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Multi Currency Ideas


Multi currency solutions to inflation are needed.

Inflation will certainly come from the current global economic bailout.

Every multi currency investor needs to mold a personal multi currency solution to meet their specific needs. Whatever individual tactic is used, it will normally work better if it includes multi currency diversification based on a search for multi currency value.

Yesterday’s message Multi Currency Warning looked at seven economic fundamentals that we can relay on during this downwards correction and stated:

The current rush to the US dollar and yen create a monumental opportunity! There will be a time to invest in the very currencies that are tumbling now.

Why am I sure of inflation?

One of the seven multi currency fundamentals (#2) is that: Government involvement in global economics and business may dampen the sharper acceleration of the natural financial rhythm but eventually makes the corrections worse.

A recent article in USA Today covering Alan Greenspan’s testimony to the US Congress said: that the “Former Federal Reserve chairman Alan Greenspan told angry lawmakers” about his shock.

I wonder? We these angry OR frightened lawmakers? I suspect that a few weeks from election day the better word would have been SCARED.

Fear destroys reason if one is not trained to deal with it. Most of Western society is not trained to deal with fear. William James aptly put it this way.

“In civilized life it has at last become possible for large numbers of people to pass from the cradle to the grave without ever having had a pang of genuine fear. Many of us need an attack of mental disease to teach us the meaning of the word.”

Since politicians are also human beings they too lose reason when they give way to fear. They seem to definitely get a mental disease!

For example what is the cause of today’s economic crisis? Too much debt.

Yet yesterday’s BBC article entitled “Brown defending higher borrowing” says:

“Gordon Brown is defending his plans to increase government borrowing in order to tackle the economic downturn in a speech in London.

The prime minister is telling business leaders it is the right time to boost demand with government spending.

Opposition parties have attacked the current levels of debt, saying Britain is inadequately prepared for recession.

Leading economists have also criticised the government over its spending plans and called for tax cuts instead.

In a letter to a Sunday newspaper, a number of economists warned against an expansion of government spending as a way of stimulating the economy.

They described a focus on public works projects and higher spending as “misguided and discredited”.

The latest quarterly public debt figures hit a record £37.6 billion – higher than the whole of the previous year. Yet Brown said: The responsible course is to borrow now to maintain growth and output.”

I have little doubt that England’s debt will grow…as will America’s, and Europe’s and Japan’s because of…fear.

The borrowed money will be spent by government’s to, as Brown says, “kick start the economy”. The economy will recover but if the fundamental about government inefficiency remans true, it will not recover as it could and should.

The price of this borrowing will be inflation…the loss of purchasing power.

Now here is where frightened politics and politicians get involved.

The same BBC article also said:

“Over the weekend, Mr Brown paid a brief visit to Glenrothes in Scotland as part of a by-election campaign and made predictions food and fuel bills would begin to come down next year.

He also hinted falling oil prices could lead to further co-ordinated interest rate cuts.

“Now inflation is actually coming down over the next few months and that will mean that it gives scope to all the monetary authorities, including the Bank of England, round the world to make a decision about interest rates,” he told the BBC.”

Brown is probably wrong. Inflation will not come down…which is okay for those who know what to do.

Do not be misled. Chances are that Western governments will borrow more than they should. Inflation will follow.

If this belief is correct then the best investments will be shares, commodities and real estate in a diversified basket of strong currencies.

What will make a currency strong?

Fundamentals of currency value (purchasing power potential) include:

A: Interest rate.
B: Inflation rate a three levels – labor – wholesale and consumer prices.
C: Trade balance.
D: Current account.
E: Debt as % of GDP.
F: Debt as % of government income and spending.
G: Amount and velocity of direction in government deficit.

Ideally we want to invest in currencies of countries that offer an interest rate above the local inflation rate, that have a positive trade balance, current account, falling government debt and deficit versus government income.

This combination of qualities in a currency are as rare as hen’s teeth and will become even harder to find during and after this downturn.

As the Western economies stall, their imports will slow. This will slow growth in emerging economies. Governments everywhere will be pressed. Fear will grow. Reason will diminish and government borrowing will increase everywhere.

Inflation will grow. Multi currency investing will become increasingly a relative process….looking for the currencies that are least bad.

I hope to help you fight this inflation with multi currency investing!

Gary

We are studying three multi currency solutions to inflation in our multi currency course. You can subscribe to gain access to these ideas here.

Join us at one of our next to International investing courses in Cotacachi Ecuador this winter.

Learn more about economic safety this November. Join Merri, me, Steve, Kjetil Haugan or Thor Anderson of Vistazul and Peter Conradsen of Jyske Global Asset Management in Cotacachi Ecuador. We’ll review economic conditions, Ecuador real estate, my entire portfolio and investing and business ideas for the months ahead.

Nov 7-9 2008 International Investing and Business Made EZ Ecuador
https://www.garyascott.com/catalog/international-business-made-ez-ecuador

Feb. 13-15 International Business & Investing Made EZ

See the wonderful balconies in the Primavera condos at for sale at $46,000 in Cotacachi.

multi-currency-Ecuador-condo-interior

Nov 10-11 Imbabura Real Estate tour
https://www.garyascott.com/catalog/ecuador-real-estat

Feb. 16-17 Imbabura Real Estate Tour

Then travel to the coast. Enjoy the Vistazul swimming pool on Ecuador’s Pacific.

Picture 9

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
https://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour

See discounts for two or more of these courses and tours

Enjoy Ecuador’s music.

Ecuador-music

Enjoy flowers and beauty.

Ecuador-flowers

Enjoy the friendly staff at our hotel.

international-club

Better still join us all year in Ecuador! See our schedule of 26 courses, tours, mingos and expeditions we’ll conduct in 2009.

Multi Currency Investing Ahead


Multi currency investments fight inflation and can enhance wealth but require a long view .

There is a screech owl that lives in our barn and the way I watch him is sort of how I invest.

Can you see the owl?

To begin, an investing idea starts with a speck of thought…seeing the whole picture, but without many details.

Then it’s time to connect dots to see a closer picture.

Then we begin gathering information so the focus is closer…

until we can finally zoom in.

At this stage when we have zeroed in, we can act.

One big idea I have been tracking and investing in, is water. Now I am zeroing in on a new sub interest…water desalination.

An article sent by a reader entitled “Australia Turns to Desalination Amid Water Shortage” by Michael Sullivan first piqued my interest.

The article told how the Kwinana Desalination Plant, near Perth, produces 40 million gallons of drinking water per day from the Indian Ocean.

The article says:

Perth, with a population of about 1.7 million, is growing 3 percent a year — about 750 families a week move to the city, says Gary Crisp of the Western Australia Water Corp.

The Kwinana Desalination Plant south of the city opened two months ago. The facility, the first of its kind in Australia, covers just a few acres in an industrial park next to the ocean.

The water is sucked in through a pipe about 650 feet offshore in Cockburn Sound, at a rate of about 0.1 meters per second, says project manager Simon McKay.

That is slow enough to let the fish escape, but fast enough to provide nearly 40 million gallons of drinking water each day — roughly 20 percent of Perth’s daily consumption. That makes the plant the single largest source of water for the city.

McKay says it doesn’t take very long for the seawater to be ready for the tap — about a half-hour from the time it comes out of the ocean until it’s processed and distributed.

Desalination plants have been around in places like the Middle East for decades. But they’ve always been expensive to build and expensive to run. New technology has made them cheaper and more efficient, but they still consume a large amount of energy.

Environmentalists in Perth balked at the idea of using coal-fired plants to provide power for the one here, forcing the Water Corp. to find a non-polluting, renewable alternative. It found that alternative — wind energy — near the town of Cervantes, a three-hour drive north of Perth.

The Emu Downs Wind Farm houses 48 wind turbines, each as high as a 15-story building.

Kerry Roberts, the facility’s general manager, says Emu Downs is among the top 10 or 20 sites for this type of energy alternative in Australia.

“If you look at the combined output of the wind farm at maximum wind speeds — 24 to 28 miles per hour — you’re looking at an output of close to 80 megawatts,” Roberts explains. That’s enough power to run Perth’s desalination plant, 160 miles to the south.

This successful marriage of renewable technology and necessity has Crisp, of the Western Australia Water Corp., thinking big: “I predict that desalination will account for at least half of Perth’s water in the next 30 years.”

Other water-stressed seaside cities in Australia are taking a serious look at desalination, as traditional water sources dry up because of lack of rain. Sydney, on Australia’s southeast coast, is expected to commission a plant even larger than Perth’s in the next few months.

Nonetheless, the desalination boom extends far beyond Australia’s shores. McKay — the man in charge of getting Perth’s plant running — will soon be off to Muscat, Oman, to build another. His company’s order book is filling up quickly, he says, and he doesn’t expect that to change in his lifetime. Neither does Crisp.

“The world is going reverse osmosis,” he says, naming projects proposed from California to Spain.

Looking around, I found that one of the largest desalination plants is not far from where I lived (Naples) for years, Tampa Florida. The Tampa Bay Seawater Desalination facility is an integral part of the Tampa Bay region’s drinking water supply. This is claimed to be a drought-proof, alternative water supply that provides up to 25 million gallons per day of drinking water to the region.

There are large desalination projects underway in California as well. However a look at the top 50 desalination projects show that the majority of them are in the Middle East.

Desalination is a sector that is bound to grow. It is estimated that 2.8 billion people live in areas of high water stress and this number is expected to increase by 50% over the next 20 years.

Areas of greatest concern include India, China and the Middle East.

There are two forms of desalination, evaporation and reverse osmosis (salt water forced through a filter under high pressure). There are already over 10,000 desalination plants going, mostly in the Middle East.

There are huge expenditures underway for desalination and wastewater purification and a number of companies are cashing in on this fact.

General Electric may be in the lead. It purchased Ionics, which builds desalination plants and makes filter membranes.

The French company Veolia Environnement (VE) is a major desalination plant and membrane supplier. This company earns over a third of its revenue from water businesses. The Japanese chemical company Nitto Denko (6988.T) is a large membrane supplier as is Dow Chemical (DOW), DuPont (DD), and GE.

Desalination plant builders include Italian Impreglio (IPGOF), South Korea’s Doosan Heavy Industries & Construction (DOHIF), French Suez (SZEZY), German Siemens (SI), and Spanish construction companies Acciona (ACXIF) and Abengoa (ABGOF).

We have written often about Singapore-listed Hyflux (HYFL) which makes filter membranes used to purify water and builds desalination plants. Hyflux is building a 500,000-cubic-meter per day desalination plant in Algeria, which, when completed in 2011, will be the world’s largest. Hyflux is also building 40 water treatment plants in China, where it gets 81% of its revenue. This share is in our Green portfolio as is Japan’s Kurita Water Industries (6370.T) which builds desalination plants and sells other water purification equipment, getting all of its 205 billion yen [$2 billion] in revenue from water-related businesses.

Canadian H2O Innovation (HEO) makes filtration membranes for wastewater treatment. Austria’s Christ Water Technology (CRSWF) sells desalination and other water purification equipment. American Water (AWK), is in New Jersey and ran the desalination plant in Tampa, which is the largest in the U.S. Energy Recovery in San Leandro, Calif. has also sold shares to investors.

Desalination plants are expensive and create local opposition for several reasons.

First, they produce a waste of highly concentrated salt water that can destroy the surrounding ocean habitat. Second they require a lot of energy which if created by coal, creates air pollution.

The third concern, perhaps the biggest is concern for the organisms that are killed by the process of withdrawing seawater. Tiny fish larvae and plankton are killed in process.

Te nature of our existence is such that we cannot eliminate our foot print entirely. very solution to environmental problems seems to create others. Let’s hope that technology will help make desalination one of humanity’s solutions…not problems. Since desalination can produce fresh water where there is none, and water is one of the few items in daily life that has no substitute, I be looking to invest in companies that provide fresh water with minimal impact on the environment.

Once I find such a  company,  will have identified one of many filters we should use when we review value.  We look for shares of companies that have a product or service in a wave of the future…such as desalination.

Then there are still many questions to answer to determine if the share offers a good value or not.  The questions include:

#1: Are the shares traded in a good value market?
#2: Does the share trade at fair Price to Earnings and Price to Cash Flow ratios?
#3: Does the share pay a good value dividend?
#4: Do the shares have a good value relative to their previous price?
#5: Does the company have rising earnings?
#6: Has the share price been rising?
#7: Is the company’s management good.

My feeling is that desalination will grow especially, that which is provided by wind energy, which is often available at the ocean and in semiarid parts of the world.  Shares in companies that answer yes to the questions above  will be interesting places to invest.

Until next message, good global investing to you.

Gary

Learn more about economic safety this November. Join Merri, me, Steve, Kjetil Haugan or Thor Anderson of Vistazul and Peter Conradsen of Jyske Global Asset Management in Cotacachi Ecuador. We’ll review economic conditions, Ecuador real estate, my entire portfolio and investing and business ideas for the months ahead.

Nov 7-9 2008 International Investing and Business Made EZ Ecuador
https://www.garyascott.com/catalog/international-business-made-ez-ecuador

See the wonderful balconies in the Primavera condos at for sale at $46,000 in Cotacachi.

multi-currency-Ecuador-condo-interior

Nov 10-11 Imbabura Real Estate tour
https://www.garyascott.com/catalog/ecuador-real-estat

Then travel to the coast. Enjoy the Vistazul swimming pool on Ecuador’s Pacific.

Picture 9

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
https://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour

See discounts for two or more of these courses and tours

Economic Safety in Troubled Times


Learn about economic safety in Ecuador, the Blue Ridge and North Dakota.

These troubled economic times create wonderful, investment opportunity. The corrections in the stock market and depressed real estate prices combined with global inflationary pressures are developing a lush field of investing values.

Yet investors looking for economic safety need to exercise care in how they harvest this financial crop.

Troubled times create distortions. Distortions create problems. Problems create opportunity. Opportunity creates economic safety and financial profit, if you look carefully for value and make sure your liquidity remains safe during the search.

This is one reason why Merri and I love Ecuador. The people are peace loving. The people are independant. Ecuador’s population have a history of caring for themselves. They know how to farm. The food supply is abundant. Ecuador is oil rich. Ecuadorians do not have the expectation that the government should supply their every want, need and desire. There is less likely to be violent civil unrest in troubled times.

Here in the Blue Ridge there is also a history and connection to independence. Heating and food is plentiful. People know how to survive tough times.

One great pleasure in our International Investment and Business Courses are the people we meet and friends made. People always enjoy each other. Merri and I do as well. Some delegates have been coming to our courses for decades, so we were delighted at our course last weekend when one delegate and good friend from North Dakota who has attended many times over the past 20 years was with us.

He told me a some things about North Dakota that started me quickly searching.

First, the Bank of North Dakota, located in Bismarck, ND, is the only state-owned bank in the nation. The bank has over $160 million in capital and is in partnership with over 100 other North Dakota financial institutions. More important because the bank is owned by the state, it has a credit rating of AA.

The main deposit base of the bank is the state itself. Sate law requires all state funds and funds of state institutions to be deposited there. However deposits are accepted from any source, including private citizens.

The bank is not a member of the Federal Depository Insurance Corporation. The State of North Dakota guarantees all deposits regardless of amount (over $100,0000) in the bank. So this is quite a safe place to hold liquid funds.

Do not expect free irons, dinner plates or special incentives to open accounts. Though individuals can open accounts at the bank, this is not the main business so it offers fewer retail services than most commercial banks. The bank only has one office and does not try to compete in consumer banking.

So, how good is the guarantee of the State of North Dakota?

According to an October 7 2008 article at KXMCTV in Minot, North Dakota, the
state has a pile of money. North Dakota is one of the few states with a budget surplus, estimated at a billion dollars.

The state also has some good economic fundamentals. First it is rich in agriculture, beef cattle, milk, hogs and honey producers rank North Dakota among the leading producers.

Wheat is the leading farm product in North Dakota, ranking second in production only behind Kansas. North Dakota grows more durum wheat (used for pasta) than any other state.

North Dakota also leads all other states in the production of barley and sunflower seeds and is a leader in the production of flaxseed (linseed oil).

North Dakota is among the leading states in the production of canola seed, honey, navy beans, oats, pinto beans, rye, soybeans and sugar beets.

Hay is important, grown for livestock feed.

That bodes well for the state in inflationary times…but there is more…energy.

Just beneath its surface North Dakota has a 1,000-year supply of coal. The third largest gasification plant in the world is here. This is the only commercial-scale coal gasification plant in the United States. North Dakota power plants have 4.5 gigawatts of electric generating capacity and are some of the most efficient and reliable in the nation. Energy, real estate costs and taxes are some of the lowest in the country.

Then there is oil. North Dakota has a lot of it. Brigham Exploration Company alone says discoveries suggest 42 million to 71 million barrels of oil.

Brigham shares sell on Nasdaq under the code BEXP.

North Dakota could become one of America’s leaders in energy production. The state has near limitless supply of coal, incredible potential for wind, ethanol and biodiesel production, and increasingly productive oil fields.

Congress has extended several renewable energy tax credits for wind and biodiesel projects, small ethanol and biodiesel producers that will help North Dakota’s economy.

North Dakota is the sixth-largest energy producing and exporting state and has more potential for renewable energy growth.

According to North Dakota’s Department of Energy’s Wind Energy Program, “North Dakota has the potential to supply 36% of the electricity of the lower 48 states through its wind supply alone.” Wind development in North Dakota is taking off, over the past year throughout the state.

North Dakota’s Senator Kent Conrad recently met with T. Boone Pickens as he has developed a New Energy Reform Act, which includes some of Picken’s ideas. The Pickens plan aims to reduce dependence on oil by increasing the amount of clean energy like wind power and solar power.

An ABC news article entitled, “The Backyard Economy: North Dakota
A Look at the Peace Garden State’s Economic Issues” by Christine Byun says:

“Surging commodity prices and a weaker dollar have enhanced North Dakota’s economic strength, leading to stronger growth and continued investment throughout the state.

‘The chances of a state recession are incredibly low,’ said David Flynn, an economist at the University of North Dakota. ‘The most likely scenario would be for North Dakota to continue to grow.’ State Fiscal Management Director Sheila Peterson said state revenues are 13 percent ahead of forecasts, which she partially attributes to ‘solid growth’ in the tourism, energy and agriculture sectors. The state’s bountiful crops play a big part of its exports; agricultural products pulled about $170 million into North Dakota in 2006. Last year, the state’s fertile farmlands produced the most wheat and barley in the nation, according to the United States Department of Agriculture.

North Dakota is not solely dependent on agriculture. It also exports machinery and crude oil products. The energy industry — both oil and alternative sources — is expanding, according to state labor market analyst Kevin Iverson. The natural resources and mining sector added 4,000 jobs to their payrolls since last March.

“Oil is an absolutely booming industry in the state,” Iverson said, noting that the western portion of the state has benefited as companies direct their attention to the Bakken rock formation as a potential oil reservoir.

“The dollar’s declining value to foreign currencies has is also spurring economic activity in North Dakota. While the state sells almost half its exports to Canada, savvy shoppers from north of the border are crossing in to Grand Forks and Minot to take advantage of what are essentially reduced prices for them and in the process, driving up retail trade.

“A potential weak spot for North Dakota is the state’s lower than average unemployment rate. Economists worry with fewer people looking for work, companies interested in doing business in North Dakota could potentially bypass the state because of the tight labor market and lack of available workers.”

Bank of North Dakota’s website is www.banknd.com

There you have it…places that may be safer than most…places that may offer more opportunity and economic safety in troubled times.

Gary

Learn more about economic safety this November.  Join Merri, me, Steve, Kjetil Haugan and Peter Conradsen of Jyske Global Asset Management in Cotacachi Ecuador. We’ll review economic conditions, Ecuador real estate, my entire portfolio and investing and business ideas for the months ahead.

Nov 7-9 2008 International Investing and Business Made EZ Ecuador
https://www.garyascott.com/catalog/international-business-made-ez-ecuador

See the wonderful balconies in the Primavera condos at for sale at $46,000 in Cotacachi.

multi-currency-Ecuador-condo-interior

Nov 10-11 Imbabura Real Estate tour
https://www.garyascott.com/catalog/ecuador-real-estat

Then travel to the coast. Enjoy the Vistazul swimming pool on Ecuador’s Pacific.

Picture 9

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
https://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour

See discounts for two or more of these courses and tours

Multi Currency Financial Crisis


The multi currency multi market financial crisis has hit the equity markets everywhere. To my surprise emerging markets have turned out to be very resistant to this crisis compared with other asset classes.

Look at the multi currency major markets year to date as of last week. The German DAX stock market index is down by 27% year to date! The Japanese Nikei 225 is down from 16,500 to 11,500. The Dow in the US has dropped from 13,000 to below 11,000.

Yet the diversified multi currency emerging market index was up +3.67% year to date.

This is an error I made in my personal portfolio. When I reduced my equities last year, I sold my good value emerging markets fund and kept my major markets good value equity fund.

I knew that emerging markets outperform major markets. I knew that emerging markets recover faster than major markets. Yet my belief was that emerging markets would drop faster than major markets in turbulent times. This belief was wrong as the indices above and fund performance below shows.

The stronger emerging markets can be seen via mutual fund performance as well. Look at the return for year to date, three and five years for Jyske Invest’s global and emerging market equity funds.

Multi Currency Fund
Performance 1 year 3 years 5 years
Jyske Invest Global Equities -15.92% 23.67% 67.73%
Jyske Invest Emging Mkt Eqt. -12.57% 70.75% 181.31%

The shift continues from the old world to the new. The United States is in the doldrums and is not the only industrialized country feeling strain. Remember this is the era when small and new is good!

Here is the multi currency investing point. As the current economic cleansing evolves, the rebound may be better in emerging equity markets countries than in major equity markets.

You can learn better ways to invest in emerging equity markets in our multi currency portfolios course. You can subscribe to our multi currency portfolios course.

Tomorrow’s message looks at how to cash in on this multi currency business opportunity.

Until then, good global investing.

Gary

Merri and I love our lives in North Carolina’s mountains but after autumn’s gold, the weather looks like this! Here I am with Ma feeding the birds in front of our house.

multi-currency-cold

We won’t make that mistake again! Instead we move to Ecuador’s Pacific coast and Cotacachi, enjoying weather and views like this one shot of Ma an me looking at birds on a sunshine filled hike instead.

multi-currency-Ecuador-condos-hike

Tomorrow’s message looks at more Ecuador pictures and the benefits of a multi currency business.

Until then, good multi currency investing.

Gary

Our Oct 14-18 Ecuador Import Export Course has two spaces left.
https://www.garyascott.com/catalog/ecuador-import-and-export-tour

Learn this November more about Ecuador and emerging bonds. Join Merri, me, Steve, Kjetil Haugan and Peter Conradsen of Jyske Global Asset Management in Cotacachi Ecuador. We’ll review economic conditions, Ecuador real estate, my entire portfolio and investing and business ideas for the months ahead.

Nov 7-9 2008 International Investing and Business Made EZ Ecuador
https://www.garyascott.com/catalog/international-business-made-ez-ecuador

See the wonderful balconies in the Primavera condos at for sale at $46,000 in Cotacachi.

multi-currency-Ecuador-condo-interior

Nov 10-11 Imbabura Real Estate tour
https://www.garyascott.com/catalog/ecuador-real-estat

Then travel to the coast.  Enjoy  the Vistazul swimming pool on Ecuador’s Pacific.

Picture 9

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
https://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour

See discounts for two or more of these courses and tours