Longtime readers of Casey Research know that Argentina is one of my favorite places in the world right now... and I'm generally there from October through December.
But recently, a large chunk of our research staff was in Uruguay, so it seemed like a good idea to get an apartment and spend some time there too. I've been there numerous times over the last 25 years, taking the short flight or the pleasant three-hour ferry ride from Buenos Aires, but I've never really written about it. And it's about time because, although Uruguay is unquestionably one of the nicest, safest, and altogether most desirable places in the world, it's among the least known.
Let me start in the manner of Caesar: Omnes Uruguay in tres partes divisa est. These are Montevideo, the beach, and the pampa. Hmmm... and maybe a fourth, the banks. At least the first three offer an opportunity.
The City
Montevideo is the country's one real city. It's a slow, somewhat down-at-the-heels kind of place, where you'll still see quite a few horse-drawn wagons hauling trash.
It's a city where the mate gourds they sell in the shops aren't for tourists, but still for local consumption. When I first visited in 1980, the place was truly in a time warp. They were still using those old black Bakelite telephones. There were still a lot of cars from the '20s, '30s, '40s, and '50s circulating in daily usage; now they're to be found as heirlooms in numerous classic car lots.
When I was in college, in the '60s, one of my Latin friends pointed out how cars were priced at about triple the U.S. level. The idea occurred to some of us that it would be worth the trouble to drive an appropriate model down, sell it, and catch a clandestine banana boat out of Dodge with the profit. It would have been a fine adventure.
As cheap as property is in Buenos Aires, it's even cheaper in Montevideo. The problem is that Montevideo doesn't vibrate. It's just a nice, quiet place.
The Beaches
During January and February, Punta del Este is among the most happening places on the planet. The city – which has elements of places like the Hamptons and Rehoboth, with a touch of Atlantic City because of the casinos and high rises – has bumper-to-bumper traffic in some areas until 4:00 a.m. The other 10 months of the year, especially in the winter, it's a veritable ghost town, like summer beach resorts everywhere. Personally, I far prefer the off-season for a couple months on either side of the peak. Many of the facilities are still open, but the crowds are gone.
I'm confident that most beach resorts (and most ski towns) will increasingly become year-round communities. Today's transportation and communication makes it possible for people with some money to live and work where they want. And they want to be in the kind of place they'd like to vacation in, where others like themselves are to be found. I suspect lots of boomers in the years to come are going to sell their main house (assuming there's a bid) and transplant to their vacation homes. So Punta, and places like it, are going to do better than "average" places.
My advice, if you want a place on the beach, is to come down and take a look. Uruguay has about 500 miles of coastline, and most of it is deserted. And pretty cheap. One quite pretty piece I'm attracted to, close to a small beach town, is 400 acres, with about a mile of beach, for US$4.5 million. Until recently, anyway, that's what some people were paying for hideous McMansions on a quarter acre in the U.S.
The Pampas
Uruguay is about only two things: agriculture and real estate. This country may be small by South American standards (176,220 sq km or 68,039 sq mi, about the size of Washington) but it's almost all usable land.
Most of the country looks like Kansas or Nebraska, Missouri or Illinois. Not unpleasant, but mostly flat to gently rolling. Nothing there but endless fields. Some growing corn, or wheat, or soy, or alfalfa. But mostly they're grazing cattle. Cattle alone, even at current low prices, amount to 35%-40% of the country's total exports.
The price of land fluctuates in lockstep with the price of the commodities grown on it. Good corn, wheat or soy land has tripled in the last few years. Cattle land, however, hasn't changed much. To my way of thinking, this presents a huge opportunity. I say that for a number of reasons, but, in essence, I believe cattle are about the cheapest commodity around today, with very low risk.
The Bottom Line
Uruguay has its problems. Here's a place that should have been on top of the world. A small but highly educated and demographically homogeneous European population. Crime free. Great climate. Hundreds of miles of empty coast. Perhaps the world's premier beach resort. Socially liberal. Religiously agnostic. Huge agricultural production. A tax and bank haven. Next door to two big and vibrant neighbors. What's not to like?
The answer lies in another question that will inevitably arise as you spend time here: Why, with all its apparent advantages, isn't Uruguay one of the richest counties in the world? The answer, as almost everywhere else, is the same: political stupidity. In so many ways – size, climate, ethnicity, economy, ambience – the place resembles New Zealand. Including in mistakes and stupidities. Its history is filled with cockamamie collectivist schemes, some of the highest duties and quotas in the world on imports, and constant destruction of its currency.
Despite these problems, Uruguay has much more going for it than going against it. My guess is that, as in Argentina, you're going to see much more immigration of wealthy Europeans, deserting that sinking continent.
Emigrants are always the best, which is to say the most opportunity and freedom-seeking, people. And because Uruguay is so small, they'll have a proportionately much bigger effect than on their neighbor to the south. The prognosis is very good. The place stands a high chance of transformation from a quiet backwater into a booming hotspot.
I expect to do more things there in the future. But if Uruguay is tomorrow, Argentina is still my choice for today. The nice thing is that they're just a ferry ride across the Plata from each other. I suggest you go down for a visit as soon as possible.
Regards,
Doug Casey
About the Author: Doug Casey, Chairman of Casey Research, LLC., is a best–selling author, international investor, and entrepreneur. He travels the world looking for exceptional opportunities in real estate and undervalued companies in the natural resource sector (precious metals, oil and gas, and more).
The author of four best-selling books, his Crisis Investing was No. 1 on the New York Times best-seller list for 29 consecutive weeks. Each month he provides subscribers to the International Speculator with his best ideas on the world's best investments. Click here to sign up for a risk-free trial subscription to the International Speculator.
