Questions: Where’s gold going? Chile or Colombia?


November 12, 2010
Bangkok, Thailand

I’ve been back and forth along the route from Pattaya to Bangkok more times that I can remember.  It takes about 90 minutes along one of Thailand’s best toll roads and costs less than $30 to hire a driver for the one-way journey, shockingly cheap by western standards.

This afternoon, my driver had to stop during our trip to gas up; something that a lot of foreigners don’t realize is that, in Asia, ‘gas’ often literally means gas.

Many Thai passenger cars, for example, burn a natural gas compound instead of diesel or unleaded petrol; with gas, they get a lot more mileage for their money, and it has helped reduce the air pollution here.

These types of vehicles are common in Asia, and many countries across the continent have successfully adopted alternative fuels. Western countries talk a big game, but from what I see on the ground, it’s the developing world that has taken the lead in alternative fuels.

In the US, for example, the best that General Motors could come up with was the Chevy Volt, an electric car that gets an embarrasingly low 40 miles on an 8-hour charge.

My guess is that when the Indians and Chinese roll out electric vehicles that are 10x more efficient at half the cost, the US government will find every excuse in the world to ban their import, even when oil passes $100 again.

On that note, I’d like to start this week’s questions with something my friends L&D asked me in a recent phone call– “Where do you see commodities going from here, especially gold and silver?”

Gold is up 13% in 60-days, and silver up 35% in the same period. This has been surprising for me as this declining gold/silver ratio is generally considered to be bullish sentiment.

I have been expecting the market to turn bearish (a rising gold/silver ratio) on US/European debt woes in the short-run… and it’s true that nothing goes straight up or down in a straight line, so there may be a correction coming.

As long as central bankers continue to debase their currencies as we are seeing, though, the long-term outlook for gold and silver is still positive… and not isolated.

The metals’ recent runs have been matched by similar gains in other commodities such as oil (16.6%) and copper (14.2%).  The trend is the same overseas– commodities as diverse as rubber in Thailand (27.5%) and coconuts in Sri Lanka (30%+) have been surging as well.

Overall, I think the best long-term commodities play is agriculture. Soil erosion and water shortages are reducing farmland, while rising global population and Asian wealth are shifting dietary habits towards resource intensive foods. Coupled with Bernanke’s printing press, it’s hard to go wrong with agriculture in the long run.

Next, Jason asks, “Simon, I’m really excited to attend your offshore workshop in Panama. When can you release more information so that I can make travel arrangements?”

Thanks, I’m really excited about the event. Our inaugural offshore workshop isn’t going to be a traditional conference with bunch of haughty, long-winded speakers– rather, our theme is action, and I’m inviting my personal contacts who can provide solutions right there at the event, tailored to your situation.

In fact, my goal is that you can leave the workshop with a customized plan for your specific needs, that you understand every aspect of your plan, and that you’re well on your way to ticking the boxes: banking, citizenship, foreign structures, business and income opportunities, tax and estate planning, etc.

The event will take place from 18-20 February, 2011 in Panama City, Panama. We’re holding a teleconference next Tuesday, November 16th at 11am eastern time to provide more details, including where/how you can sign up. If you’re interested in attending, try to make this call:

Title: SovereignMan Panama Workshop Overview
Time: Tuesday, November 16th at 11:00am Eastern
Phone number: (630) 300-6276
Conference ID: 167274#
– or – webcast

Next, an anonymous reader asks, “Simon- I happen to be finishing a stint in South Korea teaching English, and I feel the call of the road. Do you have any opinion on where would be a good market for me to go next? I’m leaning towards Santiago, Chile or maybe Colombia since I like salsa.”

Both Chile and Colombia are brimming with opportunity. Chile is poised to be among the world’s richest nations as it is sitting on vast copper reserves in a highly inflationary environment.

Having already successfully transitioned from emerging market to developed economy, Chile is a clean, modern, flourishing country with a thriving middle class. However, there are still quite a few gaps in the marketplace where strong demand exists, but supply is lacking or limited.

We discussed many of these Chile opportunities in the September edition of Sovereign Confidential, and I’ll expand further once I return to the country in early January.

Colombia is a completely different story; having battled its security problems for so long, the country still suffers from a brutal stigma.

As such, Colombia is still a pioneer’s market– few investors have taken the leap, but my sense is that over the next 5-10 years, it will truly be ‘discovered’ once the mainstream media forgets about all the FARC business.

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.

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