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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (483)	7/9/2001 8:22:54 AM
From: craig crawford	Read Replies (1) \| Respond to of 1643

BY JIM ROGERS Is the Luck Running Out for the Lucky Country? jimrogers.com That's not good for a country that already has fallen out of favor with international investors. After peaking at 40 percent in 1997, foreign holdings of national government bonds have fallen to near 25 percent. The effects on the economy have been profound: After nine straight years of 4 percent annual gross domestic product growth, Australia's GDP fell 0.6 percent in the last quarter of 2000. Unemployment has been rising. Inflation is up. The 'lucky' country's fortunes have turned. The nation's currency is most impacted by foreign skittishness. Just a few years ago, the Australian dollar was worth about 75 cents to the U.S. dollar. This past March, it dropped under 50 cents. Paige and I loved it because everything was extremely cheap but it's anything but good news for the economy or Australian citizens. In 2000, the Australian dollar was the second-worst performing major currency in the world, better only than the Turkish lira. Opinions vary widely on the root of the problems. Some believe it's an old-economy versus a new-economy problem. Australia, after all, is still a commodity-based culture. Two-thirds of its exports are commodities like wool, wheat, gold and zinc, and it's the world's largest producer of coal. I don't buy that argument: Since I'm optimistic about natural resources, I'd think this would be bullish for the currency. ........................................................................................................................ Unfortunately, everyone is ignoring the link between currency and living standards. As the currency goes down, the standard of living will start to decline because more and more earnings will be siphoned off to finance the nation's annual debt payments. Foreign companies will be even less interested in building factories because everything they need to import to operate becomes more expensive. ........................................................................................................................ I already owned shares of a few Australian companies and I actually bought three new companies while I was there. For instance, I bought shares of Bridgestone Australia, the local version of our tire company, whose stock has suffered as a result of problems in U.S. The Australian wine industry is getting better and better so I bought shares of a wine company called Southcorp, which was recently taken over by Rosemount which also owns Penfold, Australia's most-successful vineyard. I bought shares of a company called Pasminco, a lead and zinc producer that is on the edge of bankruptcy because its management was hedging badly in the futures markets. Still, these investments were special situations, not based on my faith in the future of the economy.