An International Investing Risk

by | Feb 11, 2011 | Archives

One international investing risk is inflation.


Lakeside Inn

Because problems create opportunity… this creates an international investment opportunity.

Our International Investing and Business Seminar started at the Lakeside Inn in Mt. Dora Florida and we are looking at seven international investing risks and how to position our savings and investments to gain from and protect against the changes these seven events will bring.


Our meeting is in the Donnelly room above the…


La Cremerie cafe so during delegates can… sit on…


porch or inside to view the…


interesting and somewhat amusing art.


One of our seminars in the Donnelly room.

This seminar is sold out and with a good reason… inflation.

One of the risks we are reviewing is inflation and how it is heating up.

Excerpts from a February 4th USA Today article “Prices starting to creep higher” by Paul Davidson” tells the tale: The near-zero inflation era may be ending. Prices are rising slightly, and economists expect a steady climb as the recovery gains steam.

In recent earnings reports, some retailers and manufacturers have said they’re boosting prices this year on clothing, groceries and other items after holding firm in 2010.

The uptick is largely driven by surging food, energy, cotton and other global commodity prices as economic growth heats up significantly in China and emerging markets.

U.S. firms largely absorbed higher costs last year in the belief that price increases would drive away penny-pinching consumers in a weak recovery. But they can withstand shrunken profit margins only so long.

“You run out of margin and eventually close”, says investment strategist Bruce McCain of Key Private Bank.

The consumer price index in December rose 1.5% from a year ago, the most since May. Yet, wholesale prices for finished goods jumped 4%, indicating firms were squeezed.

Paul Ashworth of Capital Economics expects 2% inflation this year, still well below pre-recession rates of 3% to 4%. But higher food and gasoline prices could trim consumer spending by two-tenths of a percentage point, he says. Among those raising prices:

•VF Corp., maker of Wrangler and Lee jeans, plans to raise prices as denim costs have been pushed up by soaring cotton prices.

•Grocer Supervalu is raising prices from 3% for items such as cereal to as much as 14% for cooking oil.

•UPS, citing a 26% jump in 2010 fuel costs, plans to raise its fuel surcharge Monday to 6% from 5.5% for ground packages and to 10% from 9% for air service.

•Tire costs for retailer Hogan Tire in Northern Virginia jumped 18% each of the past three years due partly to rising rubber costs.

Many construction firms could close because they can’t pass on higher copper, steel and fuel costs in a dismal market, says trade group Associated General Contractors of America.

Rising prices will push up short term interest rates and bond yields.

One of the slides from our seminars outlines this risk.

international-investment-slides tahs:

A solution… invest in emerging equities.  More slides from the seminar show why.

international-investment-slides tahs:

international-investment-slides tahs:

international-investment-slides tahs:

At this international investing seminar we’ll be seeing how events in the Middle East… and in Europe as the euro breaks up or survives… plus a super heated Dow will lead to Risk Off investing that creates exceptional emerging market opportunity.

Another solution we’ll review are shares in the company Silver Wheaton… traded in New York and Toronto.


Silver Wheaton is an alternative to holding silver.  Here is the share price chart since 2006.

The companies fact sheet says:

Established in 2004, Silver Wheaton has quickly positioned itself as the largest metals streaming company in the world. The company currently has 15 silver purchase agreements and two precious metals agreements where, in exchange for an upfront payment, it has the right to purchase all or a portion of the silver production, at a low fixed cost, from high-quality mines located in politically stable regions.

Forecast 2010 production, based upon the company’s current agreements, is 22.2 million ounces of silver and 20,000 ounces of gold, for total production of 23.5 million silver equivalent ounces. By 2013, annual production is anticipated to increase significantly to approximately 40 million silver equivalent ounces. No ongoing capital expenditures are required to generate this growth and Silver Wheaton does not hedge its silver production.

Silver Wheaton’s industry-leading growth profile is driven by a portfolio of world- class assets, including silver streams on Goldcorp’s Peñasquito mine in Mexico and Barrick’s Pascua-Lama project straddling the border of Chile and Argentina. The company’s unique business model creates significant shareholder value by providing considerable leverage to increases in the silver price while reducing the downside risks faced by traditional mining companies. Silver Wheaton has an experienced management team with a strong track record of success and is well positioned for further growth.

You can order the entire seminar in audio digital form delivered online… see all seven risks and international investing solutions here.