Fact: You’re a Currency Investor

Kat Von Rohr (June 11, 2010)

If You’ve Ever Bought a Stock … or Anything, for That Matter … You’re Already Part of This Profitable Market

Here’s How to Take Advantage of That Over the Next 10 Years

You’ve been a currency investor your entire life. I’ve been a currency investor since I was 3 years old. My older, wiser sister was my first “currency broker.”

Naturally it was my sister’s job to torment me and, as the younger child, mine was to fall for her ploys. Lucky for me, she mostly just chose to do that financially.

“Go get me a drink,” she’d say. “I’ll give you a penny if you hurry.” Or “Puleeeeeeeez make my bed – I’ll give you a nickel.”

And I always fell for it. Even better, I tucked that change away, thinking I was the richest kid in the world.

A year or so later, I went to kindergarten and learned how much a penny is really worth, so I started demanding higher rates to run my sister’s errands. (She whined to our mom that they shouldn’t teach kids such things!)

So there you have it – my introduction to currency investing. Like 98% of dollar-based Americans, I didn’t realize I was an “investor” at all.

The (Harsh) Truth About the Dollar

Yes; it sounds strange. But to be a currency investor, you only have to hold some sort of cash — foreign or domestic.

Think about it. When you hold dollars in your savings account, money market, CD or 401(k), you’re placing a long-term bet on the dollar’s continual performance. Just like any other investment.

Holding your entire savings in dollars is a lot like owning one stock in your portfolio.

It’s a great idea – if you plan on that one stock going up indefinitely.

But the truth is somewhat different.

Below is one of my all-time favorite charts. It shows how much purchasing power the dollar has lost over the last 10 years…

That’s not based on the Forex market – i.e, how much a dollar buys you in euros, Japanese yen or Canadian dollars.

Instead, it’s based on how much your dollars buy you in the real world, in actual goods you buy every day like groceries and gas.

If you think of your cash as an investment, it’s a lot like watching your stock portfolio sink over a decade (which by the way, the Dow has … in case you were interested).

And it’s not just your bank account losing value, either. Technically any inves tment you hold that’s denominated in dollars has lost value over the last 10 years. That includes your stock portfolio (plus capital gains loss), U.S. Treasuries, retirement plans and even real estate.

Not good — especially if the dollar continues to drop in value over the longer term.

‘But Wait, Isn’t the Dollar Rallying Right Now?’

Absolutely.

As I mentioned yesterday, this getting-worse-by-the-moment euro crisis has caused a mass influx of capital to rush to one of the last safe havens in the market – the U.S. dollar.

If you’ll remember, yesterday I gave speculators two short-term ways to play this dollar strength. Now I want to talk to you as a long-term investor.

As you can see from the chart above, long-term the dollar isn’t really a “safe haven” at all. If anything, it’s a slow death march.

But in the shorter term, dollar is king.

So what does that mean for you “currency investors” who hold nothing but U.S. dollars?

It means that while you still may be losing purchasing power, the forex market says your dollars are worth more right now … specifically more Australian dollars, Canadian dollars, Norwegian kroner, etc.

If you’re looking to defend your wealth over the long haul from an overall declining U.S. dollar, now is the time to start diversifying into currencies that will have a longer shelf life.

There’s just no better time to buy foreign currency than when it’s cheap relative to your strong dollar.

Taking advantage of today’s dollar strength and buying currencies on the cheap is a lot like using corrections to buy undervalued stocks. You believe in the company’s long-term potential and know you’ll get the most bang for your buck by acting swiftly.

By investing in these foreign currencies at the right time (now) you hedge your dollar-based portfolio of stocks, real estate, retirement plan, bagging gains as others suffer continued overall dollar decline.

The easiest way I know of to gain maximum diversification is through EverBank’s “All-Weather Portfolio.” We’ve recommended it over the years to our Sovereign Society Members and Currency Capitalist Subscribers and it is a current “Buy.”

The All-Weather Portfolio is a one-stop-shop for diversification into the Norwegian kroner, Swiss franc, Canadian dollar, Japanese yen, Singapore dollar, Chinese yuan and even the hard currency gold. To learn more visit EverBank’s Web site here.

(Just to be clear, EverBank has an advertising relationship with The Sovereign Society, so we may get compensated if you choose to invest in their products. But honestly, I’d still recommend them either way. They’ve won numerous accolades including Money Magazine’s “Best of Breed,” and Forbes’ “Best of the Web.”)

Bottom line: You’ve been a currency investor your entire life. It’s time you took full advantage of that surprisingly “not-so-unique” position.

Good Currency Investing,

Kat Von Rohr, Managing Editor
World Currency Watch

P.S. Every month, currency experts from St. Louis to Denmark to Brazil bring insights and actionable investment recommendations to everyday “currency investors” like you in The Currency Capitalist.

They give you their top picks that you can trade right from your stock account. No fancy lingo or complicated “platforms.” Just good, solid diversification and protection from the U.S. dollar’s ultimate ill fate.

To learn more about taking advantage of the dollar’s temporary strength TODAY (while you still can) … and to find out what will unleash the “Fifth Profit Wave,” get this report right away.