From Russia, With Fear

by Sara Nunnally Published on Monday, 02 April 2012, Inside Investing Daily

The BRICs are starting to show their power. As tensions with Iran rise, their economic fate is at risk.

When Russia’s worried, we all should be worried…   And when that worry concerns Iran and its nuclear program, it’s even scarier. Let me throw out a few words and phrases that Russian Deputy Foreign Minister Sergei Ryabkov said in an interview on Friday:

• Alarming
• Expanding
• Violation
• A new global economic crisis
• Strikes against Iran by… Israel
• An explosion of energy prices
• Escalation
• Worse than last year

The Growth Map

I’ve just started reading Jim O’Neill’s new book, The Growth Map: Economic Opportunity in the BRICs and Beyond.

This guy’s most known for coining the term BRIC for the grouping of Brazil, Russia, India and China. It’s been an investor’s boon for the past ten years, and everyone thought he was crazy at first. This new book highlights eleven new countries that are about to hit center stage.

The Growth Map has already got me hooked… From Page 5:

Gold Cash Machine

Probably the most interesting story I’ve read in a while…

And Indian company has launched a cash machine that dispenses gold and silver coins. From the BBC:

Backers say the automated teller machines (ATMs) will be a “one-stop shop for buying medallions, coins and jewellery”.

They hope to cash in on the insatiable demand of Indians for jewels and precious metals.

In all, 75 ATMs are planned for retail centres, temples and airports.

One is already operating in Mumbai. This idea isn’t in response to the erosion of fiat currencies… but rather the huge market in India.

India “consumes” 900 tonnes of gold each year. At $1,740 an ounce, that’s a $55.2 billion market. India is the largest consumer in the world.

These machines should catch on, and quickly. India’s Diwali festival started yesterday. The “Festival of Lights” is the like opening day for gold buying in India. After the festival is wedding season – and folks buy huge amounts of gold.

This could keep gold prices high, no matter what the global markets do… at least until the end of the year.

VISTAs not BRICs?

When people were first introduced to emerging markets on a large scale, some of the most promising countries for investors were Brazil, Russia, India, and China – or BRIC nations.

With China looking like it’s topping out, rampant inflation in Brazil, and underperformance in Russia and some could argue India, are BRICs where investors should still be putting their emerging market money? Maybe not, though I would say I still like India of the four.

Interestingly, some analysts are starting to lump South Africa in with the BRICs

Well, I travelled to South Africa a few years ago, and got to sit with a businessman (and VIP subscriber) to talk about the South African economy and why he just sold his business to an Indian company. The S.A. rand was killing exports – plain and simple – and the government wasn’t doing much about it.

The government wasn’t doing much about the infrastructure and power needs, either, or the soaring unemployment. Official statistics had put unemployment at between 16% and 20%, but unofficially that figure could be as high as 40%.