Image: Bill Fleckenstein

Bill Fleckenstein

Given the mayhem in the markets recently -- or a few weeks ago, or a few months ago; take your pick -- I wouldn't blame anyone for feeling like they just wanted to crawl off into a cave and put a big "Wake me when it's over" sign on the entrance.

Thanks, I believe, in large part to the ascendance of computerized trading, volatility is off the charts. That's true even in the notoriously volatile precious-metals sector, which saw a stomach-churning decline a little over a week ago after a particularly strong showing of late. In times like these, the general feeling is that no matter what you do, it will be wrong.

Certainly the world is full of problems, and I have spilled more than my share of virtual ink discussing them: from our own economic and fiscal woes and relentlessly bad policy (monetary, political, you name it), to concerns about sovereign debt and the stability of various banking systems in Europe -- particularly Greece, Ireland, Italy, Portugal and Spain. And those are just the issues that have to do with money.

Believe it or not, however, investment opportunities are still out there. Exciting ones. Good ones. Possibly great ones. And while it may be tempting to bury one's head in the sand, I would encourage such behavior only if the sand in question is located somewhere in particular: namely, Mongolia (a country Sam Zell recently said was on its way to becoming a massive "sovereign wealth fund").

Not just deserts

For those who don't know, I am a director of Mongolia Growth Group, a Canada-based company with operations in Mongolia, which currently trades on the Canadian National Stock Exchange (YAK, American Depository Receipt symbol: MNGGF).

Founded last February, the company is focused primarily on real-estate investment and insurance.

The investment case for Mongolia relies on a number of key factors:

  • It is new to capitalism (which essentially began there in 1991).
  • The country has huge amounts of untapped natural resources, particularly minerals.
  • Gross domestic product in 2010 was more than $5 billion spread over 2.7 million people.
  • Just one large mining project there, Oyu Tolgoi, will require $6 billion and generate $7 billion a year in revenue at current metals prices.
  • There are enough new mines and other projects that GDP could grow at double-digit rates for the next decade.

(For those who would like to know more about the country, see the current issue of National Geographic.)

Trying to invest from abroad, however, presents several obstacles, including:

  • Only a few dozen companies trade on the country's stock exchange, and they do so infrequently. None trade in the U.S.
  • Financial disclosure is not adequate in most cases.

Poised for growth

So while the Mongolian economy is poised for growth, and the country's unique history and characteristics serve to insulate it from many of the problems currently facing many "advanced" nations, it is almost impossible to seize the opportunity from afar. You have to be there, in person, on the ground, which is why Mongolia Growth Group was created and why I am involved in it.