The Canadian dollar touched a low of 90.06 cents vs the U.S. dollar in trading today primarily because the Bank of Canada kept the Bank Rate unchanged.  This, combined with signs of sluggish economic growth and a jump in unemployment, was enough for foreign investors to begin focusing away from Canada.

Bloomberg News even ran a story today about how Canada had lost the “haven” status that it had acquired after the Global Credit Crisis and Great Recession in 2008-2009.

There is also speculation that the Governor of the Bank of Canada, Stephen Poloz, is rather happy with the direction of the Loonie as this will help the primarily Eastern Canada-based manufacturing exporters.  He was once the President of Export Development Canada.  This might be an indication of where his heart is.

It also appears that he is not immediately sympathetic with the plight of cross-border shoppers or Canadians that might be looking to buy property down in the Sunbelt of the U.S.  The fall in the Loonie will also sting foreigners who have bought Canadian real estate over the past few years.

Also, in a bit of a contradiction, he said that he was increasingly concerned about inflation in Canada.  Well, one of the quickest ways to increase the risk of inflation is to let your currency devalue.  The cost of all imports will rise in that scenario, which sounds a lot like inflation to me.

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Jim Rogers has one of the greatest track records in history… 

He delivered a 4,200% return to investors of his legendary Quantum Fund in the 1970s… at a time when the U.S. stock market returned just 47%. And then he walked away from managing money. 

Today, Jim and I agree on a major investment idea. We agree that the time has come to move a portion of your money OUTSIDE of the U.S. dollar… and into a place you’ve probably never considered. 

I have a simple way to make the investment… and I believe it’s the safest place to park your cash over the next few years. 

Jim is more ambitious. He believes it could be a triple-digit winner. Either way, it’s an idea you need to consider today. 

Let me explain… 

This summer, Jim predicted that China’s currency could soar by 300%, 400%, or even 500% against the U.S. dollar in the next couple decades. “If anyone wants to sell renminbi, I’d be willing to buy,” Jim said. 

And just last month, Jim said he expects China’s currency to replace the U.S. dollar as the world’s most important currency in the next 20 years. (He is so optimistic about China, he moved his family from New York to Asia, and his young daughter now speaks fluent Mandarin.) 

Anyone investing in China’s currency over the last few years has done well. Just this week, the dollar hit a new low versus China’s currency… the renminbi. In fact, the dollar has looked pretty bad against the renminbi over the last decade. Take a look:

Importantly, Jim and I both believe this trend will continue for one simple reason… China’s currency is deeply undervalued. 

The renminbi is undervalued by 30%-50%, according to The Economist magazine. 

China’s currency has appreciated 3%-4% per year in recent years. I think that’s our “base case” going forward. However, we might do much better than that in the coming years… thanks to Janet Yellen. 

“There will be a prolonged period of appreciation for the renminbi,” Li Daokui, a former adviser to China’s central bank, said when he heard Yellen got the job. He knows Yellen will keep printing money and keep interest rates at zero for a “relatively longer period,” which would further weaken the dollar. 

So we can expect to earn 3%-4% a year in profits simply by holding cash in China’s currency – with the potential for much bigger gains if smart people like Jim Rogers are right. 

The easiest way to make the trade is through a U.S.-traded exchange-traded fund (ETF) that pays a 3.3% dividend. 

I’m talking about the PowerShares Chinese Yuan Dim Sum Bond Fund (DSUM). 

This fund holds a portfolio of “dim sum” bonds. A dim-sum bond is issued OUTSIDE of China, but it is IN China’s currency. This is exactly what we want. 

With DSUM, you’ll earn a 3.3% dividend. PLUS, you’ll get the renminbi’s appreciation – around 3%-4% a year, maybe more. You may also see a capital gain as DSUM’s bonds increase in value. It could add up to 10% a year… in an income investment. 

You MUST face the facts… You have too much of your wealth in the U.S. dollar… 

Every day, our politicians are actively making the U.S. dollar more unattractive in global markets. Meanwhile, China is actively making its currency more attractive. 

According to one of the best investors of all time – Jim Rogers – the renminbi could overtake the U.S. dollar within 20 years as the world’s most important currency. And he says it could go up in value by 300%, 400%, or 500% in the next couple decades. 

You can choose to ignore this trend and see your wealth in U.S. dollars shrink. Or you can position a portion of your portfolio in China’s currency to take advantage of it. I recommend parking some of your cash outside the U.S. through shares of DSUM. 

Good investing, 

Steve Sjuggerud 

 What Blows Up First? Part 1: Europe, 

2013 was a year in which lots of imbalances built up but none blew up. The US and Japan continued to monetize their debt, in the process cheapening the dollar and sending the yen to five-year lows versus the euro. China allowed its debt to soar with only the hint of a (quickly-addressed) credit crunch at year-end. The big banks got even bigger, while reporting record profits and paying record fines for the crimes that produced those profits. And asset markets ranging from equities to high-end real estate to rare art took off into the stratosphere.

….continue reading HERE

and

What Blows Up First? Part 2: Japan

Of all the crazy financial stories of the past year, Japan’s might be the craziest. To recap:

For two decades, successive Japanese governments have fought the deflationary effects of bursting real estate and stock bubbles with ever-larger public works programs. These prevented the collapse of the country’s zombie banks and construction firms but didn’t produce the kind of growth necessary to bring the zombies back to life. The sustained deficit spending did, however, produce a public debt that as a percentage of GDP dwarfs even those of the US and Europe.

So in 2013 incoming Prime Minister Shinzo Abe demanded that the Bank of Japan inject enough credit into the banking system to produce at least 2% inflation. The bank acquiesced and in the space of less than a year more than doubled the size of its balance sheet by buying bonds on the open market with newly-created currency.

Now here’s where it gets strange.

….continue reading HERE