More Financial Advice for Expats and Potential Expats

article from November 28, 2010

By Jamie Douglas

Some you may have read the original piece I wrote on Nov 22, dealing with renting vs. buying when relocating to a Latin American country. Well, it started a lively discussion between those who sell real estate in various parts of Latin America and others who are considering making the leap to foreign shores. I did mention that in spite of the United States printing money day and night, it was still safer to hold on to the US$ than pretty much anything else. The reason is because everything in this global economy is interconnected, and if the US$ finally tanks, so will all other currencies.

The only safe heaven will be in “useful” commodities, of which silver seems to be way ahead of the curve. I researched one of the world’s largest currency traders, XE.com and spent hours recovering data, using the arbitrary date of February 4, 2008, when things were still smoking hot, as a baseline. I then compared this to the data from Friday, November 26, 2010.

The countries are listed alphabetically, and the three most important commodities follow at the bottom. I also included a few European currencies such as Iceland to show what lies in store for those who still believe that Milton Friedman was a genius. The influence of the Chicago School of Economics has been devastating on the world’s economies, and it was their alumni who destroyed Iceland’s economy with greed and capitalism without a conscience, as preached by Ayn Rand and her fanatical followers.

Country                US$ Loss or Gain against local currency

Argentina              + 24.74%

Bolivia                   - 8.83%

Brazil                     - 1.20%

Chile                     + 3.70%

Colombia               - 2.50%

Costa Rica             + 1.19%

El Salvador            Fixed at 8.75

Euro                      + 11.2%

Guatemala             + 3.63%

Honduras               - 1.9%

Iceland                   + 78.74%

Jamaica                  + 18.57%

Mexico                    + 15.47%

Nicaragua               + 13.9%

Norway*                 + 13.1%

Paraguay                - .698%

Peru                       - 4.9%

Switzerland*           - 8.07%

Uruguay                 - 6.12%

Platinum                + 6.983%

Gold                      +50.62%

Silver                     +58.64%

*I Included Switzerland and Norway because I received an irate letter from a reader suggesting that the only two currencies worth holding are the Swiss Franc (Yes) and the Norwegian Kroner (No). Norway’s oil boom is about coming to an end, and social spending there is bankrupting the country.

Panama and Ecuador use the US$, and Venezuela is in such disorder that I am not going to get into it.

So you see, the US$ is holding its own, with small fluctuations, against most Latin American currencies. The gain against the Argentine peso is mostly due to inflation in that country.

Now a small piece of advice for those of you who own your own home or property in the US and Canada that is way under water, to where you will never recover your investment, and every payment you make is money that could be used on your potential move south. Consider that when you move away from the United States, your credit worthiness is meaningless. These are cash societies that function very well without 30-year mortgages and eight-year car loans for a Hummer. Hold a fire sale, sell everything you own, head to the destination of your choice, and start life anew. There are good schools in most countries, ATMs are spreading, high-speed Internet access is everywhere (You should see where I am writing this from!), and if you do your legwork, you can find excellent medical care that is affordable, even without insurance. Remember, you only live once, so stop suffering and start living your life.

Looking for further advice? Contact me. Been there, done that – all over the world.

Jamie Douglas

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.