The Big Mac Index

[TraderTim]

I agree with you Khalaad, it has been around quite a while now and is an interesting metric, considering it started as a sort of tongue in cheek way to compare purchasing power.

Here is a quote from the Economist:

"When the euro was launched in 1999, almost everybody reckoned it would immediately rise against the dollar. But the Big Mac index suggested that the euro was already overvalued. Soros Fund Management, a prominent hedge fund, later told us that it sniffed at the sell smell coming from the Big Mac index, but resisted the temptation to bite. It was cheesed off when the euro promptly fell."

Full article if anyone is interested: http://www.economist.com/node/21524873

Regards,

Tim

[Alpenkorps]

Very interesting, Never knew about it! Thanks Khalaad for bringing this up.

Did you guys see the comments? Pure entertainment

Here is a good one:

"My "research" shows that the cheapest Big Mac is in North Korea. Though because Big Mac is not sold in North Korea, I take the price of Kim Mac, which is made from clay patties with used oil in between."

Another one:

"India has the cheapest Big Mac because it replaces the beef patty with chicken.

So Big Mac is costlier in China than in Hong Kong -- in fact Hong Kong's Big Mac is almost the cheapest even though it is one of the most expensive city in the world.

In conclusion, price is not directly related to cost.
"