Thanks to some astoundingly idiotic decisions by the Argentine government, the country is once again on sale. Follow us on Twitter Like us on Facebook Saturday, August 16, 2014 | Issue #94 Eric Fry, Co-Editor of The Daily Grind, reporting... The Argentine stock market advanced again yesterday... just like it has been doing for most of the last two years. During this brief time span, the Argentine Merval Index has nearly quadrupled in local currency terms, and more than doubled in U.S. dollar terms. This shockingly strong performance probably has much more to do with the deplorable condition of the Argentine peso than it does with the growth prospects of the Argentine economy. In fact, the Argentine economy's growth prospects are subzero at the moment. The country's GDP "growth" is now negative, thanks to a vast menu of governmental buffoonery. But to keep this long story very short, suffice it to say that the bull market in Argentine stocks is less a "vote of confidence" in the economy than a big "vote of no confidence" in the forlorn Argentine peso. As the chart below shows, the "official" peso/dollar exchange rate has soared from about four pesos per dollar to eight pesos per dollar during the last four years, while the unofficial "blue rate" (i.e., black market rate) has soared from four to more than 12 pesos per dollar! In other words, the official peso has lost half its value during the last four years, but out on the street - the real world - it has lost two-thirds of its value against the dollar. Therefore, the locals with any sort of savings are buying stocks as a hedge against the collapsing value of the peso. The Argentines on the street have very few options at their disposal to protect their peso-denominated savings. They can't simply swap pesos for dollars; that's against the law. They can't take pesos out of the country and try to swap them for dollars elsewhere; that's also against the law. Even modest little hedges like buying foreign goods when traveling overseas is problematic. The Argentine government imposes a 35% "surcharge" on credit card purchases outside the country. What's not against the law is buying Argentine stocks. So that means Argentine stocks are one of the go-to hedges against a currency meltdown. Typically, real estate provides a similar sort of hedge. And this time around is no exception... sort of. While real estate values have not fallen as much as the currency, they have fallen nevertheless. And as my Co-Editor Joel Bowman explains below, property bargains abound in Buenos Aires. Billionaire's "Restricted Trades" Now Available to Regular Investors Wall Street big shots are making hundreds of "restricted trades" per day. These special trades often "tip off" coming stock price jumps. And the information from just one of these trades could make you up to an extra $15,735 per month. See exactly how in our presentation HERE. Lying About Moving to Buenos Aires By Joel Bowman Steak and wine. That's what I tell people when they ask why I decided to move to Buenos Aires with my wife four years ago. It's a succinct reply, yes... but it's not entirely true. Allow me to explain... Call it, if you will, a lie of omission. In actual fact, there are many compelling reasons to consider spending part or all of the year in the "Paris of the South." Juicy bife de lomos and mouthwatering Malbecs are just a couple of them. And not even the best. When we first arrived, in the summer of 2010, the cost of living was cheap... but it wasn't that cheap. (My wife and I had just moved from Southeast Asia, where we could enjoy seafood lunches on pristine, sandy beaches for six to eight bucks a pop, beer included... now that was cheap!) A decade into the new century, which was also about a decade since Argentina's last currency crisis, the Buenos Aires we found was not exactly the bargain hunter's dream it once was. Alas... But that was 2010. This is 2014. And crisis pricing is making a comeback! Thanks to some astoundingly idiotic decisions by the Argentine government, the country is once again on sale. And it's not just the inexpensive steak and wine... but prime real estate as well. The hopelessly collapsing peso deserves most of the credit/blame for the "sale prices" in Buenos Aires. Back in 2010, the official exchange rate was about 4.25 pesos to the U.S. dollar. In an effort to cover its own culos for various mistakes (that would take volumes to explain in detail), the Argentine government, in 2011, imposed draconian restrictions on the Argentine people's ability to convert pesos to dollars (or any other currency for that matter, including gold). Today, the rate is over 8-to-1. And that's on the official exchanges... en blanco... to which nobody pays serious attention. Unofficially, the rate is over 12-to-1... and the gap is widening. As a result of the economic uncertainty, the number of property sales in Buenos Aires dropped by almost one-fifth (18.6%) in 2013. And prices for closed sales have been sliding this year too. So what does that mean for you as a potential buyer? In a phrase: purchasing power. It means your dollars go a lot further than they once did. And it means sellers keen to pocket those coveted dollars (typically, though not always, offshore) are beginning to offer substantial discounts on prestigious properties. I'm hearing whispers of apartments closing 10%, 15% or up to 20% below the list price. In the prestigious Recoleta neighborhood, you can walk into a three-bedroom, two-bathroom apartment for well under $250 per square foot. (That puts a spacious 1,500-square-foot apartment in the city's premier barrio at $375,000... before "dollar negotiation.") If you want to try something a little more boho, converted lofts in the trendy San Telmo area go for about half as much per square foot. Traditional, quieter residential areas - like Flores and Villa Crespo - are somewhere in between. One place on my radar, a French-style pad with double-overhead ceilings, a gorgeous vitraux in the entrance hall and twin fireplaces in the living and dining rooms, is listed at $220 per square foot. This apartment features two en suited bedrooms, a maid's quarters (which could easily convert into an office) and four Juliet balconies overlooking the quiet street below. It will likely sell for under $350,000. This particular gem is also in the Recoleta neighborhood, not far from the national theater (Teatro Colón) and only a couple of blocks away from one of my regular watering holes - a grandiose old bar in a smartly converted Belle Epoque mansion. And yes, they serve fantastic steak and wine there too... as it so happens. Cheers, Joel Bowman for Free Market Café Follow Joel on Twitter @JoelBowman One Easy Step... And Watch Your Retirement Income Skyrocket Are you settling for 8% (or lower) annual returns because, quite rightly, you need safety more than anything else right now? Well, pardon my bluntness, but STOP IT! There's a better way. You can crush the returns of most investors, with little more risk than investing in a $50 billion blue chip. Find out how to turbocharge your income with this "safe money" secret by clicking here. Discuss on FMC Share on Facebook Share on Twitter You are receiving this email because you subscribed to Free Market Café. 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