Last week was a very interesting one here in Ajijic, Mexico, land of tacos, tortillas and tequila. We had representatives of a private European bank here visiting current clients, making a presentation of their organization and recruiting new clients/investors for their bank.
Our village is always on their list of locations to visit because of the large numbers of Americans and Canadians living in this community. Most investors are advised of the need to get some monies outside the U.S. and Canada so this was a great opportunity to see what this European bank had to say.
The bank would give us U.S. and Canadian investors an 'offshore' bank thus transferring some funds outside the control of the U.S. and Canadian authorities. Investors are offered many advantages with this organization as we could do the following:
- Have our 'dollars' denominated in over 15 different currencies
- Make use of the Japanese Yen carry trade
- Invest in many of the popular mutual funds
- Buy stocks, futures and options on futures
This flexibility sounded great and the only downside was that all of our orders would have to be placed with a telephone call and not online. This could delay our trades for some of us and also here in the Central Time Zone we have a 7 hour difference meaning we may be placing orders at 1 or 2 in the morning.
Obviously, I have strayed from the title of this article but I wanted you to understand one of the reasons for me attending this investment presentation. The other reason for attending was to get their views on the U.S. Dollar, gold, mining stocks, uranium and uranium stocks from their European perspective. Not only did I attend their 2 hour presentation but I had the opportunity to spend a wonderful 3 hour Saturday afternoon with these representatives with great conversation and asking many questions on the following subjects:
• U.S. Dollar | -- | Basing their views of the U.S. dollar using technical analysis, they see the U.S. dollar climbing HIGHER in the coming days, weeks and perhaps months even though they agree from a fundamental view, the dollar should decline long term. |
• Gold & Silver | -- | Gold and silver will continue up even with the rising U.S. dollar. |
• World Liquidity | -- | The massive liquidity in the world's financial system will continue, probably driving the indices higher in most countries. |
• Mining stocks | -- | They currently have little or no knowledge thereof (leaving me almost speechless). |
• Uranium & Uranium stocks | -- | They currently have little or no knowledge of uranium or investing in the uranium shares and commented that "this seems very risky". |
The Great Disconnect:
I informed them that a significant portion of my investments were in the mining stocks, uranium stocks and/or the long term warrants thereon and that 'we' are in a bull market. They looked at me as though I was crazy and I thought they were crazy because they didn't even know about the bull market in the mining shares.
It would be one's first instinct to dismiss these bankers' as unknowledgeable or ignorant investors. But this is far from the truth. Then it hit me. What my new friend's have reminded me of is that we view the world and the markets in different currencies. Think about it; with the Euro and other currencies stronger against the U.S. dollar it has been advantageous for many investors in the world to remain invested in other stock markets in the world which have performed extremely well in the last few years.
It also occurred to me that Henk J. Krasenberg, European Gold Centre, (a European Perspective) based in London recently voiced a similar view while speaking at the investment conference in Vancouver, CA in January. In essence, the majority of European investors are not yet interested in, nor currently investing in, the mining shares.
The Great Question Is:
The question now becomes, "will the European investors EVER be investing in 'our' (U.S. and Canadian) bull market in the precious metals stocks?" Most analysts assume (I know, this is usually trouble) that all investors in the world will one day be investing in the precious metals stocks and/or warrants. Maybe - Maybe Not!! Is it possible this bull market will remain basically a U.S. and Canadian affair? Do we need the rest of the investors of the world to assist with driving the mining shares to the outrageous price levels predicted by some analysts as we peak in the coming years?
Conclusion:
Investors' views and opinions of the world financial markets, gold, uranium, etc. are dictated by the specific currency in which we make our investment decisions. As the U.S. dollar rises or declines, the Euro rises or declines as well as all other currencies of the world, investors are faced with making investment decisions as viewed from their particular currency. It is possible the lack of European investors in the mining shares is a sign that we are still in the early stages of this bull market. Perhaps; but it is entirely possible that this bull market will take place basically on this side of the pond. Either way it will still be a great party but the more investors the better before the clock strikes midnight.
