{"id":101528,"date":"2017-01-31T11:09:39","date_gmt":"2017-01-31T16:09:39","guid":{"rendered":"http:\/\/countingpips.com\/?p=101528"},"modified":"2017-01-31T07:10:19","modified_gmt":"2017-01-31T12:10:19","slug":"trump-reagan-and-the-secret-silver-mine-in-mexico","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/01\/trump-reagan-and-the-secret-silver-mine-in-mexico\/","title":{"rendered":"Trump, Reagan, and the Secret Silver Mine in Mexico"},"content":{"rendered":"<div id=\"inves-1560712857\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">January 31, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th size-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/01\/0117_mexico_feature.jpg\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" srcset=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/01\/0117_mexico_feature.jpg 580w, https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/01\/0117_mexico_feature-300x155.jpg 300w\" alt=\"Trump, Reagan and the Secret Silver Mine in Mexico\" width=\"580\" height=\"300\" \/><\/p>\n<p>Ronald Reagan won the White House largely thanks to his famous Rust Belt strategy.<\/p>\n<p>President Trump\u2019s decision to borrow Reagan\u2019s Rust Belt strategy proved genius, pushing him straight into the Oval Office.<\/p>\n<p>As Trump begins his presidency, he\u2019ll do it with the lowest approval rating ever (45%), replacing\u2026 guess who?<\/p>\n<p>Ronald Reagan, of course.<\/p>\n<p>Prior to Trump, Ronald Reagan and George H.W. Bush owned the lowest approval ratings for modern presidents taking office (51%).<\/p><div id=\"inves-2596867984\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p class=\"centered\"><img loading=\"lazy\" decoding=\"async\" class=\"centered aligncenter\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/01\/jobapproval_chart.png\" alt=\"Job approval rating per president\" width=\"540\" height=\"443\" \/><\/p>\n<p>But I believe the similarities between Reagan and Trump begin and end there.<\/p>\n<p>Trump will face radically different challenges, and he\u2019ll face those challenges alongside an electorate far more racially and culturally diverse than when Reagan was president.<\/p>\n<p>Many Americans are questioning Mr. Trump\u2019s ability to unite the country.<\/p>\n<p>Among Trump\u2019s biggest challenges is Mexico.<\/p>\n<p>The two countries are at odds over a wall and questionable trade agreements.<\/p>\n<p>\u201cMassive trade deficits &amp; little help on the very weak border must change NOW!\u201d Trump asserted on Twitter.<\/p>\n<p>With the Mexican peso down 17% versus the dollar and Trump\u2019s next move virtually assured, there could be an enormous investment opportunity developing south of the border.<\/p>\n<p>I asked my senior analyst Martin Hutchinson to get the scoop, and it led him to a silver mine in Mexico.<\/p>\n<p>The mine has a few unusually powerful forces working in its favor, says Hutchinson.<\/p>\n<p>Boy, this one is a true moneymaking gem.<\/p>\n<p>Smart investing,<\/p>\n<p>Louis Basenese<br \/>\nChief Investment Strategist, <i>Wall Street Daily<\/i><\/p>\n<p><script src=\"\/\/fast.wistia.com\/assets\/external\/E-v1.js\" async><\/script><\/p>\n<div class=\"wistia_responsive_padding\" style=\"padding: 56.88% 0 0 0; position: relative;\">\n<div class=\"wistia_responsive_wrapper\" style=\"height: 100%; left: 0; position: absolute; top: 0; width: 100%;\">\n<div class=\"wistia_embed wistia_async_fzhm2qvaqv videoFoam=true\" style=\"height: 100%; width: 100%;\"><\/div>\n<\/div>\n<\/div>\n<p><strong>Question: <\/strong>Martin, tell us what\u2019s at the top of your list today. What do our readers need to know?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> There\u2019s a great deal, of course, that\u2019s been happening in the world this month. Perhaps from the international point of view, the most interesting thing is President Trump stopping the Trans-Pacific Partnership with a single executive action.<\/p>\n<p><strong>Question:<\/strong> We covered that yesterday, Martin. I urge any of our readers to go back into our archive from yesterday and listen to Martin\u2019s full report on that. Really, really insightful. But what\u2019s going on today, Martin?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Today, I want to look at Mexico, which, of course, was a member of the Trans-Pacific Partnership. But more importantly, it\u2019s also a member of NAFTA (the North American Free Trade Agreement), which President Trump has said is going to be reviewed.<\/p>\n<p>At first sight, you\u2019d think that this is bad news for Mexico because, obviously, a lot of its exports are to the United States. But I\u2019ve seen a way in which you can profit \u2014 from the fact that the Mexican peso is fairly weak.<\/p>\n<p><strong>Question:<\/strong> All right, let\u2019s back up just for a second. Are you projecting that the NAFTA trade agreement will be pulled off the table?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> I don\u2019t think it will be pulled off the table. I think it will be tweaked.<\/p>\n<p><strong>Question:<\/strong> OK, and why is the Mexican economy so important to investors here in America?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> It\u2019s a pretty big economy \u2014 about a trillion dollars. There are a lot of exports from Mexico into the United States \u2014 but also some pretty attractive companies there. One advantage that Mexico has is that apart from NAFTA, it has a very good set of trade agreements.<\/p>\n<p>It has trade agreements with the EU, Japan, most of Latin America \u2014 a total of 44 countries. In general, Mexico\u2019s trade position is very good. Its growth\u2019s running about 2%, and it doesn\u2019t have much inflation. It\u2019s had some macroeconomic benefits recently from freeing up the telecom sector and the oil sector. They\u2019ve allowed foreign investment in some of Pemex. Overall economic policy\u2019s been improving, and that\u2019s having an effect.<\/p>\n<p><strong>Question:<\/strong> What do you see happening?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> The main thing of interest is that the Mexican peso is down 17% against the dollar in the past 12 months. That\u2019s made it much more attractive for companies to produce in Mexico and sell in dollars, because their production costs \u2014 denominated in pesos, local laborers and so on \u2014 have all declined by 17%.<\/p>\n<p>That\u2019s not a huge amount of use for the companies selling into the United States \u2014 or at least it is in the short term \u2014 because they\u2019ve got the threat of NAFTA renegotiation. You obviously worry a bit about that. There are another set of companies that are particularly attractive given this, and those are mining companies. Because if you\u2019re producing, say, iron ore in Mexico and your local costs have gone down by 17%, you can sell the iron ore anywhere in the world.<\/p>\n<p>With Mexico\u2019s excellent set of trade agreements, they\u2019ve got many, many alternative places to sell the iron ore. And it\u2019s priced on the international markets. It\u2019s not dependent on a particular market for its pricing. Therefore, Mexican mining companies have all improved their margins.<\/p>\n<p><strong>Question:<\/strong> Excellent. Are you looking at any individual stocks to own that you\u2019re bullish on right now, Martin?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Yes, there\u2019s one particular company that isn\u2019t well-known here in the United States, but it\u2019s very large. In fact, it\u2019s the world\u2019s largest silver producer and one of Mexico\u2019s largest gold producers. It\u2019s majority Mexican owned and listed on the London Stock Exchange \u2014 but with some shares trading here.<\/p>\n<p>It\u2019s called Fresnillo Plc (FNLPF). That\u2019s a $14 billion-market cap company. It\u2019s something you can buy pretty easily here because there\u2019s a lot of stock around. It has the advantage of being a Mexican-owned mining company. It doesn\u2019t have any nonsense from the Mexican authorities. Because one of the problems that Canadian-American mining companies operating in Mexico have is that the local governments are a bit iffy.<\/p>\n<p>For example, there\u2019s one company that\u2019s had a big tax problem in Mexico. There\u2019s another one that\u2019s got a super new project, but it can\u2019t get all the permits in line. Whereas Fresnillo, being a Mexico-owned company, doesn\u2019t have those problems, because it just sorts out the local governments.<\/p>\n<p>Fresnillo\u2019s costs are down 9% in the first half of 2016, so it\u2019s already benefiting from the decline in the peso. Its sale prices in silver and in gold have gone up in 2016, so its margin is expanding pretty rapidly. It made $167 million net income in the first half of 2016. And its production report, which came out this week, says that for the whole year, silver production was up 7% and gold production was up 23% on the previous year. Its profitability should be going up very rapidly, and it\u2019s already pretty highly profitable. It has a 1% dividend yield, but that\u2019s likely to increase, because the company has a policy of paying out 50% of its profits in dividends. There\u2019s really a lot to go for there.<\/p>\n<p><strong>Question:<\/strong> Martin, if I\u2019m correct, this company benefits from almost a double pop. You\u2019ve got the upside of the silver market and then also that 17% differential in the Mexican peso, the currency pop. Is that correct?<\/p>\n<p><strong>Martin Hutchinson:<\/strong> That\u2019s right. You\u2019ve got the production costs going down because of the peso \u2014and the sales prices going up because of the silver market. Obviously, anytime that happens, profits explode upward.<\/p>\n<p><strong>Question:<\/strong> Fantastic. Well, again, I thank you for your insights, and we\u2019ll have at it again next week, Martin.<\/p>\n<p><strong>Martin Hutchinson:<\/strong> Great, thank you very much.<\/p>\n<p>Good investing,<\/p>\n<p>Martin Hutchinson<br \/>\nSenior Analyst, Wall Street Daily<\/p>\n<p>The post <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/01\/31\/trump-reagan-and-the-secret-silver-mine-in-mexico\/\" rel=\"nofollow\">Trump, Reagan, and the Secret Silver Mine in Mexico<\/a> appeared first on <a href=\"https:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com Ronald Reagan won the White House largely thanks to his famous Rust Belt strategy. President Trump\u2019s decision to borrow Reagan\u2019s Rust Belt strategy proved genius, pushing him straight into the Oval Office. As Trump begins his presidency, he\u2019ll do it with the lowest approval rating ever (45%), replacing\u2026 guess who? Ronald Reagan, of [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-101528","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/101528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=101528"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/101528\/revisions"}],"predecessor-version":[{"id":101536,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/101528\/revisions\/101536"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=101528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=101528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=101528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}