Argentina - Tópico principal

[hermes]

além disso, as acções compensam tanto, que o primeiro post deste thred começa logo assim [i.e. foi melhor que o normal]:

The Argentine experience stands in sharp contrast to other recent financial crises. If one examines the stock market performance of other countries in the immediate months involving crises, one finds the following fall in stock market indexes: Mexico (December 1994-February 1995), 53.5%; Korea (July 1997-November 1997) 47.0%; Malaysia (July 1997-January 1998) 52.0%; and Thailand (July 1997-December 1998) 33.8%. Such pronounced drops in stock market values are the typical result expected during crises. Yet the Argentine market more than doubled in the early months of the crisis of 2001-2002. How can such a surprising event occur?

[jeab]

Fitch coloca nota da Argentina em revisão para possível rebaixamento

http://estadao.br.msn.com/economia/fitch-coloca-nota-da-argentina-em-revis%C3%A3o-para-poss%C3%ADvel-rebaixamento

[Local]

Argentina congela preços nos supermercados por 60 dias em resposta ao FMI

A Argentina anunciou, esta segunda-feira, a adopção de um novo método de cálculo da inflação e o congelamento dos preços dos produtos nos supermercados por 60 dias, reagindo à censura do FMI às suas estatísticas económicas.
O Fundo Monetário Internacional (FMI) informou, na sexta-feira, ter emitido uma "declaração de censura" à Argentina por causa da falta de qualidade das estatísticas relativas ao Produto Interno Bruto (PIB) e à inflação, as quais poderão estar a ser manipuladas.
A mudança traduzir-se-á "num novo índice de preços no consumidor em substituição do indicador actual, que supostamente coloca muitos problemas ao FMI", disse o ministro da Economia, Hernan Lorenzino, em declarações ao canal de televisão C5N, citadas pela agência AFP.
Na sequência disso, a secretária do Comércio veio anunciar que todas as cadeias de supermercados -- incluindo a francesa Carrefour e a norte-americana Wal Mart -- se comprometeram a congelar os preços de todos os produtos por um período de 60 dias, até 01 de Abril.
Para o efeito, foi firmado um acordo entre o Governo da Presidente Cristina Kirchner e a Associação Supermercados Unidos, que agrupa todas as grandes cadeias estabelecidas no país, numa altura em que os consumidores se queixam da constante subida de preços dos bens de primeira necessidade.
Segundo o ministro da Economia, a Argentina deverá começar a utilizar o novo método de cálculo de inflação no terceiro trimestre deste ano.
O FMI emitiu uma "declaração de censura" pela primeira vez na sua história contra Buenos Aires que, com esta decisão, arrisca perder os direitos de voto no seio da organização internacional e até mesmo a exclusão.
A instituição decidiu, contudo, dar um prazo a Buenos Aires: o governo tem até ao dia 29 de Setembro para regularizar a situação.
As estatísticas oficiais da Argentina diferem com frequência das emitidas por entidades privadas independentes.
Em Janeiro, o governo anunciou que a inflação chegou aos 10,8 % em 2012, quando um instituto privado colocou a taxa em 25,6 %.
A Argentina é acusada sobretudo de subestimar a taxa de inflação porque parte substancial da dívida soberana se encontra indexada ao aumento de preços.

http://www.jornaldenegocios.pt/economia/mundo/americas/detalhe/argentina_congela_precos_nos_supermercados_por_60_dias_em_resposta_ao_fmi.html

[hermes]

Aqui vamos nós de novo. Daqui a 60 os preços são actualizados e subirão mais do que teriam subido nestes 60 dias, já a prever e para se proteger do próximo congelamento de preços. Nada de novo debaixo do sol, era assim nos anos 80 na américa latina.

[Automek]

E provavelmente com algumas rupturas de stock pelo meio.

[aos_pouquinhos]

Aqui vamos nós de novo. Daqui a 60 os preços são actualizados e subirão mais do que teriam subido nestes 60 dias, já a prever e para se proteger do próximo congelamento de preços. Nada de novo debaixo do sol, era assim nos anos 80 na américa latina.

Não é grave!!!!

Solução: Imprimir....

Mas em vez de notas reais, podem fazer umas notas com bens de 1ª necessidade (metem um saco de arroz na esfinge, ou um saco de batatas) e o povo passa a comer papel com sabor.

A produção de papel é a solução até ao dia em que nada compra....

Cumprimentos

[Incognitus]

Os recursos não se transformam sozinhos.

[SrSniper]

Se aguentar 4 anos e se mantiver neste preço, duplicamos o investimento....

[hermes]

Voltando à Argentina, segue-se um artigo interessante e vivido em primeira mão pelo Martin Sibileau sobre os efeitos da inflação no imobiliário e terrenos agrícolas.

Farmers will not drive Lamborghinis (or Why I disagree with Jim Rogers)

By Martin Sibileau
On January 8th 2013

http://sibileau.com/martin/2013/01/08/farmers-will-not-drive-lamborghinis-or-why-i-disagree-with-jim-rogers/

This is my first letter of 2013. I was not able to write earlier as I was travelling in Argentina. The situation there is complex and fluid. It would seem easy to compare it to that of Venezuela, but that would be a dangerous reductionism. Three things really caught my attention and are related to what we are going through in the developed world:

a) Argentines, just like everyone else in this world, struggle to find acceptable assets to allocate their capital. This is striking because they have no capital markets and it would seem that real estate or the US dollar should be the no-brainer, natural alternatives. Yet, unlike in the past, they are not. However, the reasons for this go beyond the scope of today’s letter.

b) In spite of explicit acknowledgment by the Argentine government that the monetary base will grow at no less than a 40% per year (this is even embedded in the government budget projections), the government still manages to issue its currency. The country is still far from hyperinflation, although with high inflation. There are no definitive metrics given the media repression, but private estimates gauge it at no less than 25%.

c) Just like some analysts today see a bubble in the price of gold, there are analysts in Argentina who see a bubble in the price of the US dollar vs. that of the peso. This is a country that has gone through two hyperinflations and decades of high inflation within a single generation. I was astonished to see how easily the memory of all this was lost. This is so impressive that even Roberto Cachanosky, a leading Austrian voice in the country and who regularly writes at La Nación, had to devote one of his weekly columns to “explain” that the US dollar was not in a bubble.

Why do I bring this up? Because I still can’t find what the difference is between Ben Bernanke, who is telling me that he’s going to monetize US sovereign debt as long as the unemployment rate (as measured by the government) is not below 6.5%, and Mercedes Marcó del Pont who openly says that monetizing debt does not lead to inflation (as measured by the government) and that the Banco Central will monetize all the sovereign debt necessary to boost economic growth. As much as I hate acknowledging this, I am convinced Cristina Fernandez de Kirchner is right when she says that the developed world lacks the moral authority to criticize her policies.

Real estate under high inflation: Context and assumptions

Let’s return now to the topic of the day, namely real estate as an inflation hedge. Today, I want to offer my family’s experience in the case of Argentina’s hyperinflation and their choice of real estate as the hedge against it. The context in which this story takes place is one of high inflation, in which the market knew two things: a) It was a point of no return, and b) It was going to get worse before it would get better.

I think it is clear that none of these points are visible today in the developed world. For instance, gold was sold last week simply because the FOMC minutes suggested that the same Fed that has to buy approx. 90% of the Treasury’s long-term debt issuance to keep rates from rising (without much success one must add), may end the purchases by the end of this year.

The context of the story was also one of increasing financial repression. As I suggested earlier, inflation and financial repression are only two different sides of the same coin. And as inflation spikes, so do interest rates, for the trust in the system collapses. Only with higher rates can central banks sustain a target level of deposits, so that the coerced banking system sources the funds needed  to buy sovereign debt. High nominal interest rates and inflation then, go hand in hand.

In such a context, there is no return and the market knows it will get worse. The fear of confiscation sets in. Confiscation can and did take place in two ways: a) Between private citizens/corporations, in which case, we are in the face of explicit wealth transfer from creditors to debtors or landlords to tenants, and b) from private citizens/corporations in favour of the state.

A true story

In 1973, Argentina decided to nationalize bank deposits and to impose a 100% reserve requirement. This measure however was not to last long and by 1976, the banking sector was again allowed to leverage on its deposits. To fight the increasing exodus from the system by depositors, the central bank decided to encourage deposits by paying interest on savings accounts deposits and charging a fine on current account deposits. By 1980, 90% of all deposits were in savings accounts under 90 days and the average lending rate was 35%. This brought about a spiralling quasi-fiscal deficit (i.e. a deficit at the central bank) that led to the hyperinflations of 1985 and 1989 (Read more about this –in Spanish- here)

It was in the context described above that my father first lost his first apartment and later bought a ranch as a hedge against the increasing inflation. The apartment in Buenos Aires was lost to a tenant, in the early 1970s, who took advantage of a new bill favouring tenants over landlords. That apartment was my parents’ first home and they had only vacated it because they were working outside Buenos Aires at the time. It was not their investment property. My father ended up negotiating a ridiculous discount to at least get something back, but he basically lost it all. There is really not much more to say in defense of the investment-in-condos thesis as a hedge against inflation (Remember that if rental contracts at one point, given high inflation, become denominated in a foreign currency or gold, the government will very likely fix the price of these assets (i.e. fx, gold) at an official rate, below the proper market prices. Landlords will receive that official rate and will not be able to challenge it in court).

In 1978, however, my father did purchase a ranch for investment purposes, in beautiful Patagonia. Today, I want to share this experience, vis-à-vis the thesis held by Jim Rogers because my father back then thought like Mr. Rogers today.

The Jim Rogers thesis

Briefly, Jim Roger’s thesis is old and simple: The monetization of sovereign debt means higher commodity prices and owning a farm is a means to both profit from these higher commodity prices and protect one’s capital, invested in land. In Jim’s words, farmers will drive Lamborghinis.

Well, it may be true in the early stages of a hyperinflationary process. But as inflation arrives to stay and the money printing becomes structural, the financial repression that follows challenges the thesis. As well, just like in the first world today newer taxes or higher tax rates are being imposed on those lucky enough to be able to save and invest, back then politicians engaged in demagogy and established new laws to favour debtors and tenants over creditors and landlords. In my experience, under high inflation, the price of agricultural commodities rises in local currency terms because of shortages in production. There are shortages because producing is not profitable. Rising nominal prices therefore are not a signal to encourage production, but precisely the opposite; the reflection of supply shortages because producing is unprofitable. The unprofitability, of course, is caused by the government’s intervention via price controls (wages, foreign exchange), higher taxes, trade restrictions and outright confiscations. To expect that farmers will be able to receive international market prices for their produce under high inflation is naive at best. I know of no nation under high inflation, where its government would have not controlled exports (or their prices) of necessary goods (i.e. food), or forbidden imports of luxury goods.

The case of “Los Maitenes”

My father bought Los Maitenes (the name of the ranch) in 1978 with the simple idea of protecting his capital. He was not a rancher, although he knew the business well from my grandfather (who had managed an estancia for Mr. Bunge in the 1920s). Indeed, it was not a farming property in the sense Jim Rogers means: It is in the mountains and is for the purpose of raising cattle. Growing grains there is not efficient. However, whenever the price of grains rises (in US dollars) and the agricultural frontier shifts to the West, land formerly used for cattle in the Pampas needs to find a replacement and ranches in Patagonia get bid.

To my father’s disappointment, rates and the appreciation of the US dollar continued to outperform ranching. Under high inflation, soon everyone wanted to own (“stock up” would be a better word) products, but not producers. Nobody was interested in producing anything and it was not due to some behavioural problem, as Keynes and its followers always point to. Simply, the distortion in relative prices and the disappearance of credit for working capital (i.e. nobody in the business of “making stuff” could any longer reasonably calculate whether they did so at a profit or at a loss) was too high to bear. My father then became a forced long-term real estate investor. Nobody was interested in buying him out of the ranch. It was far better to keep playing the dangerous game of earning absurd returns in savings accounts deposits, subsidized by the central bank, or to keep your capital in foreign currency, fully liquid. It was a game that would last until 1989, when deposits in savings accounts were confiscated and paid back in bonds. In my view, we can see this same phenomenon playing out further down the road of this ongoing inflationary process, whereby gold would play the role the US dollar played in Argentina.

In the meantime, my family had managed to survive from other income sources until 1981. In that year, their most important source, a concession on a beach resort in Mar del Plata, was finally expropriated under the regime of General Galtieri. The thesis that owning a ranch was the final hedge against inflation and general chaos suddenly became a reality and in January 1982, my father set off to Patagonia. It was a three-day long trip with a trailer (see picture below). In this trailer, we would live the first three months.

Picture 1: A stop on the way to Los Maitenes, January 1982 (I am on the right, next to my mother and sister).


A few months later, war broke with the UK over the Falkland Islands. Living in Patagonia, this meant that everything could be taken from us at any moment, if either the UK or Chile invaded. Fortunately, this scenario did not play out. However, during that first year at the ranch, my father found out that squatters were living in different parts of the property. Once again, even though he managed to negotiate a settlement with some of them, the government expropriated a few hectares from us. I am sure Mr. Rogers did not take into account this sort of inconveniences, but expropriation becomes very real when credit disappears and food shortages follow. As I wrote in my earlier letter,”…thousands of years of Diaspora are screaming to us in the face that the advantage of gold as an easy-to-transport and store asset is not to be underestimated…”

From 1983 on, inflation began to grow exponentially. Soon, it became difficult to know if one was making or losing money. Relative prices in terms of US dollars fluctuated widely and in general, over the long term, everything tended to depreciate versus this currency (just as I expect prices to continue depreciating in terms of gold, if QE remains eternal). Without liquidity and credit, farmers began to barter. The most liquid items were alfalfa hay, flour, wire rolls, gasoline and meat. Contracts could be settled in alfalfa bales, 10-kilo flour bags, fencing wire rolls (1,000 meters per roll), and litres of gasoline or kilos of meat.

Bartering, my father survived those years. He hired men to plant, irrigate and harvest the alfalfa lots in the ranch, on a partnership basis. Whatever alfalfa bales he managed to keep, he used them to further buy cattle or to pay for labour. The cattle were then bartered at the nearest general store to buy groceries. Anything outside the bartering circle became extremely expensive (clothes, fuel, electronics, etc.), as cattle or alfalfa bales had to be first exchanged for currency.

The years of high inflation were years of self-sufficiency. It took us about seven years to build our house, for we had to produce our own bricks (adobe), stucco and wood. Below is a picture worth a thousand words: In it, we see Don Onofre Grandón, carpenter, working a poplar tree just cut down at the property to produce one of the rafters for the roof frame of our house. Circled far in the back, we can see a stock of adobe bricks also produced at the ranch. This picture was taken on January 1989, during the last hyperinflation.

Picture 2: House building under hyperinflation


The picture above is comparable to a painting of the London’s Carpenter’s Company in the late Middle Ages. Any European peasant resuscitated from the Middle Ages would immediately recognize and feel familiar with this scene. This is a typical scene of a farm in times of hyperinflation. And it makes perfect sense: Under the Pax Romana, the owners of villas were rich. When hyperinflation finally destroyed the Roman Empire under Diocletian, owning a villa was a liability, as one could not trade the produce without price controls or safe transportation and was further subject to either looting by barbarians or confiscatory taxation by Rome.

The above picture shows a scene of non-monetary exchange, no access to a Home Depot, no credit, no capital markets nor commodity markets (either spot or futures). The sight of harvesting machines, highly capitalized farmers participating in commodity futures markets are completely foreign to a hyperinflationary scenario. Such a sight belongs to farming under stable relative prices and available credit. Eventually, both came back after the peso collapsed and became convertible to the US dollar, in 1991. It was only after the hyperinflationary episode, when the peso as legal tender was fully repudiated, that farming became again a productive enterprise, when the government had no choice but to become friendlier to open markets and seriously diminish any form of financial repression.

Epilogue

The story I just shared is definitely not what Jim Rogers has in mind. During those years, holding US dollars or taking the risk of financing the government with deposits at the banks far outperformed any productive project. However, at one point (in 1989), even financing the government ended up a losing proposition, and term-deposits were confiscated (see the announcement of the confiscation here)

US dollars (or any other stable foreign fiat currency), in the end, were king. When I extrapolate my personal experience to our current situation, I feel confident that holding physical gold to the end will also be the winning strategy. Hence, my disagreement with Jim Rogers: Farmers will not drive Lamborghinis if inflation spikes.

During those years, the government constantly sought to manipulate the price of the US dollar or to discourage everyone from holding foreign exchange. This too is happening with gold and I expect it will become more pronounced in the years ahead.

[John_Law]

Quando vi a actualização deste tópico pensei que era sobre os recentes desenvolvimentos. Há uns dias atrás foi conseguido um acordo por parte do governo com o retalho para o congelamento dos preços...

E para além disso o governo está a dizer às empresas para não colocarem anúncios nos jornais. 

http://www.washingtonpost.com/business/argentinas-price-freeze-now-hits-opposition-newspapers-with-supermarket-advertising-ban/2013/02/08/64b04eaa-7232-11e2-b3f3-b263d708ca37_story.html

[hermes]

No fundo, o efeito sobre o imobiliário e terrenos agrículas foi bastante semelhante ao que se passou na República de Weimar. Seguem-se alguns excerptos do livro "When money dies" a mostrá-lo:

Frau Eisenmenger let a room to the gentleman from the American Mission — just as Garbo's father in The Joyless Street was able to do — and received for it ten times the rent which, in accordance still with the wartime rent restriction Act, she herself paid for the whole flat. On a now slender quantity of negotiable cigars, on her daughter's earnings, on that rent, and on the diminishing real income from her burgeoning shares, she tackled the first months of 1920.

[...]

Blackett noted that the rent restriction Acts hit much the same classes, who were 'forced to starvation in order to subsidise the German workman's wages and the employer's profits'. The bread and rail subsidies, financed by inflation, combined with the rent restriction, enabled the foreigner to buy German goods well below world prices and, if he lived in or visited Germany, to travel, eat and occupy houses at ridiculously cheap rates. 'A gradual process of buying up and carrying off Germany's movable capital, secondhand furniture, pianos, etc., is taking place at the expense of Germany as a whole.'

Foreigners were also buying up real property and interests in factories and all kinds of businesses. To some extent this was at the expense of the workman whose wages lagged behind the climbing cost of living, but it was mainly at the expense of the middle classes whose capital was destroyed and largely exported. The exporting industrialists could just keep their heads above water, Blackett thought, but the others making goods out of partly imported material could not possibly replace it with a continually rapidly falling mark.

[...]

In the second half of June it became necessary again to double the salaries of government officials, and to give higher grants to the war-wounded, to'widows, to pensioners and to the unemployed, in and out of the Ruhr, An additionaL reason for these increases, over and above the general fall in the mark's purchasing power, was that the poorer classes, especially the rentiers, would soon no longer be able to afford the price of bread. Agricultural interests had become angry about the 'Umlage', the forced delivery of the first two million tons of wheat produced each year which enabled half the total supply of bread to be sold cheap. From August onwards farmers were to be paid at world prices because, when obliged to sell wheat cheaply, they still had to pay the world price for fertilisers. The change in policy, from subsidising food to subsidising the needy, may have satisfied the farmers; but the extra subsidies for the poor soon became worthless again.

[...]

Those with foreign currency, becoming easily the most acceptable paper medium, had the greatest scope for finding bargains. The power of the the dollar, in particular, far exceeded its nominal rate of exchange. Finding himself with a single dollar bill early in 1923, von der Osten got hold of six friends and went to Berlin one evening determined to blow the lot; but early the next morning, long after dinner, and many nightclubs later, they still had change in their pockets. There were stories of Americans in the greatest difficulties in Berlin because no-one had enough marks to change a five-dollar bill: of others who ran up accounts (to be paid off later in depreciated currency) on the strength of even bigger foreign notes which, after meals or services had been obtained, could not be changed; and of foreign students who bought up whole rows of houses out of their allowances.

[hermes]

Quando vi a actualização deste tópico pensei que era sobre os recentes desenvolvimentos. Há uns dias atrás foi conseguido um acordo por parte do governo com o retalho para o congelamento dos preços...

E para além disso o governo está a dizer às empresas para não colocarem anúncios nos jornais. 

http://www.washingtonpost.com/business/argentinas-price-freeze-now-hits-opposition-newspapers-with-supermarket-advertising-ban/2013/02/08/64b04eaa-7232-11e2-b3f3-b263d708ca37_story.html

Baseado na leitura do livro "The hyperinflation survival guide" do Gerald Swanson a relatar os efeitos da hiperinflação nos vários países da américa latina nos anos 80/90, já aqui tinha deixado a minha previsão para o que se segue na Argentina:

Aqui vamos nós de novo. Daqui a 60 dias os preços são actualizados e subirão mais do que teriam subido nestes 60 dias, já a prever e para se proteger do próximo congelamento de preços. Nada de novo debaixo do sol, era assim nos anos 80 na américa latina.

[jeab]

Estes vão pelo mesmo caminho ...

Venezuela desvaloriza o bolívar em cerca de 32%


..... num país em que a inflação anual é superior a 22%.



http://expresso.sapo.pt/venezuela-desvaloriza-o-bolivar-em-cerca-de-32=f786029#ixzz2KR1m3fuG

[Incognitus]

Eles na Venezuela não têm a Merkel para chatear, é só prosperidade.

[hermes]

Eles na Venezuela não têm a Merkel para chatear, é só prosperidade.

Mas o dinheiro traz felicidade. Olha aqui tanta gente feliz.

[Local]

Chávez ordena encerramento das lojas Zara por 72 horas

25/02/2013

Hugo Chávez, presidente da Venezuela, ordenou o encerramento temporário, durante 72 horas, das lojas Zara para que estas procedam a uma modificação dos preços, fruto da desvalorização do bolívar, segundo noticia o “Cinco Días”.
 
A medida obrigará a que os proprietários das lojas permaneçam sem as abrir durante três dias, para que possam ajustar os preços, que alegadamente estavam com margens excessivas. As autoridades acusam as lojas de terem remarcado os preços com a desvalorização da moeda.
 
Osiris Pacheco, funcionário da autoridade venezuelana, explicou aos meios de comunicação que encontraram na Zara “margens excessivas, sendo preciso verificar as estruturas de custos destes estabelecimentos”. Acrescentou que as lojas vão continuar fechadas, para evitar a imposição de novas sanções.
 
Na  Venezuela existem 22 contratos de franquia do grupo Inditex, dos quais nove são Zara, nove são Bershka e quatro são Pull & Bear. O porta-voz do grupo afirmou que as lojas que foram fechadas não afectam o grupo porque são franchisados.

Fonte: BPINet

Não deve faltar muito para passarem a ter as prateleiras vazias.

[camisa]

Não deve faltar muito para passarem a ter as prateleiras vazias.

o inevitável fim de todos os regimes socialistas...

[jeab]

Disappearing Dollars Compound Default Threat: Argentina Credit

http://www.bloomberg.com/news/2013-02-28/disappearing-dollars-compound-default-threat-argentina-credit.html

[hermes]

Goldman Bearish Gold Call Overrun by Inflation: Argentina Credit

By Camila Russo
Mar 18, 2013 1:57 PM GMT

http://www.bloomberg.com/news/2013-03-18/goldman-bearish-gold-call-overrun-by-inflation-argentina-credit.html

Argentines are buying more gold than ever to protect their savings from the Western Hemisphere’s fastest inflation as the country’s bonds suffer the worst returns in developing nations.

While Goldman Sachs Group Inc. called for gold prices to peak last month and billionaire George Soros cut his stake by more than half, Banco de la Ciudad de Buenos Aires, Argentina’s only gold trader, is talking with mining companies to buy the metal directly as surging demand exhausts its supply of scrap. The bank began marketing gold to individuals after the nation tightened currency controls in October 2011, selling 280 kilos in its first year for 102.6 million pesos ($20 million).

Argentines are turning to the precious metal to preserve the value of their savings as economists forecast the peso will lose more value than any currency in the world and President Cristina Fernandez de Kirchner bans most dollar purchases. The nation’s estimated inflation rate of 26 percent is also eroding the value of fixed-income securities, causing Argentina’s peso- denominated bonds to lose 5.5 percent this year versus a 2.2 percent gain in emerging markets, according Barclays Plc.

“I’m buying gold every chance I get,” Guillermo Acosta, a 27-year-old security guard, said inside a branch of Banco Ciudad in downtown Buenos Aires. “With this inflation, I feel like my savings will evaporate if I keep them in pesos.”

Dollar Bonds

Acosta’s initial investment of 10 grams of gold in February last year has returned 47 percent as the price per gram rose to 381.5 pesos from 260 pesos.

Argentina’s government dollar-denominated bonds fell an average 14.3 percent in that span, according to JPMorgan Chase & Co.’s EMBI global index, and the peso weakened 15 percent.

The nation hasn’t borrowed money from overseas debt markets since its $95 billion default in 2001 and Fernandez’s increasing influence over the economy since her re-election in 2011 has pushed up the interest that bond investors demand to 13.9 percent, or three times the average in emerging markets.

With Argentina printing pesos to finance itself, the amount of pesos in the economy has increased 38 percent in the past year, leading analysts to anticipate that the currency will depreciate 12.9 percent through year-end, the most among currencies tracked by Bloomberg.

Banco Ciudad is the only bank left that trades the metal after Fernandez in July banned the purchase of certified 99.99 percent pure gold for savings. The bank sells it at 99.96 percent purity, according to Carlos Leiza, who oversees the lender’s gold trading.

‘Keep Up’

“The boom goes in hand with the inability to buy dollars,” he said in an interview at his office in Buenos Aires. “People are looking for alternatives that at least implicitly hold the value of the dollar. The demand has been strong for over a year now. We can barely keep up.”

The extra yield that investors demand to hold Argentine government dollar-denominated debt instead of Treasuries widened two basis points, or 0.02 percentage point, to 1,185 basis points at 9:55 a.m. in New York, according to JPMorgan’s EMBI Global index.

The cost of protecting $10 million of Argentine government debt against default for five years with credit-default swaps rose 88 basis points to 3,121 basis points, data compiled by Bloomberg show.

Last year, Banco Ciudad limited purchases to 100 grams per person per day in direct sales to individuals. Investors who want to speculate on the price of gold without actually owning the metal are also buying record amounts of futures contracts.

‘Good Option’

The number of open futures contracts due in June in the Rosario Futures Exchange, where they are traded locally, climbed 183 percent in the past year to 14,508, and reached an all-time high of 15,276 on Jan. 29.

“Faced with the inability to buy foreign currency, investors are seeing gold futures as a good option to dollarize their portfolios,” said Sebastian Porcel, director of Buenos Aires-based futures brokerage Global Agro. “The fact that people are going through the burden of owning actual gold bars shows the huge need they have to protect savings.”

While demand for gold is rising in Argentina, Goldman Sachs last month cut its three-month target to $1,615 an ounce from $1,825, and also chopped its six- and 12-month forecasts. The bank said the cycle for gold prices, which has climbed for 12 straight years, has probably turned as the recovery in the U.S. economy gathers momentum and investments decrease.

Soros reduced his stake in the SPDR Gold Trust, the biggest gold exchange-traded fund, by 55 percent in the fourth quarter, filings showed last month.

Prices Drop

Gold futures traded in New York have fallen 11 percent in the past six months.

The difference between the prices to buy and sell gold is greater than the gap when trading futures, meaning investors are more at risk of losing money when they need to sell, according to Claudio Burelli, the head of the currency trading desk at Buenos Aires-based brokerage Puente Hermanos Sociedad de Bolsa.

There is a 35 percent difference between the prices to buy and sell gold at Banco Ciudad, while there’s no premium to sell the country’s benchmark 2017 dollar bond in the local market, according to the Buenos Aires-based Open Electronic Market, known as MAE.

“There’s a big spread in prices, so to make money, not only does the price of gold have to rise, you have to beat that gap,” said Burelli, who sold gold before it was restricted.

Exchange Rate

Gold sold by Banco Ciudad also isn’t recognized internationally, making it more difficult to determine its value, he said.

The cost of 100 grams of gold in Argentina as of last week was 36,646 pesos. In New York, the same amount based on the benchmark troy ounce (31 grams) sold for about $5,126.

The bank multiplies that price by 0.95 to account for the lower quality of the gold to get a dollar price of $4,870.

While the implied exchange rate of 7.5 pesos per dollar is higher than the official rate of 5.09, it’s still better than the rate of 8 pesos per dollar in the black market.

“Historically, gold has been seen as a store of value, so as long as options for doing that in Argentina are limited, people are going to keep buying it,” Banco Ciudad’s Leiza said.

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