Frank Holmes'  Instablog

U.S. Global Investors travels the world in search of new investment opportunities in the natural resources and emerging markets sectors. Often that travel is to remote provinces that also can present physical and political dangers. Jayant Bhandari, a U.S. Global consultant, recently visited gold projects deep in the interior of Colombia. Here’s his dispatch.

We visited Ventana Gold’s La Bodega project, which is a short helicopter ride from the city of Bucaramanga in the eastern interior of Colombia, not far from the border with Venezuela.

La Bodega is still an early stage project, but it has released some drill results that have attracted some attention. Adjacent to La Bodega is Greystar Resources’ Angostura project, which has measured and indicated resources of more than 10 million ounces of gold and 50 million ounces of silver, plus an inferred resource of another 3 million-plus ounces of gold.

Gold mining in Colombia has a history going back nearly five centuries, and the country is one of the world’s top producers. According to the World Gold Council, Colombia produced 40 tonnes of gold in 2007 (18th in the world), double its output in 2002.

In Bucaramanga, we were escorted by private security and the army provided protection when we were at the camp site of La Bodega. While the private security was an attempt to be extra safe, it was obvious that the security has improved very significantly. Those who have been to Colombia on earlier occasions attest to the fact that there has been a huge improvement in the security, as well as in the economic and social situation.

The bad stories of the past have still not brought the tourists back to the beautiful capital city of Bogota, where we needed no security and could walk around freely.

Alvaro Uribe, Colombia's pro-business and pro-American president, is currently serving his second four-year term, and a constitutional referendum effort is under way to allow him to  stay for a third term. 

During Uribe’s presidency, the Revolutionary Armed Forces of Colombia (FARC) and other armed rebel groups have suffered a series of military defeats. Polls consistently show him as very popular—his job approval rating as of last month was 68 percent. It had been as high as 91 percent in June 2008, after a military operation freed 15 high-profile hostages.

Uribe gives very high importance to creating an investment climate so as to create fiscal resources to invest in the welfare of the people and to eliminate social injustices. He has also sparked some controversy -- the army has been blamed for human rights abuses and his attempt to change the constitution to run for a third term is a hot topic.

Overall, however, we returned with a positive opinion of the situation in Colombia.

The following securities mentioned in the article were held by one or more of U.S. Global Investors’ clients as of 3/31/09:  Greystar Resources, Ventana Gold. 09-431

Many years ago, when I first traveled to China, the presence of construction cranes as far as the eye could see really solidified in my mind that something special and enduring was going on there.

With the power of first-hand experience in mind, we’ve set up a webcast double feature for investors.

Next Thursday, I will share what I’ve learned on recent trips to Europe and Asia. What signs of recovery are out there? Have the actions of global governments been enough to pump life back into these economies?

And on Friday, my good friend Andy Rothman, CLSA’s China macro strategist, will fill you in on what’s happening on the ground in China.

Has the Beijing government’s infrastructure-focused stimulus been effective as reported? Will more stimulus be needed for growth to continue in the second half of 2009?

Andy is one of the most knowledgeable sources on China. He spent 17 years following China’s economic policy while working in the U.S. foreign service. He’s been CLSA’s China macro strategist since 2000.

I urge you to take advantage of this opportunity to expand your global perspective. Registration for both webcasts is below.

Click here for more information:

Searching for Signs of Recovery

China's Impact

I also wanted to share with you a slideshow of ongoing construction projects in China that I found on wallpaper.com. It’s really interesting to see how the unique Chinese culture mixes with the rapid changes that are taking place.

Watch the Slideshow

The four largest emerging nations are meeting deep in the heart of Russia this week. It’s interesting to note that the president of Iran—accused by many of his angry countrymen of rigging his re-election—made an appearance at the gathering.

It’s equally interesting to note that the United States was not invited.

What to do about the dollar is a key item on the agenda for the meeting among Brazil, Russia, India and China—collectively known as the BRIC nations.

Russia and China have both said publicly that they want to change the dollar’s role as the globe’s reserve currency. The BRICs have built up huge surpluses of dollars and Treasury securities whose value has been in steady decline for years now. The trillions of dollars in economic stimulus coming out of Washington threaten to erode the dollar’s value even more.

Russian officials say the world would be better off with a basket of currencies that includes the Chinese yuan, the Russia ruble and gold. Today a Bloomberg story says the four BRIC countries may set up a partnership to invest in each other by buying each other’s bonds and currencies.

Analysts say such a system would work on a relatively small scale and not right away, but I think that misses the bigger point. Momentum is moving against the dollar, and it’s hard to see now how it will move back. This uncertainty stands to be a positive for gold, oil and commodities.

The BRICs represent 40 percent of the world’s population, and their economies are growing at a much faster clip than the developed nations.

As the economic gap narrows relative to the U.S., Europe and Japan, the BRICs will have a greater say in making the important decisions, such as the future structure of the world’s main reserve currency. Their meeting this week makes clear these emerging giants will make sure they are heard.