Beating inflation by saving overseas

sabretoothtigger

the whole country very sensitive to commodities.

Yea thats a good thing, they export and the currency relies on that strength.

Where as we import and make up the difference in borrowed money and we rely on that weakness. We are sensitive to just about anything.

Australia gets cheap oil or gas if no one else wants it and that being true is quite unlikely anyway in a world with growing population, etc

If you want a reserve currency it should surely all go into gold shouldn't it?

I already have gold too much, they are buying over decades. Right now other things are cheaper likely like Australia's productive output or anywhere else that has alot in its favour without massive debt like UK or USA, ultimately that debt is cash that will flood out sterling value

Im not sure but I agree Canada is maybe a good proxy for the Dollar. They have tons of resources yet are largely in league with western doctrine, presuming they dont do stupid amounts of QE maybe they are a safe currency

brazil would have been a fantastic deal a decade or so ago,

India would have quadrupled, I ordered the prospectus and everything. Personally I'd take various stocks that earn cash in that country, not hold the cash itself alone. But that is more involved.
I hold India ports and railway stockyards via a LSE stock, its super boring but I do presume they will appreciate one day (relative to sterling). India of course has massive inflation, etc

the scottish claymore or equivalent could be available ina few years for a very local punt? Don't fancy argentine pesos though given their record.

Scottish politics would fail to balance their books, it would be awful almost certainly and even their own people know that long before. Its sterling or euro for them
BP is in Argentina I think, walking a tightrope; friends of the regime funnily enough?

http://www.bloomberg.com/news/2013-06-01/abe-offers-32-billion-to-africa-as-japan-seeks-resources-1-.html
Why you want to avoid pure cash from countries playing debt games is explained partly in this. Japan like China is chasing actual assets, its full of politics still but they do know debt is not profitable policy

Voyager2002

five_o wrote: »

I was just thinking about how low interest rates are at the moment here in the UK and it got me thinking. My other half is from South America and I noticed that the interest rates on savings over there are quite high (circa 9-10 percent). The rate of Inflation over there would eat considerably into the real value of savings. In addition, I have noticed over the past 5-7 years that the exchange rate between Sterling and the local currency has not fluctuated a great deal.

This might sound like a silly question but if one was to save an amount of money over there at let's say 10%, would I be right in saying that as long as the exchange rate does not fluctuate too much, we would actually be beating inflation by transferring the interest to the UK on an annual basis??

10% interest - 2.8% UK inflation = 7.2% real return (less income tax)

I considered doing this when I lived in Colombia. Stable banks there were offering 19 per cent interest on peso-denominated deposits. While the rate of inflation within the country was in the mid-20s, the exchange rate against the US dollar and sterling did not change much, since the strength of the peso was backed by the cocaine trade (and to a lesser extent by coffee exports).

However, there was a big crackdown on the cocaine cartel and the value of the peso hit the floor. Had I exchanged any serious sums of money for pesos, I would have suffered a serious capital loss. I'm glad that I resisted temptation.

bigadaj

Voyager2002 wrote: »

I considered doing this when I lived in Colombia. Stable banks there were offering 19 per cent interest on peso-denominated deposits. While the rate of inflation within the country was in the mid-20s, the exchange rate against the US dollar and sterling did not change much, since the strength of the peso was backed by the cocaine trade (and to a lesser extent by coffee exports).

However, there was a big crackdown on the cocaine cartel and the value of the peso hit the floor. Had I exchanged any serious sums of money for pesos, I would have suffered a serious capital loss. I'm glad that I resisted temptation.

Interesting, not all commodities are subject to just supply and demand!

Having a debate at work last week I advocated the potential legalisation of all drugs, by No means ideal but has the potential to remove the criminal connection and the costs there incurred. My colleague then expressed his main concern against this, which was unemployed drug dealers!

Biggles

bigadaj wrote: »

My colleague then expressed his main concern against this, which was unemployed drug dealers!

He's suggesting that their natural honesty is what's currently preventing them from registering for benefits?

bigadaj

Biggles wrote: »

He's suggesting that their natural honesty is what's currently preventing them from registering for benefits?

Well he is a graduate of derby college of knowledge as another colleague calls it, he basically got a bit stubborn and wouldn't admit it was a daft reply.

Sort of shut me up though, as that sort of argument is difficult to counter.