Argentina’s Economy And Its Illusion Of Performance

July 14, 2014

Argentina's Stock Market boasts the highest performance worldwide since 2001.

Argentina’s Stock Index is called MERVAL…and it has increased by over 2,000% during the past 14 years.

However, the seemingly astounding performance of Argentina’s MERVAL Stock Index was an illusionary investment bonanza.

Consider MERVAL’s Performance (appreciation) vs DOW Index

MERVAL soared +2,017%

DOW Index rose     +57%

And MERVAL’s “Performance” (i.e. return) vs gold

Since 2001 MERVAL has apparently “appreciated” +2,017% vs the gold price rising only 390%. Obviously, something smells here! The problem with MERVAL’s so-called “performance” is that it is measured in Argentine Pesos…indeed horrifically devalued Pesos vs the USDollar…since 2001.

Since 2001 the Argentine Peso has lost 88% of its value vis-à-vis the US Dollar.

(Source:  FXsauder) 

MOREOVER, since 2001 the Argentine Peso has lost 97% of its value relative to GOLD.

To be sure the fictitious performance (return) of the Argentine MERVAL Stock Index is markedly reduced if the Peso’s relentless devaluation is factored into the equation. Ergo, relative to GOLD, MERVAL’S “performance” of +2017% is reduced to only +60% during the last 14 years, which is approximately equal to the DOW Index appreciation for the same period. 

Obviously, the only smart profitable investment for Gauchos Argentinos was (and is)  gold…Gold…GOLD for the past 14 years.

Argentina’s legendary Tango maestro, Carlos Gardel probably had the above scenario in mind when he wrote and sang his most famous Tango song:

“Por Una Cabeza”  >>> hear and see Carlos Gardel’s 1935 sterling performance:   http://www.youtube.com/watch?v=8dStp5hq294  

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Founder of Gold-Eagle in January 1997.  Vronsky has over 42 years’ experience in the international investment world, having cut his financial teeth in Wall Street as a financial analyst with White Weld. Vronsky speaks three languages with indifference: English, Spanish and Brazilian Portuguese.  His education includes a degree in Petroleum Engineering from the University of Oklahoma, a Liberal Arts degree from Hartnell College and a MBA in International Business Administration from UCLA – qualifying as Phi Beta Kappa and Tau Beta Pi for high scholastic achievements.  Vronsky believes gold and silver will soon be recognized as legal tender in all 50 US states…and many countries worldwide.  You may reach I. M Vronsky at: vronsky@gold-eagle.com and/or vronsky@bellsouth.net

Small amounts of natural gold were found in Spanish caves used by the Paleolithic Man about 40,000 B.C.