Greenback at 19-Month Low Against Euro–Opportunity Knocks

“Another day, another TSX stock record” reads the headline in a popular Toronto newspaper. The TSX, Canada’s equivalent of the U.S.’s NYSE, has been on a tear for several reasons… the most obvious being the exchange’s large number of resource and commodities stock listings. Are you getting your piece of this action?

Today marks the seventh morning in a row gold bullion prices have opened higher–up this morning a big $10 U.S. per ounce. Hence, you can see why the TSX (an exchange laden with quality gold stocks) continues to move to record highs.

A simple investment strategy I started recommending two years ago can still work profitably today: For Americans, buying quality stocks on foreign exchanges (especially the TSX) is a great way to gain on the decline in value of the U.S. dollar and profit from the rise in commodity prices, especially gold.

On Friday, the U.S. greenback fell in price to a 19-month low against the euro. The “current thinking” in the market is that the Fed will soon lower interest, while rates are rising in Europe. The Bank of England recently raised interest rates to a five-year high of 5% in its effort to curb rising inflation.

My “thinking” is the same I’ve been predicting for about four years: Foreigners are backing away from the U.S. dollar as foreigners see the economy slowing in America and they are becoming concerned about mounting U.S. debt and the consumer and government levels.

No one wants to own a currency that is backed by more debt than assets. Nor do foreigners want to own a currency that seems to continue, and magically, increase its supply.

As the U.S. is becoming increasingly dependent on foreigners to finance its debt, a lower valued U.S. dollar could present plenty of economic problems for the U.S., but this is a topic for another day. Today, gold prices and foreign currencies are shinning as the U.S. dollar falls on world currency markets. If you haven’t adjusted your investment portfolio for this great opportunity, there’s still opportunity. The U.S. dollar has a long way to go down, while quality gold stocks have a long way to go up!