Fortunately, as subscribers to Latin Stock Investing know, I still have a short term negative bias on through the ETF portfolio on the precious metals market and am recommending large cash holdings in the other portfolios.

It could be worse. Consider Venezuela.

While Latin America's economies grew by an average of nearly 6% last year, Venezuela's economy fell by 1.6%, after falling by another 3.3% the previous year, according to the United Nations Economic Commission for Latin America (ECLAC).

While most Latin American countries maintained single-digit inflation rates, Venezuela's inflation rate rose from 12% a decade ago to 27% last year.

And while most other Latin American countries are benefitting from record foreign investments, Venezuela is suffering from capital flight. The country's foreign debt has risen from $35 billion in 2001 to $58 billion in 2010.

News that Hugo Chavez had been in Cuba receiving cancer treatments is actually being cheered by some. The Venezuela Caracas General Index scored an impressive 23% gain during the first half. Are they anticipating a brighter future for Venezuela after the December 2012 presidential elections?

His limited public appearances since returning from Cuba have been received positively by investors, who have bid up prices for Venezuela's dollar-denominated bonds.

Don’t blame it all on Chavez. Venezuela has corruption issues too that even a socialist reform has not been able to change. Regardless of who wins, it will be years before they find out where the $700 billion in oil income went to during the Chavez term of office.

And in addition to lower oil prices, another issue facing Venezuela and Latin America is a weaker U.S. dollar. In the second half, regional currencies generally gained ground relative to the faltering greenback.

Read my recommendations for positioning in this new environment in the attached weekly update and ...

Happy trading this week!

Rudy