Chris Martenson of Peak Prosperity (peakprosperity.com) recently visited Lima to present a seminar with well known financial guru Robert Kiyosaki (Rich Dad, Poor Dad) entitled “The new global scenarios that will define the Peru of the next 20 years”, organized by the University San Martín de Porres and Bu$iness Insiders.
Peru should think more in producing energy than in exporting it
Peru presents great opportunities for growth in mining and energy but the country must begin to generate a production with added value and not only exporting their natural resources, says Christopher Mårtenson, American researcher specializing in the cycles of the economy, energy and natural resources.
“The biggest opportunity is in the energy sector where there is still much ground to explore in Peru, because not many wells have been drilled and there are many possibilities for growth in oil and gas,” said PhD at Duke University in dialogue with Gestion.pe.
For Martenson, everything it is possible for a country with energy resources, to the extent to grow an own market not only to grow because it has to export to other countries. “Trade is important but is best thinking on how to create your own local market where is take advantage of the energy and natural resources to create products that the world needs”, explained.
In mining, Peru has abundant resources by extracting but there is a risk in the short term, and is that many of the minerals that today are extracted from the country, are being sent to China to meet the demand of the housing sector, said the researcher.
Martenson explained that the problem with this market is that you have already built too many houses in cities where no one lives. “These buildings will come to its end and it is likely that that causes a large reduction in (imports of) commodities, such as cement, steel, copper and zinc.” Peru has a stake in all of them, so we’ll see what happens”, he added.
Despite this scenario, Martenson was optimistic about Peru for the future opportunities. “The country has a low debt level compared to other countries, has a population that will be a very productive stage for the next 20 or 30 years and has a wealth of resources, especially water and energy,” noted.
The specialist warned, however, that these resources, by more abundant than, will end in 10, 20 or 100 years. Therefore, the Peruvian authorities should consider what will be the future of the country when this happens.
Where we want to be? How do we want to be the country? Where will our energy come from? What kind of systems we are going to use? they are some of the questions that the Peru should be considered for the next 20 years, according to Martenson.
“The pieces are here for the Peru is a very prosperous country, but without a vision of how you will use these resources, the risk is that resources be drawn, are sold and not to obtain many benefits,” he added.
Original article here. (Spanish)
Peruvian Sol Falls Again
Another day of weakness in the commodity markets, and today the Peruvian Sol has fallen to a new 5 year low of S./2.937 interbank rate to the US Dollar. Copper prices have fallen today by 1.29% and are below the psychological $3.00 price at $298.60. (Comex)
Peru is also an oil exporter – 15,610 bbl/day (2012 est. CIA Factbook) so the rapid drop in oil prices has an adverse effect on their trade balance.
Besides planning for the best use of resources over the next 20 years, the Peruvian government would do well to prepare for an eventual disconnect from the dollar. While Peru has an enviable Debt vs GDP ratio, the US does not. Whether the debt is renounced or inflated away, neither will be advantageous to Peru. By working to produce locally, the shock from a change in the value of the dollar can be cushioned.
A visit to Peak Prosperity yields this article from one of our favorite authors, Charles Hugh Smith:
The Consequences of a Strengthening US Dollar
Charles noted in September:
The case for a rising dollar is based on the basic supply and demand for dollars stemming from four dynamics:
- Demand for dollars as reserves
- Other nations devaluing their own currencies to increase exports
- “Flight to safety” from periphery currencies to the reserve currencies
- Reduced issuance of dollars due to declining U.S. fiscal deficits and the end of QE (quantitative easing)
Since then the dollar has continued its advance, and is now breaking out of a downtrend stretching back to 2005—and by some accounts, to 1985… (from Peak Prosperity)
Here we are just a few months later & the dollar is rising somewhat rapidly. Commodity prices are falling, and those who feared an imminent fall in the dollar have been wrong (at least for now.)
Full article here.
See also: Peruvian Sol Reaches S./3 vs $1 USD
Did you enjoy this page? Have questions? Would like information on something to be posted here? Please drop us a line, sign up for our email list in the box to the right, or comment below.