Questions: Uruguay and our silver call

May 6, 2011
Punta del Este, Uruguay

My time in Uruguay has been all too short, mostly because I was ill for the majority of the trip. If Ben Bernanke were a physician, he surely would have described my bug as ‘transitory,’ though it proved to be anything but…

This evening, I’m heading out once again to Chile where I’ll be investigating some -very- promising leads on agricultural property. Before I depart, however, I wanted to provide a bit of insight into Uruguay.

As I mentioned in yesterday’s letter, I did live here in Uruguay briefly a couple of years ago. I liked the country then, and I like it even more now. It’s a lovely place– scenic, clean, and very peaceful.

The lifestyle is easy and low stress, and with such close proximity to more exciting places like Brazil and Buenos Aires, the slow way of life is an easy compromise for many people.

Punta del Este is a beautiful town, and I’ve long believed that it will probably turn into one of the world’s best expat havens over the next few years. Why? It’s quaint, temperate, upscale, safe, and very international…

There’s already a really great group of pioneering expats here now; I attended a party last night with about 60 of them, many I’ve known for several years.

They come from all nations and walks of life but share a common desire to live in a place where they can feel free and be left alone by the big bureaucracy. Punta definitely fits the bill.

Cost of living is on the rise, but there’s still quite a few bargains. Property here is reasonable– you can buy a small farm of 25-acres with a modest home (or two) in the countryside outside of town for around $325,000. Roughly the same amount gets you a nice single family home in town.

Rents are also inexpensive, for at least for 9 1/2 months out of the year. March through mid-December is the off-season, and you can rent a beautiful place for $800 to $1200 per month, fully furnished. In the high season (especially January), rents can be $25,000 per month. No, that is not a type-o.

Punta del Este swells from Christmas through mid-February (southern hemisphere summertime) with international jet-setters, global fashion icons, and South America’s elite. Think Monaco in August– supermodels, billionaires, mega-yachts, the whole nine yards.

For the rest of the year, Punta is a veritable ghost town. Many of the restaurants close until next year’s tourist season, though you can still find the basics. In time, as more people discover Punta, I suspect the year-round services and amenities will grow dramatically.

Moving on, I wanted to clarify something today. I just received a very nice note from the privacy master himself, Mr. JJ Luna, who wrote, “Simon- I just wanted to send a thank-you note for the letter calling the recent top in silver. I sold when I read your article at $49.35, since then silver dropped $15!”

Thanks for the kudos. But listen, I should be clear about something: our partner Tim Staermose perfectly timed silver’s most recent top last week, and readers who followed his advice were handsomely rewarded.

Tim’s keen talent and investment instincts have made a lot of people a lot of money over the years, and for this reason we asked him to write the 4th Pillar investment alert service.

Despite Tim’s sensing short-term opportunities in selling silver, however, we all remain bullish on precious metals over the long-term. In a world dominated by unrestrained monetary expansion, precious metals are some of the best hedges against inflation, likely front-running nominal price growth.

Other commodities like oil and corn are politically sensitive. There’s no way oil can get to $200 without a Congressional inquiry and a host of new regulations to fix prices and thwart speculators in both Europe and the US. Silver, on the other hand, can hit $200 tomorrow without causing much of a stir.

Always remember, though, that nothing goes up or down in a straight line. Tim called a short-term speculative opportunity to make some money. Long term, though, we believe that everyone ought to consider holding a portion of his/her savings in gold and silver.

Ultimately, nothing beats physical bars and coins, either stored at home or outsourced to a reputable nonbank private facility. We’ve discussed a number of these places overseas– Austria, Switzerland, Singapore, Hong Kong… there’s even one here in Punta del Este called “Fort Box”.

Beware of holding paper ETFs for long periods; it’s difficult to determine if these funds even have the metal they claim to own, and market fluctuations can make them poor proxies of metal prices.

To give you an example, the PSLV silver ETF was recently trading at a 16% premium to its net asset value… surely a sign of a heated market.

On the flip side, Chris Weber just announced to his subscribers that the Central Fund of Canada (NYSE: CEF) closed last night at an 8.5% discount to its net tangible asset value… so sometimes these inefficiencies can work out in our favor in the short-term.

About the author

Simon Black

About the author

James Hickman (aka Simon Black) is an international investor, entrepreneur, and founder of Sovereign Man. His free daily e-letter Notes from the Field is about using the experiences from his life and travels to help you achieve more freedom, make more money, keep more of it, and protect it all from bankrupt governments.

Get our latest strategies delivered
straight to your inbox for free.

Discover our most read content below...

Share via
Copy link