Questions: Colombian investments, Perth Mint disclosure, Biking in Panama, Thai crime, Medellin for women

April 16, 2010
Medellin, Colombia

Yesterday I celebrated tax day by charging up my AMEX card on one of the IRS’s official payment websites. There’s nothing like earning travel points for keeping the flames of bureaucracy burning.

And speaking of travel, I should be headed to Ecuador this weekend where I plan on spending several days hopefully hopping around the country; more to follow next week.

On to this week’s questions…

Fred asks, “Simon, I cannot find a clear answer as to whether or not the purchase of Perth Mint Certificates in excess of $10,000.00 would require filing of Treasury Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts).

This is a really important question that applies to both Perth Mint Certificates and accounts. The IRS, as usual, provides no clear guidance specific to these institutions… so I posed the question to my team of legal/tax advisors.

One of them, “JN”, participated with on the recent S&A teleconference that I discussed yesterday, and he is probably one of the world’s foremost experts in offshore banking. I find that his information is priceless, and he’s the kind of guy that you definitely want in your corner.

JN had this to say:

“As far as the TDFs are concerned, I would generally argue that neither gold currency accounts nor Perth mint certificates meet the definition of a foreign financial account.

The new “jobs” bill however changes the dynamics, effective December 31, 2012 by requiring the disclosure of ANY asset outside the US that has a value of $50k or more. This will pretty much make the TDF issue academic except in cases where someone has say between 10k and $49k in gold.”

Next, William asks, “Simon, Medellin sounds like it’s full of opportunity; I’m curious how you would compare/contrast the investment opportunities with Panama.”

Frankly, an analysis of Colombia vs. Panama deserves its own missive. But briefly, I think the best Colombian small investment opportunities are in the property market; you’ll likely score the trifecta– substantial capital appreciation, high income yields, and currency appreciation.

As such, property in Medellin is an excellent investment candidate for tax free / tax deferred structures.

There are also a handful of Colombian mining companies traded on public exchanges, but I’m staying away from them. Here’s why:

The property market in Medellin is undervalued. Cheap, actually… mostly because the market is still pricing in the “Colombia stigma,” i.e. prices are lower than what they should be because the market still has overstated concerns about stability and security.

On the other hand, mining companies with heavy Colombia operations seem to have absolutely no risk priced into their stocks… which is quite strange. The stock market has assumed away Colombia’s risk, and the property market is irrationally overstating it.

The truth lies somewhere in the middle… though I would argue that the best properties in cities like Medellin have very little risk compared to remote mining sites where there is still paramilitary activity.

Next, Bonnie in Massachusetts asks, “Hi Simon, I do a lot of serious road cycling. Are the roads in Panama good for cycling? Are there bike groups or clubs down there?”

The best places to bike in Panama (or walk) are the Amador Causeway (about 4 miles) and the Cinta Costera… but typically, no, the roads in Panama are terrible for cycling. If you bike on a regular city street, you’ll probably get run over. Panama is not biker/walker friendly.

Next, Richard comments, “What’s up with all the violence in Thailand? I thought it was an idyllic Buddhist country. Now it seems like they’re more prone to violence than the good old U.S.A. Even with our budget issues and governator, I’ll take southern California anytime.”

I like southern California too… but don’t be too quick to judge Thailand based on an anomalous incident in which 21 people died. Statistically, violent crime is much, much worse in southern California.

In Thailand, violent crime, particularly against foreigners is almost unheard of; the worst thing you have to worry about there is corruption, not getting your head blown off.

Lastly, Pamela comments, “Simon- I would like your take on Medellin from the single female perspective. What about the men– looks, demeanor, attitude relative to females, local and foreign. What about safety/security, getting around, etc.?”

Look, I definitely do not claim to have the perspective of a single female… but from the best that I can tell, men here interact with their women in typical Latin style, though slightly more respectfully than I have seen in places like Argentina where men regard women as their toys.

As for safety and security, the single women that I know here have never complained about being accosted or threatened… though it is uncommon to see a single, nonprofessional woman in Medellin, mostly because Colombians tend to socialize in mixed groups.

Overall, while I’m soundly unqualified to rate the attractiveness of the men folk here, I can tell you that Colombians are generally a very friendly people. If you speak some Spanish you should be able to make friends in no time, and that goes for anyone.

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