ThePanelist.com - Reader Question About The Canadian Dollar

Reader Question About The Canadian Dollar

Written by David Neubert

Saturday, 03 November 2007

A Reader Asks:

Hi David,

How does an average guy like me with an Ameritrade account take advantage of the Canadian Dollar rising (13% since September). Are there any currency products that are traded? Also, can I short the dollar at the same time?

Thanks,
Mark D

Heya Mark,

There is an exchange traded fund that will let you play the rise of the Canadian Dollar relative to the US Currency. I wouldn't do it with my own money at this point. I think the fall in the U.S. Dollar is getting overdone. That is a long term veiw and doesn't mean things can't get worse for the Greenback in the next few months. I started buying the Euro at $1.06 in the early this decade and kept buying as it fell another 20% in my face for two years. Currency mispricings take a long time to work out.

So to answer your question, there is an exchange traded fund called Currency Shares Canadian Dollar (FXC - $107.25). But playing currencies is playing economics.

My way to play any further decline in the dollar is also to pick a currency and stock market region I still feel is undervalued: Asia. I'm playing with the ETF Vanguard Asia (VPL - $74.00).

Best of luck with your currency bets. But be careful.

Disclosure: I own VPL. I do not own FXC. I had about 500 Canadian dollars in a drawer at home but I sold them last month to a Canadian friend. I like Canada, I took the photo above while cycling in Quebec last summer. I like their beer, they way they mostly embrace a bi-lingual culture, their skiing, and their irreverent political attitudes. They said no to Bush's invasion of Iraq; what's not to like. Still I am who I am and I would rather be American.

Photo:slightlynorth, Creative Commons, Flickr

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Comments (3)

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written by Adam Waitt , November 05, 2007

Save the US Dollar! Reinstate the gold standard!
Ron Paul 2008!!!
www.ronpaul2008.com

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written by Mark D , November 05, 2007

Thanks David.

"I wouldn't do it with my own money at this point."

How can I use someone elses money?

Past 3 months:
http://finance.yahoo.com/currency/convert?from=CAD&to=USD&amt=1&t=3m

Your Euro investment is up almost 40-70%??, that seems good, when will you sell?

Thanks,
Mark

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written by David Neubert , November 05, 2007

Well remember that gain is over seven years; so that's not as big an annualized return as it looks. It took me two years to get into it. I've been getting out of the trade slowly for a couple years now by letting the long term European corporate and government bonds redeem. I'm trying to take as long as possible since I hate paying those capital gains taxes. My last Euro denominated bond matures in 2012.

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