A Rare Forex Trading Opportunity in the Australian Dollar
Currencies / Forex Trading Jul 05, 2012 - 10:27 AM GMTBy: DailyWealth
Dr. Steve Sjuggerud writes: Right now, the Australian dollar is a perfect example of what I look for in my True Wealth newsletter...
It is cheap, hated, and in an uptrend.
It is time to buy Aussie dollars.
You'll collect 3.7% interest... And you'll profit as the currency rises in value. You'd be surprised how much a currency can rise when it gets going – the Aussie dollar, for example, nearly doubled in value after bottoming in late 2008.
Backing up a bit...
The Aussie dollar bottomed at the beginning of June. Take a look...
Since then, the Aussie dollar has been going up. Its uptrend is firmly in place.
This is crucial to us. It is one of the three things we look for in an investment.
Meanwhile, the Aussie dollar is more hated than ever.
Specifically... in early June, investors had larger bets against the Aussie dollar than at any other time in history. Take a look...
As you can see in the chart above, every time the "Commitment of Traders" fell below that black horizontal line, the Aussie dollar eventually entered a three-month rally. (Commitment of Traders simply displays whether speculators are betting on higher or lower prices for the Aussie dollar.)
Today, the Aussie dollar is coming off an all-time extreme low. Just a month ago, there were more bets out there against the Aussie dollar than ever. Those bets have already started to unwind. And it's causing the Aussie dollar to rise.
The perfect time to buy is when the uptrend has slightly appeared, but sentiment is still bad. And that's where we are today...
Even better, the Aussie dollar is the best value out there of all the major currencies, measured by yield. It's paying 3.7% interest. (Compare that to less than 1% from short-term U.S. Treasurys.)
Longtime readers know we look for three things in a True Wealth investment... We want it to be 1) cheap (a good value), 2) hated (or at least ignored), and 3) in an uptrend (or what appears to be the start of one).
We have all three in the Australian dollar.
We can easily purchase the Aussie dollar through the CurrencyShares Australia Dollar Trust (FXA). This fund pays monthly dividends worth 3.7%. And it's my preferred way to invest.
Everything we look for in a trade is right here, in Aussie dollars. Don't miss it.
Good investing,
Steve Sjuggerud
The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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