Where in the World Should I Invest? March 20, 2016

Steve McDonald: Hi, everybody. I’m Steve McDonald. This is your Market Wake-Up Call. Our guest today is the Karim Rahemtulla, the editor and co-founder of Beyond the Dollar and author of the book Where in the World Should I Invest? An Insider’s Guide to Making Money Around the Globe. Welcome, Karim. Karim Rahemtulla: Thanks, Steve. Good to be here. Steve McDonald: It’s nice to have you back. Now, you expect the dollar, which has been on a tear for some time, to drop in value by 20% to 30%. Why so negative on the dollar? And will a weakening dollar help or hurt our Members? Karim Rahemtulla: Well, let’s separate the two. I’m negative on the dollar. I’m not negative on the prospects of the U.S. and its continuing dominance in global trade and things like that. I think the dollar itself is overextended. And I’ll give you several reasons why I think it’s going to come down. It’s made a parabolic move over the last three or four years, gaining between 30% and 60% against almost every other currency on the planet except the Swiss franc. You’re talking about major moves of 50%-plus against the yen, 30% against the euro, 30% against the Australian dollar, the Canadian dollar... the list goes on. I mean, some currencies have fallen 65%, like the South African rand. So the dollar has been in an extremely strong bull market. And history has shown - and we’ve got this plotted out in charts - when the dollar makes this kind of run, it also sets up for a major fall in the coming months after it’s hit a peak. And we think we are within 5% or 10% of that peak if we haven’t already reached it. Steve McDonald: Okay. Most of our Members don’t trade currency. How do they make money on this sort of thing? I mean, how do they use that information to make money? Karim Rahemtulla: Yeah. Trading currencies is probably best left to those who understand the market. And I’m not advocating that they should go out and trade currencies. But there are various ways to play this downside move. One way is something that we’re writing about in an upcoming issue: It’s almost a risk-free deal where you can bet against the dollar using commodities such as oil, gold, silver and grains, and do it through a CD product, which guarantees your principal; so you have almost no downside other than opportunity cost and all the upside - I think up to about 70%. Another way is to play it directly through commodities, like through oil, gold... buying selective companies. Like gold has already been on a run, up 20% so far in the last few months. And that’s despite the dollar not really giving up much of its strength. So gold is looking extremely interesting at these levels, but more interesting if it gets a little pullback, which we’re expecting. And commodities such as oil - these are priced in dollars. So when the price of oil is down - down in the $30s right now - and the U.S. dollar is strong, if the U.S. dollar weakens, the price of oil will have a boost behind it in price as well. Steve McDonald: Now, you own two or three oil companies. Is that correct? Karim Rahemtulla: We do. We have several positions in the portfolio. And the way we’ve done the oil companies is based on that we don’t know where oil is going to end up a year from now, two years from now. We don’t know where it’s going to be two months from now. It was as low as $26 a couple of months ago. And we’ve been buying. And the way we’ve been buying it is that we’ve advocated buying one-tenth of a position in each one of the stocks we’ve recommended over the next 10 months. And so far, we’re way ahead on all of our oil picks because we’ve been able to catch the price of these stocks - these are high-quality stocks. Very important to buy oil stocks that are very low debt and very high quality. So we’ve been able to catch them at their lows. Steve McDonald: Right. Now, if your prediction is correct - and it sounds reasonable to me; I mean, the dollar can’t stay up as high as it has been. Does this help or hurt oil companies? Which ones are you playing? I mean, there are so many different ways to play oil, I guess is what I’m saying. Are you talking the U.S. Oil Fund? Are you talking pipelines? Karim Rahemtulla: No. We’re talking specific oil companies. And we’re talking oil companies that have - two of them have operations that are global. And what’s important - and this is also in the dollar in general - a lot of the S&P 500 companies, almost 63% of them, derive more than 50% of their profits overseas. And they’re getting hammered because the dollar is so strong. But so the oil companies: We’ve chosen Exxon, which is a major company that has a very low debt-to-equity ratio, and it has operations all over the world. And those operations all over the world do business in lower currencies and translate back into dollars, which is the price that oil is sold in. So their margins are slightly better there. And they also have things like refining operations. It’s not just an oil company; it’s an integrated oil company. The other company that we’ve got in our portfolio is Schlumberger, which is a major oil services company. And it does business, again, around the world. And the third company is a shale play, which is the strongest shale play in the business: EOG Resources - very low debt. And what I like about it is it’s not just drilling to pay its debts off. Because it doesn’t have that much in debt. It’s keeping most of its oil in the ground until prices get better, and it’s got the luxury to do so. Steve McDonald: All right. Besides oil and gold, what else are you playing on this downside of the dollar? Karim Rahemtulla: We also have a position betting against the dollar using the euro. We’ve already closed out a 70% gain on half that position; we’re holding the rest. And we’re looking for the euro to be pretty volatile. So we don’t want to really get into that unless we can get in at our levels. And we’re also looking at unique investments. For example, you can go and pick up a second residency at a place in Asia for 40% to 50% less than you could have two years ago and increase your standard of living by a factor of four times. Meaning if you’re someone who has a million dollars or $100,000 in the U.S., that $100,000 would give you $400,000 in purchasing power in some of these countries. Steve McDonald: That’s interesting. So Asia, the euro, oil and gold. Sounds like a great play. Thanks so much for being with us, Karim. Karim Rahemtulla: Thanks, Steve. Thanks for having me. Steve McDonald: It’s my pleasure. And for everybody here at the Market Wake-Up Call, I’m Steve McDonald. Thanks for being a part of us. We’ll see you next week. [End of Audio]