Tag Archive | "commodities"

International Investing: Middle East-Risk & Rewards


The time has come to think about international investing in the Middle East with its risk and rewards.

Andrei-Kozyrev

Take a tip from this Russian.

The shifts taking place in the Middle East could transform overseas investing!  This area is filled with intelligent… passionate, energetic people.  Capital abounds. There are phenomenal amounts of wealth and Pandora’s democratic box has been opened.

Yes, the chances of power vacuums create risks.  Yet the countries that get this transformation right could explode with growth and opportunity.

The first obvious international investment opportunity is in oil. We are reading a lot in main street media about the risks that high oil prices bring to the Western economy.   However these investments have already been made… so be careful of a downward bounce as those who jumped into oil at the beginning of this transformation take profits.

Look on the fringes.  Russia, for example. The ruble is incredibly sensitive to oil prices. Several years ago I had dinner with the first Foreign Minister (under Boris Yeltsen) of democratic Russia, Andrei V. Kozyrev.  He gave me a tip about investing in Russia. “Gary. he said… “investing in Russia is simple. Watch the price of oil.”

If oil prices rise and the ruble or Russian securities lag, think вложите капитал в Россию   (Invest in Russia).

My investment advisers, Jyske Global Asset Management (JGAM) emailed me about this last week and said:

Oil and turmoil

The North African/ Middle East turmoil continued this week, with many demonstrations especially in Libya, where the people demand that Colonel Gaddafi t step down and turn over the power. The EU-countries agree to prepare sanctions against Gaddafi’s Libya, however it remains to be seen how and when.

The turmoil has triggered the Oil prices as 25% of Libya’s oil production has been stopped. It is not much of the total global production, but the market is concerned that the turmoil will spread to the world’s largest oil exporter, Saudi Arabia. Saudi Arabia will do what they can to avoid an oil panic, thus having decided to increase the supply of oil to calm the market. All this has of course had an impact on the stocks this week, where we have seen increased volatility worldwide.

JGAM was head of the curve and emailed me January 15, 2011:  On 13 January 2011 JGAM’s Investment Committee held its ordinary, monthly meeting going through all managed portfolios. This email gives you a short summary of the changes we have made in our managed asset allocation portfolios (see the FX Update to track the managed FX portfolios).

We took profit on our Canadian dollars and swapped the proceeds into stocks, buying Statoil for the low risk portfolios and Alfa Laval for the medium and high risk portfolios, thereby increasing the equity exposure in all portfolios.

We also changed the loan mix on leveraged portfolios from 100% US dollar to 50% US dollar and 50% euro. On and off, the euro continues to be under pressure because of the unsolved sovereign debt crisis in the eurozone.

JGAM’s Statoil position has done well as the chart below shows.

Statoil is an international energy company with operations in 34 countries.  Headquartered in Norway with 20,000 employees worldwide, the shares are listed on the New York and Oslo stock exchanges.

statoil-chart

Statoil shares 1 month chart from fincae.yahoo.com

The company engages in the exploration, production and marketing of petroleum and operates primarily in Scandinavia, Poland, the Baltic States and Russia.

You can get more details on JGAM investment portfolios from Thomas Fischer Senior VP at JGAM. His email is fischer@jgam.com

Look at alternative energy investments. Today I am meeting with a contractor to install a solar system in Florida. We’ll  add hydro power in North Carolina as I believe that energy prices will rise.

Prices are not quite right… but I’ll explain in a future message why I am installing a 5040 solar voltaic system now.

Here is why I believe the democratic transformation in the Middle East will be real.

The Power

Modern communication technology allows populations globally to know how the rest of the world lives.  The power in this revolution  is held in the way such a large segment of the population is repressed.

For example, a National Geographic article entitled “Veiled Rebellion” tells of “Afghan women who suffer under the constraints of tribalism”. Here is an excerpt:

The Wails of a Jailed Wife

A female inmate at the Maz-e-Sahrif prison has just been released prompting Maida-Khal, 22, to cry out because she is still trapped in her cell.

When Maida-Kal was 12 she was married to a man of about 70 who was paralyzed.

“I was so young, I could not carry him because he was so heavy so his brothers would beat me,” she recalls. When she asked for a divorce for years ago she was imprisoned I am in jail because I don’t have a mahram (male guardian).

The Weapon

It all began with a rock… or perhaps a stick.  Some one…. sometime… a long time… eons ago was feeling repressed… for whatever reason.  He (probably) picked up a stick or a rock and let fly.   The projectile evolution… the great equalizer began.

Later the slingshot took this technology to the next level.  Then came gunpowder, bullets,  the Colt .45!

Next we saw bombs, missiles and rockets… plus increasingly sophisticated aiming techniques which brings us to this revolution.

Cell phones and the internet aiming…

rocks

rocks.  There are plenty of rocks… more than enough information and a determination for more freedom. I do not believe the Middle East will ever return to its old ways.

Other Opportunities

Other opportunities may come in commodities.

Here are three ways to earn from this.

#1: Invest in junk silver coins

A recent article entitled “Is It Time to Buy “Junk Silver” Dollars?” by Steve Emeric and published by Asset Strategies gives us a tip on junk silver. Here is an except:  As you know from reading our alerts and newsletters, we are huge fans of “junk silver” coins. By that we mean the pre-1965 dimes, quarters, and half-dollars from the U.S. Mint. Many of you have purchased them on our recommendation, not just because of their low premiums, but also for their wide acceptance, easy divisibility, and other good reasons.

In today’s message, I want to suggest a way you can give your “junk silver” purchases an extra kick. Think of how Emeril Legasse says “Bam!” as he adds some spice to a recipe. That’s what this recommendation can do for your precious-metals portfolio. And right now is the best time in years to act on this opportunity.

Instead of dimes, quarters, and half-dollars, the coins I’m talking about today are the Morgan and Peace Dollars minted prior to 1935 that are in VG (very good) condition. These silver dollars contain more silver than the pre-1965 dimes, quarters, and half-dollars we like so much. Yet they’re not in good enough condition to interest a serious collector. That’s why I call them “junk silver” dollars.

#2 Invest in Silver Wheaton shares.

#3: Invest in KCHM Polish Solver & Copper mine shares.

The Middle East has taken a powerful step towards democratic capitalism and freedom… the economic model that has been the most effective humanity has developed yet.  This can bring a better life to millions of oppressed people and it creates many kinds of opportunity.  One of the first opportunities will come from the turmoil and and short term fears this transition brings… so look more deeply at investing in commodities now.

Gary

Get the latest update on junk silver… Silver Wheaton shares and KCHM Polsa Mining shares.

We reviewed my portfolio (which includes each of the investments above) at our International Investment Seminar in February 2011.  You can listen to the seminar in a digital file on your computer… MP3 player… or a disk at home or in your car.

Listen to, Thomas Fischer of JGAM. Rich Checkan of Asset Strategies and me discuss where to invest in the months ahead.

Order my International Business Made EZ  seminar digital download here. $199.

Save $199 Enroll in our June or October International Business Made EZ seminar and you can have the digital seminar free. You save $199.

Full Refund Guarantee

Enroll in our June or October International Investing and Business Seminar. Get the digital download of our February seminar now free.  If you are not totally happy with the information you gain… just let us know within a month.  We’ll cancel your seminar reservation, send a full refund and you can keep the digital download free as our thanks for tuning in.

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See seminar details here.

Ecuador, as an oil exporter, will also benefits from Middle East turmoil, but not as much as it seems. Ecuador has crude reserves and exports crude but has no refineries. This means it has to import all its refined oil from Venezuela thus giving up a lot of its profit. In addition Ecuador subsidizes its gas and propane prices.  Gas is sold at $1.50 a gallon and a tank of propane that sells for $2.50 costs the government $16.

Higher oil prices help stabilizes the system… but the systems has these fundamental flaws… so in a way higher oil prices encourages waste in Ecuador.

ecuador-beach-real-estate

See a  20 to 40 times investment Bahia Ecuador Beach bargain here.

Read the entire article Is It Time to Buy Junk Silver” Dollars?

Gold Review 2011 Summary


This gold review was scheduled for next week but I posted it today as I am guessing that the crash in gold’s price has caused some knitted brows.

I planned this Gold Review for 2011 because we entered the new year with the gold price near an all time high and all time highs always create areas of concern!

All the debt around the world and inflation over the past 25 years were bound to push up the price of gold… but has it reached a stratosphere where a bubble could burst?

gold

I began my global investing career as a gold bug. One way I have invested in gold is American Eagles… one ounce of gold.  Double boxed… inside of

gold

velvet and sealed in…

gold

plastic. Held in a safe deposit box now for about 20 years they have not been a bad investment… rising over 400% in 20 years,  but a normal investment… to me… they are not.

Many other investments were far better.  Gold has a definite place in one’s portfolio, but I have created this Gold Review because not all about gold investing is golden as you’ll see below.

Executive Summary for Gold Review 2011: To give a quick overview for those who don’t have the time for the full review, I am posting the executive summary of this report below free. (For those who want and have the time and interest, my entire Gold Review 2011 which runs many many pages can be ordered for $9.99. (Order here)

Point #1:  A series of  economic events have come together to worry investors world wide. Some of them are the staggering numbers of aging boomers in North America, Europe and Japan  – Low returns of fixed income investment – US dollars losing global reserve status – the Euro crisis – stubborn unemployment in US and Europe – North Korea  – Iran – Huge US, Japanese and European government debts.

In the past, worried investors fled to the US dollar, Swiss francs and gold.  Now the dollar and euro (which negatively affects the Swiss franc) are part of the problem.  The Swiss unemployment rate is again rising, up  0.1 percentage points in November to 3.6 percent, the latest official data showed on December 7, 2010.

Gold (and other precious metals) are left as the last guardians during dangerous economic times.

Point #2:  Stock markets globally have risen dramatically since the 2007-2008 equity collapse.

mcsi-chart

Here is the 2010 chart for the Morgan Stanley Captial Index World Index (all major markets excluding emerging markets) from www.bloomberg.com/apps/quote?ticker=MXWO:IND

We can see that this is a continuance of a trend that began in 2009 after equity markets collapsed globally.  Here is the three year chart of the same index at the Bloomberg site.

mcsi-chart

Emerging markets performed even better.  Below is the Morgan Stanley Capital Index Em Index for 2010.

mcsi-chart

Here is the three year chart.

mcsi-chart

This Emerging Markets Index is a float-adjusted market capitalization index. As of May 2005, it consisted of indices in 26 emerging economies: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela.

Shares compete with gold to attract investors and have the advantage of much lower dealing costs and pay dividends.  This shows that gold prices have shown considerable strength to rise as high as they have despite the strong global equity price improvement.

#3: Compared to equities the rise in the price of gold for the last year has been strong.

We can see the reverse synchronicity between gold and global equity prices when we notice the spurt in gold prices in May through July 2010 when equity markets slowed.

gold-chart

In fact no matter which chart you view…

Here is a five year gold chart.

gold-chart

The rise in gold looks good especially…

gold-chart

strong in the last six months.

gold-chart

This warns us that gold’s price may be frothy. And  Tuesday’s (Jan. 4, 2011) price drop suggests that the market is now growing more nervous.

gold-spot

Three day gold pricie chart from www.goldprice.org

This chart was written before the January 5, Hong Kong market began… but those prices are included in the full gold review 2011 report.

Hong Kong’s reaction will be an important signal.

A long term chart analysis also suggests that gold’s big recovery may now be near its top.

gold-chart

Point #4:  Gold has appreciated a lot since 1942. Price comparisons show that Gold has outperformed 13 of 15 standards we reviewed. Only a Harvard tuition and housing prices have risen higher than gold.  This gives only a partial picture of gold’s true value, but should give us pause for thought.

How much is gold worth now?  This of course is THE golden question…so let’s compare prices.

Prices (1942 to 1967 source: “Remember When” by Seek Publishing 2007 to 2010: US Bureau of Labor)

gold-price-comparison

If we assume that the gold price of $33.85 an ounce (before the end of WWII and the huge inflation this conflict created), is the more accurate than the price at the end of the war,  the house, car and wage cost is one place to start a comparison.

Biggest increase: Harvard tuition 80 times increase.

House prices from 1942 until 2010 increased 67 times.

Gold has risen about 41 times.

Cars jumped 30 times.

Movies  27 times.

Wages increased 24 times.

Rentals are up 20 times.

Gas 20 times.

Postage 15 times.

Bread 15 times.

Pound of sugar 10 times.

Hamburger about 9 times.

Coffee, bacon, eggs all about 8 times increase.

Milk only five times.

Gold has risen about 41 times (4,100% or 60% per annum simple) from 1942 to 2010 at its January 4, 2011 price of  1,383.

Point #5: Unemployment is not getting better. A recent New York Times article says “Few New Jobs as Jobless Rate Rises to 9.8%”.

Another NYT article “Unemployment Rises in Europe”  By David Jolly says:  Unemployment in the euro zone rose in October to its highest level in more than 12 years, an official report showed Tuesday.

Unemployment slows inflation and favors deflation the enemy of the price of gold!

Point #6:  Gold is a good investment in some circumstances. Gold could rise even more if the economic problems could lead to a stampede in stock markets… great currency volatility and inflation.  Gold is good as insurance because it represents real money.  However a 95 year study comparing precious metals to equities, housing and bonds shows that over the long term gold is the third best performer and is especially weak during inflation..

Point # 7:  Gold has its downsides. Gold’s price is volatile and subject to great long term depressions.  If there is sustained deflation, gold prices could drop.  Gold is expensive to hold and gold does not pay dividends.

The conclusion of this report is that gold prices will rise but much more slowly and could have several short term price corrections over the next year.

You can order the full Gold Review 2011 for $9.99 here.

Our favorite bullion dealer who we have known for over 20 years is Asset Strategies. Get more information from Rich Checkan at rcheckan@assetstrategies.com

Gary

See a full review on gold investing at our February 11-12, 2011 International Investing Seminar in Mt. Dora, Fl.  See details at www.garyascott.com/catalog/international-investments-and-international-business-course

Gain ideas on how to use gold to finance your own micro business at our February 12-13, 2011 International Business Made EZ Seminar in Mt. Dora.  See details at www.garyascott.com/catalog/international-business-made-ez-seminar

Learn how to use FM Plus (Frequency Modulation) to think out of the box when investing and in business at our February 11 – 12 2011International Investing International Business Seminar or both – (saves up to $499) in Mt. Dora, Florida or both. and February 12-13, 2011.