changing. I read an article last week that sarcasticallysuggested that we allow the value of the kilogram to float. Or themile. Imagine the confusion if the word "foot" meant somethingdifferent today than it did yesterday. Yet that's exactly what we'redoing with our currencies. No wonder people get confused by things likethe above.