Friday, April 24, 2009
by Karim Rahemtulla, Investment Director, Smart Profits Report

Let’s face it: As a viable investment, the U.S. dollar is out. It’s why investors looking to protect their purchasing power are moving into Canadian dollars.

Canadian dollars… But what about our own dollar?

Our currency is everywhere these days - a dollar here, dollars there. Unfortunately, that doesn’t mean it’s worth more. In fact, it’s worth less, much less.

Fiscal deficits growing into the trillions are going to devalue the U.S. dollar for years to come. It’s time to seriously consider diversifying out of “George Washington.”

This isn’t a call to expatriate or radically alter your retirement plan. Instead, it’s a plan to protect the value of your hard earned dollars - before they become worth a little less each year.

And mark my words: That’s exactly what will happen.

But it’s not the end of the world. There are ways to not only hedge against a loss of your purchasing power and make a profit as well.

Natural Reserves And Careful Planning Make For One Good Investment

The Canadian dollar is currently down about 30% from its highs in 2007. And far from a negative, it means we’re facing a prime buying opportunity… and a market set to push it to new levels.

We don’t need the International Monetary Fund (IMF) to tell us how bad things are. We already know.

Along with the U.S., The Euro-zone and Britain are both victims of the sub-prime crisis, though the latter is in the worst shape of all. And with all of the money those countries involved have pumped into the system, commodity price inflation has nowhere to go but up in the long run…

…Which will drive the value of the Euro, the Pound and the U.S. dollar straight down, and their purchasing power right along with it.

But we expect just the opposite for their Canadian cousin though. Since Canada is a major exporter of commodities like oil, lumber and metals, commodity priced inflation actually helps its currency.

Not to mention that Canada has shown greater fiscal responsibility in the past two decades than too many other countries out there. While other governments have racked up their deficits, Canada actually brought its federal debt down from 70% of GDP in 1995 to under 30% last year.

Currently, it’s actually running a small annual surplus, though this year the country will likely head into its first deficit in years due to the global slowdown.

That hardly means that it faces the same type of financial crisis that the U.S. is suffering from.