Global Investor: How to Use a Central Banker’s Clues for a 170% Gain
As a currency trader, I can pair up the high and low yielders for higher profits in the currency markets.
For instance I just recommended my Currency Cross Trader’s buy the high-yielding Aussie dollar and short the New Zealand dollar by going long the AUD/NZD last month.
It took some patience. But a couple weeks later, my subscribers were sitting on a 128% gain, so I asked them to close half their position. A few days later I recommended they close the other half of their position for a nice 170% gain.
In other words, we got two triple-digit winners out of the same currency trade. And it was only based on the interest rate differential between the two currencies.
Even if you don’t have any interest in FX trading, just paying attention to the central bankers can give you a leg-up in your long-term currency investing.
For instance, my colleague Ashish Advani has had his eye on the Australian dollar since June because he was betting the Reserve Bank of Australia would raise rates first.
That’s when he first recommended our long-term Currency Capitalist subscribers go long the Aussie dollar. As of yesterday, that initial long-term bet on the Australian dollar is up over 24%.
Ashish didn’t recommend his readers go anywhere near the Forex market. That particular play was available through a regular stock brokerstockbroker. And his reasoning was largely based on the prudent Reserve Bank of Australia’s interest rates.
If you’re wondering, I STILL love the Australian dollar for 2010. I still believe the Reserve Bank of Australia will be the first to raise interest rates in 2010.
When they do, it will be their fourth rate hike since October. And the Aussie dollar will soar even higher. In fact, the Aussie dollar could even hit parity with the buck for the first time in decades in 2010.
Bottom line: Stay long the Australian dollar and be sure to keep an eye on interest rates as we head into 2010!