Yesterday, oil rose over $86. Gold shot up too – to $756. Gold has risen more than 19% so far this year.
The commodity index also hit a new record high – over 450.
“This place is going to boom, I can feel it,” said old friend Doug Casey over dinner last night.
“This place” is Argentina. We were having dinner at the Puerto Madero – a section of town where the old docks and depots along the waterfront have been renovated into sleek restaurants and loft apartments. We looked out across the water and saw the neon lights of various corporate headquarters…and the glass and steel office buildings that house them.
“It’s going to boom because it has no debt…and it is a major producer of food. And not only that, it’s already made almost every mistake you can make. It’s had socialism, hyper-inflation, price controls, debt, coups d’etat, military governments – you name it.”
“Yes, but there’s no reason why it couldn’t make the same mistakes again,” suggested another person in our group.
“Yes, and it will…but it’s ready for a little catch-up first. These things always go in cycles. This place is ready for an up-swing; I can feel it.”
Things always go in cycles. Short cycles. Long cycles. Bicycles. Motorcycles. Wash, dry and spin cycles.
But what you never quite know is where you are in the cycle.
We have bought a little property in Argentina because it is cheap – and we like the place. Even if Doug is wrong about the cycle, we won’t be unhappy. We bought value. We’re tempted to buy more. Argentina’s economy is growing nearly three times as fast as the United States. It is coming off a major depression, when GDP growth went negative for a year and a half…when the local currency lost two-thirds of its value…and in which the economy actually shrank as much as 16% in a single quarter.
Now, credit is rare in Argentina. Finally, with the accumulated mistakes of many years washed away, people can build on a new, more solid foundation. In fact, it may be finally coming back after a more than 50 years of backsliding.
Yes, dear reader, you should really see it for yourself. It is a truly beautiful place – and with Argentina sitting right on the edge of a boom, it is primed for you to jump on it…before it jumps without you.
Markets and Money