Buying stock/etf/etn in foreign companies sold on american market

[rrcamp]

I have a Scottrade account and an E-Trade account. E-Trade allows you to trade on foreign markets in foreign currencies. I see it as a poor-man's, do-it-yourself EuroPac. Unfortunitely, you need $10,000 plus in the account or you'll get hit with quartly charges. I'm not sure I like this policy.

There are many foreign companies that trade on US markets in USD. I've looked at oil & gas companies in Argentina, I own GFI which is South African, tons of Canadian, etc.

What are the problems with buying foreign stock/etf/etn/whatever on a US market.

The #1 obvious problem is that they are priced in USD. Would dividends be paid in the local currency, then converted to dollars? If do, at least your dividends would be okay, but of course your capital gains would be a bit in the toilet...

Any thoughts?

 

[Dianne]

I am in the process of opening an account with EuroPac. I spoke with someone there yesterday, and he said American based companies always pay everything in US dollars, dividends, etc. He did say you would get the benefit of the exchange rate; i.e., Euro $1.50 to $1.00 US dollar, you would take the profit in the exchange rate; however, you will be paid in US dollars.

So yesterday, I was on the verge of just opening a swiss bank account with UBS or USB, then learned yesterday that our government strong armed them to stop working with American citizens. So now I am unsure as to what to do. I don't feel very excited investing through an American company, as the feds can still confiscate everything you own if they need your money and assets.

 

[rrcamp]

He did say you would get the benefit of the exchange rate; i.e., Euro $1.50 to $1.00 US dollar, you would take the profit in the exchange rate; however, you will be paid in US dollars.

So this answers one question: if I buy a foreign company on an American market with, for example, Scottrade... that foreign company will pay dividends in EUR/CZK/whatever... then that is converted by somebody into dollars and that's what you get. So if the dollar crashes to 1 EUR = 10 USD, then you still basically get the 1 EUR as long as you take those dividends and exit the USD immediately. Or, you could prehaps set it up to reinvest the dividends back into the foreign company.

This still doesn't address the problem of capital gains being in USD. I guess that's why you need to execute these trades on the foreign market in foreign currencies via EuroPac, E-Trade, whatever.

The big example here is: you can buy a ton of great Canadian and South African mining compnies on American exchanges using a cheap brokerage. But you buy them in USD. Thoughts on this.

 

[rrcamp]

I had another thought... would the foreign mining company's stock act as gold does. The underlying stock has true value. People from all over the world can buy this stock on an American exchange. Would this mean then, that is the dollar is worth 1/2 next year, the mining stock might trade at 2x today's price, all other things being equal?

 

[slacker921]

I had another thought... would the foreign mining company's stock act as gold does. The underlying stock has true value. People from all over the world can buy this stock on an American exchange. Would this mean then, that is the dollar is worth 1/2 next year, the mining stock might trade at 2x today's price, all other things being equal?

Keep in mind that if the dollar did drop to 1/2 it's current value then people in the US would be less likely to buy foreign made jewelry, electronics, etc.. which might factor into the demand for gold.

 

[LibertyEagle]

I am in the process of opening an account with EuroPac. I spoke with someone there yesterday, and he said American based companies always pay everything in US dollars, dividends, etc. He did say you would get the benefit of the exchange rate; i.e., Euro $1.50 to $1.00 US dollar, you would take the profit in the exchange rate; however, you will be paid in US dollars.

So yesterday, I was on the verge of just opening a swiss bank account with UBS or USB, then learned yesterday that our government strong armed them to stop working with American citizens. So now I am unsure as to what to do. I don't feel very excited investing through an American company, as the feds can still confiscate everything you own if they need your money and assets.

You can still have an account in Switzerland that holds physical gold.

 

[rrcamp]

I'm bumping this because I still feel I really haven't gotten an answer, and this is a pretty important question for a lot of people I'm sure.

Buying stock in foreign companies on US markets in US dollars. What are the problems with it? We've decided that dividends aren't a problem since they are paid in foreign currency, the converted to USD.

The big question is how capital gains... ie. the stock going up.. will be affected by decline of USD. My assumption is that the stock will act like gold - with real value - so the USD price of the shares will go up 2x on a 1/2 fall in dollar value (lets say against gold).

Maybe I can ask Peter during his next radio show...

 

[LibertyEagle]

Maybe I can ask Peter during his next radio show...

Schiff has a radio show? When, where?

 

[FunkBuddha]

Schiff has a radio show? When, where?

The live show is at 8:00 EST on Wednesday.
http://www.europac.net/radioshow.asp
and here are the archives.
http://www.europac.net/radioshow_archives.asp

 

[LibertyEagle]

Thanks.

 

[acroso]

The Euro could end up as bad off as the dollar though...

At least with commodities they are bought and sold in dollars. If we inflate, the prices go up so you don't lose dollars in that sense.

 

[Jason T]

WTF, you guys are using capitalism to make money? Don't you guys know the more efficient way to get things is to support Barack Obama who will give you FREE health care, FREE education, and FREE stimulus paychecks in return?