* Natural Health Tip: Be A-maized?
* Ecuador Real Estate: A Unique Comparison
Recent messages have looked at how currency turmoil can enhance your wealth. We saw that the Canadian dollar, Danish and Swedish kroner may be good major currencies to hold at this time.
How about emerging currencies? Should we invest in them as well? The answer for many of us is assuredly yes. But which?
Emerging market currencies offer much greater opportunity than so called major currencies, but they also contain increased volatility and risk.
Jyske Bank’s recent currency analysis shows us why when it says: “American inflation data puts renewed pressure on the emerging markets. Consumer prices grew by 3.5% and these numbers sent US and European yields up. The yield on 10-year American T-bonds is currently at 5.15%, compared with 5.10% before the release of inflation data. The yield on 10-year German bonds is now at 4.07%, compared with 4.00% before the release.”
The statement shows that a rise in major market yields puts stress on emerging currencies. Why?
The answer is most major currencies are perceived as being safer than emerging currencies.
This is the opportunity. Perception does not always make sense.
For example, in our major currency analysis we saw that the US is deeply in debt, has a slow, growing economy and a huge current account imbalance, plus numerous other factors (war, aging population, higher social costs, hurricanes, etc.) that suggests that the greenback will continue to drop. The economic backdrop of the last thirty years has been of a declining US buck! However the majority of the world still thinks of the US dollar as the reserve currency, with many other debt ridden (especially the Japanese yen and euro) as the other stable currencies.
Yet there are numerous emerging countries with fast growing economies, no debt and big surpluses. Logic dictates that these are the currencies that are stable. However, markets are rarely moved in the short term by logic.
Thus financial markets think that emerging currencies contain greater risk and must pay a risk premium in the form of higher interest rates than major currencies. So short term interest rates on the Russian Ruble are 12%, Indonesia Rupiah 13%, Turkish Lira 14% and Brazilian Cruzero 15%.
Sometimes this risk premium is not enough.
According to Jyske Bank, emerging-market currencies have been under pressure since the end of February 2006 even though they pay much higher interest.
We can gain opportunity by knowing this. Times of turmoil and weakness are when the markets are most likely to discount emerging currencies. Often these currencies have a history of weakness, and pay high interest rates, also now also have strong fundamentals. Smart investors look for currencies with high interest and strong fundamentals.
Take Turkey and its currency the Turkish lira (TRY) as an example. Turkey has a booming economy, sits in a strategic part of the world and stands to gain enormously by entering the European Union in a decade or so. This entry into the European Union will force Turkey to increase its fiscal discipline which could create a stronger currency. Yet recently the TRY has depreciated by 6% versus the euro.
This could mean that the TRY offers a good deal (I think so and just put 5% of my portfolio into TRY bonds that pay me over 10%).
The current nervousness in the emerging markets may create opportunity. Therefore, it is worth keeping an eye on economic indicators and announcements that may change interest rates in the US, the euro zone, Japan and Switzerland. Furthermore, country-specific circumstances may cause further movements in the emerging markets (see Turkey below).
Emerging equity markets have offered better returns for the past five years running. The opening of emerging nations (not the building of the US and Europe) are now the driving force of the global economy. Based on this I believe that emerging currencies will recover and rise.
This does not mean to jump in right now. I have made a limited move in the direction of emerging currencies, but I have no liquidity restraints. I have no time line for profit and I have 30 years of experience in feeling comfortable with emerging currencies.
I am often ahead of the pack which means sometimes I gain a little extra profit. This also means that there are times when my losses are greater so I also sweat a bit more. For example, the drop of the Lira means that my portfolio will take at least a temporary hit. If I were not prepared emotionally, financially and liquidity wise, this could hurt.
Jyske Bank still maintains a HOLD recommendation for bonds denominated in emerging currencies, and feels that volatility is still high. This hold may continue well into June when the bank reviews the outcome of the US job reports for May (2 June), the next inflation data from Turkey (2 June) and the result and comments from the next ECB meeting (8 June). Jyske is extremely experienced in this field. Jyske Invest Fund Managers were recently awarded best performing European Equity Fund manager by Global Investor magazine. In rankings calculated by Morningstar (based on realized return versus risk over three year period) the 33 Jyske Invest funds were awarded 3.7 stars of 4. You can get more information on Jyske’s view of emerging markets from Thomas Fischer at firstname.lastname@example.org
So from now to June we’ll be looking at some emerging currencies to see if we can find any that offer high interest and opportunity for appreciation.
Enhance your profit potential with a diversified portfolio of emerging currencies through a MultiCurrency Sandwich. LEARN HOW
Learn about investing in emerging currencies, gold, silver, Ecuador, import-export, overseas markets and more. Join Merri and me at our next International Business and Investing Made EZ course in North Carolina. Review where to invest and do business now and learn which markets and currencies may be strong in the year ahead. Our May course was overbooked and the September session is already filling up fast. Our free accommodations are reserved on a first come first served basis so do not delay! DETAILS
Natural Health Tip: Be A-maized?
The greatest asset of all is a clear mind, sound body, pure consciousness and good health. This comes in part from correct nutrition and to this end we have studied eating philosophies in many parts of the world from Europe to China to Tibet to India and throughout the Americas. However, we have missed Africa so my interest was really peaked when this message from a reader popped up a few days ago.
“Gary You are so good. I totally agree with your views on Chernobyl, Press, Diamonds and coins! I agree with you food front also.
I was a consultant for a company making ergogenic aids in 1991. They had a problem with their energy drink which I solved – learning, in the process, a huge amount about long chain glucose polymers and their effect on the body. Organically grown WHITE corn (or maize as we Brits call it) is something you should be into. Many African runners would kill for a bag of the stuff. I was presenting prizes on behalf of the company at a major cross country running meet in the UK when the African who won it was given, by another African, about 5 lbs of the stuff. He was SO grateful and confirmed what I had already found out. The balance of long, medium and short chain polymers (which give you long lasting energy (trust me) in this vegetable is the best for most people’s bodies that can be obtained from food. We had a staff member have a bad car accident (semi facial rebuild and so forth) and the hospital was amazed at her recovery rate. They had never seen anything like it – and that was with our yellow dent product. The white maize is MUCH better. best regards, Roger.”
Are we onto something that can improve our health here? Usually the legends and traditions of the old ones will lead to a health pot of gold if followed.
I have been researching “white corn,” “white maize,” and “short, medium and long polymer chain balance” with nothing of great interest yet. Can any of you help me? Have you heard of any health or energy benefits from white maize? Please let us know as we would love to share.
One area of health that I do know is well documented is Ayurved, the Indian science of life that dates back 5,000 years. This is why we are very pleased to sponsor a course offered by a healer from a family with healing histories that date back millenniums. See details
Ecuador Real Estate: A Unique Comparison
In 1999, Merri and I moved to Ashe County and bought 252 acres of land far from town. We paid less than $1,000 per acre. At that time, the farm first of all offered what we wanted from life, but also appeared to me to be good value. Merri and I have made millions by again and again buying real estate we liked that seemed to be good value. DETAILS
Either we have a feel for the pulse of the marketed or are just darned lucky, but look at what our friend and real estate broker, Trey Morison, says in his latest report.
“I’m only a few weeks away from having a new addition to the family and so I’m trying to get everything in order the chaos that I’m sure will ensue. I was just emailing a gentleman earlier about property values in the area and here is what I wrote…
“I do feel that things are just starting to accelerate here as far as appreciation in concerned. People are taking their profits from Florida and investing them here. There is a new super Wal-Mart in West Jefferson and a Lowe’s hardware is going in next door. These companies have certainly done their homework and would not be investing if they did not believe in the growth potential here. As to vacancy rates, here in Boone I have several college rentals and I have never had any vacancy, but I do manage them myself which I’m sure helps. The appreciation of property is difficult to gauge. It was pretty easy to find land at $2000-4000 per acre when I moved here 9 years ago. Now it is tough to find good land for under $14,000. That’s a pretty good increase and I anticipate similar returns over the next 10 years. There are already places going for over $100,000 per acre. Home sales have increased too but not at that rate. The biggest jump in prices is and probably will be the second home market, so while the rental cabins will be harder to cash flow they will likely appreciate more.”
“After writing that I did a search for new listings and found two new ones that seemed pretty interesting.
“The first one is 12.3 acres for $1,200,000 or $100,000 per acre…
“The second one is 45 acres for only $318,250 or a little over $7000 per acre…
“They do not look too dissimilar to me! But the prices sure are different. One property is near West Jefferson and the other one is in the country near Merrily Farms, but many of the people that are coming up here to buy are often looking for places that are not close to town. They want to be in the country.
“Okay I gotta go and prepare for the new family member for a while! Trey”
There you have it, wonderful land with vast differences in price. This spells opportunity. There are a couple of hundred acres for sale adjacent to our farm as well (the owner is asking in the $5,000 an acre range). If you want to look at property in this area, you can reach Trey at email@example.com
We have cabins for rent where you can stay if you want to come view real estate in the area. Included in the rental is our office with broadband and free Vonage calls. Send enquiries to firstname.lastname@example.org
But the other opportunity comparison I want to make is with real estate in Ecuador! We began buying land there at the turn of the millennium as well.
Land is so much less there, the lifestyle wonderful and cost of living so low. If Merri’s and my feel is correct, land prices are going to explode there.
It is my belief that as the standard of living in the US drops, more and more people will move to emerging countries. Ecuador is one of the least known and as such offers great opportunity.
Spanish is the world’s second most important language. Join Merri and me for a week of Quantum Learning in Ecuador. Look at real estate for sale while you are with us at El Meson, Cotacachi, Ecuador. FOR DETAILS
For example here I am riding with our friend Joe Cox on a 225 acre farm, 10 minutes ride from our hotel, El Meson, where the owners are asking less than $1,000 an acre.
Until next message, good international investments to you!