Chile Peso 2016, starts at 717

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Chile Peso 2016, starts at 717

Postby admin » Tue Jan 05, 2016 5:37 am

Please visit the 2017 peso thread for current discussion.
viewtopic.php?f=23&t=14304

as our last thread on the direction of the peso / dollar went on for 27 pages, thought a new thread might be helpful for 2016.
the last one was here:
viewtopic.php?f=23&t=12705

So we have started the year off with a
1.00 USD = 716.846 CLP
US Dollar ↔ Chilean Peso
1 USD = 716.846 CLP 1 CLP = 0.00139500 USD

see it at 717.50 for most of yesterday.

Betting China stock market route will take us much higher in the near term while everyone tries to figure out how the global markets are going to roll this year.

I am just fine with that, as I am top heavy dollars right now, need to make some exchanges. Plus got a bunch of clients that will have some exchanges coming up for investments and so on. Good for driving investment money in to Chile, as this is the time of year everyone comes to Chile and is making decisions as to what to do for the next year. So a strong dollar, at least for a little while longer, is good for Chile.

Possibly more concerning is that Brazil is now at 4.04 to the dollar. Will they stay there?

So, my 2016 bets right now, and I am likely going to be wrong about this, is the peso hits 800+ to the dollar by the end of the year, at least once. 2016 will be about volatility in the global markets for just about everything, in every country, and in every sector. 2017, the dust will start to settle, everyone will once again look around Latin America and the Emerging markets, and realize Chile is still putting along, neither with a screaming "latin american miracle" nor a crashing basket case, and that boring stability in the middle of the global chaos will bring the investors back in to mining assets, agro, real estate, and so on. Chile will be boring, while everyone else is trying to pick up the pieces of what is going to be a very, very wild ride this year.

This year will be all about China and oil. What they do, will set the peso and just about everything else. Even the Fed is a slave to those two this year, and if she is not, she is a moron. They can spin charts however they want, but at the end of the day the Chinese RMB, thus commodities overall, and oil are the inflation drivers or killers this year.

Copper will just be the electrical conductor between the rest of the World and the Chilean economy.
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Re: Chile Peso 2016, starts at 717

Postby HybridAmbassador » Tue Jan 05, 2016 7:13 pm

Talking of Oil. Now a new conflict arousing, Saudi and Iran at odds. There are a lot of oil flowing from that strait of Hormuz.
It only take a few more accusations either from the Sunnis or Shiites and the area will explode. Here goes the oil price
skyrocketing to the heavens. Time to put money in oil before the war?
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Re: Chile Peso 2016, starts at 717

Postby pascual » Tue Jan 05, 2016 8:15 pm

I am dollar heavy as well...Canadian dollars.

I will be using my dollars as toilet paper soon enough.

Anyone know what the ballpark value of a Canadian dollar is at any of the Santiago exchanges right now? XE.com shows 510 but I know local exchanges are always higher by quite a bit. Not there to check myself at the moment.

Here is hoping for USA/Canadian parity once again...in my lifetime. Oh the good old days. :(

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Re: Chile Peso 2016, starts at 717

Postby admin » Tue Jan 05, 2016 10:00 pm

HybridAmbassador wrote:Talking of Oil. Now a new conflict arousing, Saudi and Iran at odds. There are a lot of oil flowing from that strait of Hormuz.
It only take a few more accusations either from the Sunnis or Shiites and the area will explode. Here goes the oil price
skyrocketing to the heavens. Time to put money in oil before the war?


I am all over the energy stocks right now. Mostly oil and natural gas related. a little bit of mining stocks, but they are not ready for a recovery for a long time.

I am staying super diversified across the energy sector, because there is a lot more blood to be spilt but not all of them are going to go under (in fact, most won't, they will just be bought out). We have seen this show before. In fact, I would not even say it is a once in a lifetime investment opportunity, because it has been more like a 4-6 times in my lifetime. If Iran and Saudis do not start shooting at each other, something else will give. Whatever it is, there is definitely a lot more people with a lot more money than me, sitting on mega losses. They are not going to let this hang in there like this for years. They simply can not afford it (e.g. russia, venzuela, everyone else).

Just this time might really be different, the only time it seems it has happened before to this extreme was around 1988. So, I would say we are pretty much at the bottom or will be in the next 3-6 months for oil. Sub $30 dollar oil is already here for much of the world. My money, in the short-term, that reverses oil, will be Venzuela missing a bond payment in February. Once they go, the dominoes will start falling on the Saudi plan to pump and dump oil. If it is not Venzuela in February, fine with me. I am not done buying.

The scary thing is, back in august after the flash crash, I dipped my tow in the water with a s&p 500 index fund. Kind of a no thought required trade, given the flash crash brought everything down. I made a fast 10% over a month or so, then it flat lined. I started looking under the hood as to what was going on, and what sort of hope there was for a plain jane index fund under the market conditions. Well, guess what I found? A handful of FANG bullshit tech related stocks pumping up the entire market, and shitload of energy stocks falling through the floor of the stock exchange holding the hole thing down.

I figured If I am going to be that exposed to energy, without any real upside potential, I should really be in the energy sector. All these mom and pop investors are totally exposed to oil, directly or indirectly, just they are not going to get the big returns when it does pop. They will instead have their 401k or IRA that has been flat lining all year with broad market index funds blasted by a wave of inflation caused by rising oil prices; and, that is the 7 trillion dollar Gorrilla in the room. The other one is the China RMB. Both I think will have the same effect on commodities. A crash, followed by a flood of Chinese money in to commodities, and then they will proclaim China successful at a soft landing (after everyone is wiped out).

If oil pops, inflation pops, the rest of the commodities pop, along with copper, and we are off to the races again. We will be doing a hard reverse on the peso back to sub-600 levels to the dollar with very little effort.

Remember, all the fun inflation numbers the talking heads at the Fed and TV like to look at, have energy stripped out because it is too "volatile". Yea, its volatile, but it is a real inflation driver that can not be ignored. I don't buy that the fed is not keeping one eye on the energy prices. If oil pops, she can raise rates all she wants, but she is not going to be able to catch an energy market that doubles costs to the rest of the economy over the course of a few months.

In the meantime, energy stocks are big dividend payers and will generally as a rule chew their left leg off first to keep paying dividends even when in trouble. I like warren buffet's advise. Buy stuff you would be o.k. owning if the stock market closed for 5 years.
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Re: Chile Peso 2016, starts at 717

Postby HybridAmbassador » Tue Jan 05, 2016 10:21 pm

admin, interesting.
Now you're talking as real day-trader!...
I know a chap, changed his base from Tokyo to Singapore, and all he does is day trade but right now US$7 mill in the "black" !
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Re: Chile Peso 2016, starts at 717

Postby admin » Wed Jan 06, 2016 7:18 am

More of weak trader. Very weak.

I like watching day trader action sometimes, but prefer the long game. The big picture. I find macro-economics more interesting than what any particular stock is doing at any particular minute, or even what the markets are doing on any particular day. I like it specifically because I am convinced that most of the economic theories and explanations that the Global economy is built on is mostly bullshit sudo-science. It is only slightly more rigorous as a field than Sociology; yet, is depended on to make or break empires, all segments of society, individuals, and just about everything else.

Back when i was a Philosophy grad student, we use to have these sort of round-table / seminars among professors and grad students, where one or two would present a paper they were getting ready to publish and the rest of us would then find all the chinks in the reasoning. The idea was to be as brutal as possible to prevent our colleges from publishing something with an error in it. If I had walked in to a room full of Philosophers, Logicians, Mathematicians with most of the half-baked theories used in Economics every day to drive the markets and the World, I would have had my head bit off.

So I find economics particularly interesting simply because it is a field that is sooooo under developed. Even when economist get something right, politics inevitably distorts and bias the results to the point it is hard to get a proper test results. However, now, due to the internet, I can get access to most the same data the Fed and everyone else has in the field of economics, that use to take a large staff and millions of dollars in computing power to crunch.

Why is this relevant to the Peso? Well, we are particularly vulnerable to the whims of economists on the other side of the world, due to living in such a small country with such a small economy, that although relatively good is fairly fragile in the context of the big picture of the World. In a developing country like this, I am afraid if we don't keep an eye on what the rest of the World is doing, we could wake up one morning and just get crushed by the Global markets.

In 2008, Chile dodged a major bullet. Everyone was on vacation for the Sept 18 independence day holiday when the Lehman Brothers imploded and the Global Economy. It was another week before anyone got back to the office to dump their stocks or more importantly the Peso. The Major panic was pretty much over by that time, and people were able to make an orderly retreat. Subsequently, Chile's economy took off. I realized, that It could have been otherwise. That got me more seriously interested in studying Global Economics and trying to read the tea leaves in the Market, at least in so far as being able to identify the major swings before they run us over.
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Re: Chile Peso 2016, starts at 717

Postby El Chupacabra » Wed Jan 06, 2016 11:05 am

pascual wrote:I am dollar heavy as well...Canadian dollars.

I will be using my dollars as toilet paper soon enough.

Anyone know what the ballpark value of a Canadian dollar is at any of the Santiago exchanges right now? XE.com shows 510 but I know local exchanges are always higher by quite a bit. Not there to check myself at the moment.

Here is hoping for USA/Canadian parity once again...in my lifetime. Oh the good old days. :(


I exchanged some Canadian dollars a few days ago at around 490ish, and the week before that at 508.
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Re: Chile Peso 2016, starts at 717

Postby admin » Thu Jan 07, 2016 8:56 am

Here we go. I think we are finally off to the races. China is letting their stock market implode, and is starting to float the RMB. I have been waiting for this since I was living in China. Copper is going to get creamed, and the peso with it.

1.00 USD = 721.781 CLP
US Dollar ↔ Chilean Peso
1 USD = 721.781 CLP 1 CLP = 0.00138546 USD

My best guess is that China let's the RMB devalue a bit, let's the stock market drop for a few more days, then steps in to let everyone catch their breath for a few weeks or a month, before doing it again. Well, at least I hope that is what they do. Just yanking the band aid off, might really hurt.
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Re: Chile Peso 2016, starts at 717

Postby regioncentralX » Thu Jan 07, 2016 2:02 pm

Tyler Durden at ZeroHedge on what just occurred:

http://www.zerohedge.com/news/2016-01-0 ... d-currency
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Re: Chile Peso 2016, starts at 717

Postby papageno » Thu Jan 07, 2016 2:43 pm

Gold at 1,108+ and rising

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Re: Chile Peso 2016, starts at 717

Postby admin » Sat Jan 09, 2016 10:01 am

I had posted another gold vs. oil chart on another thread recently. Found this yesterday, with basically the same conclusion I had. Oil is at a low not seen since 1988. Numbers are slightly different, but then also gold and oil have moved away from each other since I posted that last one. I calculated 28.5 barrels to the ounce, at 1060, with an historical average being around 14.5, and the all time high in 1988 being around 29.5. Either way, we are there and moving further. Which recalculated for the current prices, I got 33.8 barrels to ounce, not much different. Which since I posted that last chart, does top the historical average. He goes further, and runs number of barrels divided against the S&P 500.

http://www.marketwatch.com/story/if-you ... 2016-01-08

The former chart I used, had calculated based on small stripper wells, that were not having there prices controlled by the U.S. government for its historical average calculation. In any case, we have blown past both averages to the point that it no longer matters where it is at exactly.

There are a couple big points missing, that some of the commentators on the above article pointed out. Both make it even more profound bottom in the price of oil. 1. Oil really is at the equivalent of $20 a barrel, when you consider it now costs $10 more per barrel to produce than it did in 1980's. 2. the 1970's are not a good comparison, because both the price of oil and the price of gold were being messed with by the U.S. government. 3. The speed of additional Gold mining production, will never come close to oil. Well, at least not in our lifetime, unless some new ground breaking technology manages to come along. We are basically still mining gold the way we did 100 years ago. yea, the machines are a bit bigger, but not that much different.

None the less, I got my rear handed to me in the energy sector this week, but not nearly as bad as I expected, and strangely everything else seems to have done worse. Basically I am doing an average down strategy, that started at about $38 dollars to the barrel. Which although I would not call it a bottom yet, sure seems like a bottom when everything else was crashing worse. I was prepared for that. Good thing I nibbled at some gold mining ETF's along the way. Those did pretty good this week, but I don't think it is going to last. But, just in case. They are historically cheap too.

The other thing I am finding strange, that might indicate a bottom, is that the irrational moves occurring in the energy stocks. For instance, I have had days where natural gas has taken off, but my natural gas stocks move the other direction dramatically. No other news particularly effecting them. I have had days when oil has crashed like 4%, yet my oil stocks are up 3% that day. That fairly new phenomena among the companies I follow. Which hopefully is the bounce, bounce, bounce off the floor waiting for some really positive news to go up. Still, we might very well get to sub-30 a barrel in short order.

The one thing, in all this bla, bla, about the over production of oil I am not buying, is the amount of over production being estimated. They are claiming that there is only a 1-2 million barrel to a day over production. Well, to put it in perspective, that is one super-tanker a day. That is a pretty thin margin of error, to be driving oil prices to this level and be able to keep them there. The shorts are have a rude awaking some morning when something goes wrong.

Copper seems to have done some sub-$2 runs, but does not seem to be able to stay there. So, I am sticking with my thesis for 2016

Chilean peso continues to drift down until Oil shock/ spike (even to just double the price) -----> copper price spike ----> Peso reverses (likely in sink with the price of oil)

In the meantime, I am buying energy stocks and real estate in Chile.
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Re: Chile Peso 2016, starts at 717

Postby admin » Sun Jan 10, 2016 9:06 am

not exactly a crashing peso (that is a good thing), but seems to be a fairly consistent move.
1.00 USD = 726.900 CLP
US Dollar ↔ Chilean Peso
1 USD = 726.900 CLP 1 CLP = 0.00137571 USD
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