Tuesday, January 21, 2014

Expat Financial Advice: In the U$ Dollar We Trust (reposted from original location)

article from December 30, 2013
By Jamie Douglas

As 2013 draws to a close, many of us are wondering what may lie ahead for us in the coming year.

Where to place your trust

A little over three years ago, I wrote two articles – Basic Financial Advice for New Expats and a follow-up – urging my readers to not believe in all the false prophets of doom and gloom in regard to the US dollar. This is a follow-up on both of those articles, which focus on Latin America.

As we have all witnessed the boom and bust of the “nouveau riche” BRIC nations over that period, one nation that, until recently, seemed isolated from the world’s economic troubles has been Australia. But the Aussie dollar has lost over 15% in value over the past year, as China has been affected by the global slump and its demand for the mineral wealth in Australia has waned.

In its place, the Chinese have taken their hoard of 1.4 trillion US dollars to buy into the mines and mineral rights of other mineral-rich nations around the world, even landing in tiny Uruguay to exploit that nation’s meager iron ore deposits.

While global currencies have an uncertain future, with more problems forecast for the Euro Zone for 2014, the almighty US dollar has held its course, with the help of steady support from Ben Bernanke, and has gained substantially against virtually all Latin American nations’ currencies, with the exception of those currencies that are either fixed to the dollar or those nations that are using the dollar as their own currency.

A December 27, 2013, Bloomberg News analysis of Latin American currencies should be sufficient to convince all travelers and expats in the region to keep their money in US dollars or Swiss francs to protect their nest eggs. And as Jeffrey Grossman, president of BRG Brokerage, explains, “compared to all the other currencies, as we always say, even when it’s at its weakest, [the US dollar is] still the best horse at the glue factory. In 2013, the Dow Jones Index gained 25% and the Standard and Poor´s Index gained 28%.

Where not to place your trust

Never automatically trust fellow expatriates who want to help you invest your money in crash-proof funds or metals. In many cases, their job is to fleece you with fancy schemes to buy fractional ownership in vineyards in Argentina, teak farms in Central America or, worst of all, to get suckered into one of those pricey seminars to sell you real estate, urging you to invest in Colombia as if there was not a civil war raging there for the last 50+ years. The vultures at Escape Artist (Disclaimer: I was indirectly involved as a writer with these people several years ago, but distanced myself after I realized whom I was dealing with) and similar publications will gladly fleece you of your life savings ...but wait – I have a bridge for sale somewhere!

Enjoy the day, commit an act of selfless kindness and have a great new year!

Jamie Douglas
Still at large in South America

I encourage you to write me at cruzansailor [at] gmail [dot] com with any questions or suggestions you may have. Disclaimer: I am not in any travel-related business. My advice is based on my own experiences and is free of charge (Donations welcome). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.