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A Rare Opportunity in the Australian DollarBy
Thursday, July 5, 2012
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 (NYSE: 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
Further Reading:
In March, Steve called Australia the last safe place on earth for your money. See his argument here.
Two months ago, Steve showed readers another "cheap" play. See why Steve says it's "the absolute perfect time to buy" this investment right now here.
Market NotesTHE DIVIDEND UPTREND CONTINUES A prediction we made early this year is coming true: Dividends are the "fashionable" thing on Wall Street...
Over the past few years, we've stressed the importance of dividends and high-quality stocks dozens of times in DailyWealth. We practically went to your house and made you buy them. In a world full of risk and fraud, getting paid steady and growing cash dividends is one of the market's best strategies. You can read a few of our favorite pieces on the idea here, here, and here.
Starting early this year, we ran charts of dividend champions like Wal-Mart, Intel, and Coke to show how these stocks are getting popular with money managers. The growing interest in safe dividends has caused these to soar in 2012. Traders would say these stocks are catching a major "bid."
Another blue-chip dividend-payer catching a bid right now is health care giant Johnson & Johnson. As we've noted many times before, J&J earns healthy profit margins and pays dividends that are as reliable as the setting sun. The current yield is 3.6%... which is helping the stock run higher and higher, due to the new fashion on Wall Street.
– Brian Hunt
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