GUALFIN, Argentina – “We always felt a little ashamed… or we had an inferiority complex… because our government was so bad.”
An Argentine friend – a cattle man – was explaining how he felt about his new president, business mogul Mauricio Macri.
(To fill readers in, Macri was mayor of Buenos Aires after years working in the private sector in construction and manufacturing. Last November, he beat a populist left-wing opponent to become Argentina’s new president… ending 12 years of rule by the dominant Peronist party.)
“But I don’t feel that way now. This was the first time I voted for a politician that I actually wanted to win. It seemed impossible. But he did win.
“I’d put him up against any president the Americas have ever had. At least, in recent times. He’s like a conservative, business-minded Kennedy. Compared to your frontrunner candidates in the U.S. – Clinton and Trump – he’s much better.
“Of course, it’s still early days. Macri is going to make mistakes. And we still don’t know if a president like him can survive in office in this country. But I am very optimistic. That’s why I’m investing again.
“We couldn’t export meat under [Marci’s predecessor] Kirchner. Farmers sold off their animals and planted soy. Now, soy prices are down… and beef is way up. We’re making money on cattle again.
“I’ve got 300 head, including the 230 that we got from you [we shipped our cattle down to the valley as grass dried up] and I’m going to add another 350.”
A Visit to Jorge’s
Meanwhile, up at the ranch, things are looking up, too… if you ignore the drought.
Our dried-up ranch – there’s been little rain this year
We arrived yesterday. Our faithful ranch manager, Jorge, has retired. He now lives not far from the airport. So, we stopped by to say hello to him and his wife, Maria.
After a lifetime spent up in the mountains… riding his horse every day… covering thousands of acres of pasture… fixing fences… repairing roads… wrestling calves… and driving a team of gauchos… we worried that Jorge would find retirement dull and difficult.
He wouldn’t take up golf. He wouldn’t go to Starbucks, buy a latte, and surf the internet. He is out of place down in town.
His son was there when we arrived. He teased his father…
“Are you going to take dad back to the ranch?” he asked.
“He needs to go,” Jorge’s son continued. “He still gets up at 6 a.m. He can’t stop himself. He brought his two horses down from the ranch and keeps them at a nearby farm. He goes over there every day just so he can ride around and look at the cattle. He’s going crazy. And he’s driving us crazy.”
We turned to Jorge. He was laughing, too, but it was an insincere laugh.
“How are you taking to retirement?” We put the question directly.
But it wasn’t okay. We could tell from the look on his face. There was a hint of sadness in his usually cheerful eyes.
For nearly half a century, he woke up every day and rushed to get out onto the valley… or up into the mountains. There were cattle to take care of. There were problems to solve. There were people to talk to. He could shoe a horse, castrate a calf, and build a stone wall – all before lunchtime.
Now, he must wake up and wonder why he bothers to wake up at all.
Our New Capataz
“How’s Gustavo doing?” we asked.
Gustavo is the new capataz, the man who has taken Jorge’s place.
“I think he’ll be fine. People like him. The ranch is a good place to work. The peones (as Jorge calls the men who work for us) are happy. After all, we pay them. I’ve heard that our neighboring ranches have not been able to pay their workers. They’re running months behind on wages. Our peones feel lucky to be on our payroll.”
We were happy to hear him say “our.” Over the years, your editor developed a great admiration and affection for Jorge.
Our main goal came to be nothing more than winning his respect. We’ve been there 10 years. But we were so awkward on a horse when we arrived… so clumsy in Spanish… so ignorant of cattle ranching… it was always an uphill struggle.
Now he’s retired and left the ranch. What is our goal now?
“Come up and visit,” we urged him. He agreed to come this Saturday.
Up at the ranch, Gustavo has taken over. Young. Nice. Smart. Gustavo grew up here, too. His mother comes from one of the old families on the ranch. He doesn’t know who his father was, not an unusual situation in the mountains.
Gustavo moved his family into the foreman’s house in January and has been running things ever since.
We worried that he may not be able to fill Jorge’s shoes; we wondered if anyone could. Besides, Gustavo is younger than the other ranch hands. The tough old gauchos may not accept him as boss.
But “so far, so good,” says Gustavo.
More to come…
BY CHRIS LOWE, EDITOR AT LARGE
Argentine stocks are on a tear…
Today’s chart is of the Merval Index, the country’s main stock market benchmark.
Since the start of 2013, it’s rising 363% in local currency terms.
In dollar terms, it’s up 59%.
BY CHRIS MAYER, CHIEF INVESTMENT STRATEGIST, BONNER & PARTNERS
People often ask me for my favorite gold stock.
That’s easy. It’s not even close! In fact, this stock should be a core holding for anyone who wants some exposure to the yellow metal.
On Wednesday, I was at Grant’s Spring Investment Conference in Manhattan. It’s a semi-annual gathering of gold bugs and bearishly inclined investors.
One of the speakers was Pierre Lassonde, the chairman and co-founder of Franco-Nevada (FNV), a gold royalty business. The title of his talk was “Gold: The Investment You Never Knew.” It was a standard pitch on gold. With a predictable conclusion: Lassonde is bullish on the metal.
But he was silent about the elephant in the room… the attractiveness of Franco-Nevada itself.
Lassonde, 68, is a legendary character in gold circles, thanks to the freakishly high performance of Franco-Nevada’s stock.
From its inception in 1982 to its purchase by Newmont Mining in 2002, Franco-Nevada delivered a 36% annualized rate of return to its stockholders. This is an astounding return for a stock in an industry – gold mining – notorious for being unrewarding. In fact, it’s astounding performance for a stock in any industry.
In 2007, Newmont spun out Franco-Nevada. It’s been on its own again ever since. And it continues its winning ways. Since 2007, the stock is up 345%. By comparison, the GDX – an exchange-traded fund made up of gold miners – has lost half its value. The price of gold itself is up only 50%.
What is Franco-Nevada’s secret? Well, it’s not a miner. It’s a gold royalty company. In essence, it is a kind of financier. The company fronts the money for part of a mine’s development in exchange for a royalty, or a percentage of what the mine produces over time. As such, it escapes a lot of the dirty work of mining.
Franco-Nevada’s return on capital is better and more consistent than gold miners’… and it still makes money on gold’s upside.
But Franco-Nevada can generate a solid return on its capital even when the gold price goes nowhere. It’s also debt-free and loaded with cash.
I alerted my readers that Franco-Nevada was a good buy in December – when the stock was $46. Today its $67… a 40% gain.
Even at today’s level, Franco-Nevada is one to buy and hold for the long haul. It’s easily my favorite gold stock.
P.S. Last night, in a special web event, Bill and I revealed the secrets behind my personal investment strategy. This is the same strategy I’ve used to beat the market by more than 2-to-1 over the past decade. My readers had the chance to book gains of 41%, 114%, 233%, and more – in as little as 3 months.
Bill believes in this system so much, he’s committed $5 million of his family money to my recommendations. You can learn all about my strategy… and invest in the same companies Bill’s family trust will be investing in. Click here to watch this FREE video now.
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Today, readers weigh on Bill’s Diary issue about why the U.S. dollar should be tied to gold…
The problem we face is getting from point “A” (the credit dollar) to point “B” (the asset value dollar). As Jack Nicholson said in the movie A Few Good Men: “You want the truth? You can’t handle the truth.”– Jim B.
The Fed has no choice but to do the bidding of those power elites – to continue disenfranchising the masses and further enriching the very few at the top of the economic pyramid.
If they even hint that they might do something really beneficial for the masses at the power elites expense, they would be quickly dispatched, with cement shoes at the bottom of the river.– Larry H.
I am addicted to Bill’s ideas and original way of thinking. I plan to write President Trump and suggest he appoint Bill Bonner as Fed chairman.
We don’t need to audit the Fed, just put the whole thing up for sale, piece by piece, payable in $10,000 an ounce of gold.
Keep up the good work!– Daniel P.
And Bill’s account of watching Mozart’s Don Giovanni in Buenos Aires prompted the following reflection on music…
I have always found music to be a kind of meditation, which quiets the nerves. Verbal representations like program music are no help. You need to banish all worldly thoughts from your mind.
Years ago, I taught a few music courses. And I would tell my students the music is better than religion, because it doesn’t lie.– Ken G.
In Case You Missed it…
Bill’s special web event with Chris Mayer last night was a huge hit with your fellow Diary readers.
More than 30,000 people joined us to learn the investing strategy that’s made Chris one of the top stock pickers in the business for more than a decade.
It’s not too late to catch up on what you missed. Bill has prepared a special online presentation to explain why he’s committing $5 million of his own family money to following Chris’s recommendations. Access it here now.