Investing in Argentina: The Dollar Still Goes a Long Way

Argentina is one of the places where the American dollar still goes a long way. We had a dinner party of eight last night. We drank wine and ate appetizers and steak. The bill was almost laughably low, about US$70. Later, we had six beers and coffee for a total of $7.

Real estate is also cheap. That's why Americans and Europeans have been actively investing in Argentina, specifically in property. They are real estate bubble refugees, you might say. They cashed out of their expensive and inflated properties in the U.S. and Europe, and then they came down here and live like kings. It's a cash market, and you don't have the speculation you have in hot U.S. markets, for example.

Over the last week, we also spent some time at an Argentine ranch in Salta. There are some 60,000 acres here at this ranch. It has livestock and grows alfalfa, tobacco and corn. This place, too, was owned by a group of overseas investors who have plans to carve off lots and develop the property, while maintaining it as a working ranch.

Besides the potential for development, the agricultural lands out here should grow increasingly valuable for investors in Argentina. As I've written about before, there are several factors creating a boom in the agricultural markets. There is the push for more biofuels, which results in increased consumption of the basic feedstocks used to produce alternative fuels - such as corn, sugar, palm oil and more. There is increased prosperity in China, India and other emerging markets. This leads to greater demands for meat in particular, which also fuels the boom in demand for grains (crucial in feeding livestock).

Chris Mayer
for The Daily Reckoning Australia

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