Take the Australian Dollar on a Looney Summer Holiday


Go Aussie go!, and we aren’t talking about swimmers or cricketers. “The Australian dollar could being buying as much as 83 US cents in coming weeks amid expectations that interest rates will rise next month,” reports Stephen Johnson at news.com.au today. 

Like any rising currency, there is a winner and a loser. The winner: you the consumer. The loser: you the shareholder of a manufacturing firm whose products abroad are now more expensive.

Everybody loves a winner, so let’s focus on that first. “Imported goods are now at their most affordable since December 1996, when the domestic currency last bought more than 80 US cents.” As if you needed a reason to go out and buy something new, dear reader. We nearly did it ourselves this weekend, flirting with a new video iPod at an electronics store on Bourke Street. But since the dollar in which we’re paid, the U.S., is actually losing purchasing power, the price tag ($499) scared us off. That and all those books on the shelf that keep staring at us forlornly, begging to be read.

“I’d say now is as good a time as any to go on a trip overseas,” RBC Capital Markets senior currency strategist Sue Trinh said. We concur. And donning our travel agent hat at the Old Hat Factory  we say don’t bother going to the Grand Canyon for that audacious new skywalk. It is just a big ditch. And you can’t even bungee jump!  Why not try, say, Canada?

The Aussie-Looney cross is even more favourable for holders of Australian dollars. One shiny gold-looking Aussie dollar coin will buy you ninety- three Canadian cents. Not bad, at all. And Vancouver is lovely in July, in the heart of the North American summer, and the depth of the antipodean winter.

We should know. Last year we spoke at the Agora Wealth Symposium in Vancouver and gave our predictions on solid oxide fuel cells, currencies, and global energy prices—and anything else we were asked about. A few years ago, when gold was still under $300, we had a hard time getting 200 people to join us at the Fairmount Hotel on Nob Hill in San Francisco for a conference. Last year, there were over 600 people at the shindig and Steve Forbes, the American entrepreneur and sometimes-presidential candidate/flat tax advocate showed up to speak.

There will be many diverse speakers there, each presenting ideas about resource investing, currencies, China, India, you name it. Our friend Chuck Butler the currency strategist from U.S. bank Everbank will be there too. Last year, Chuck got up to give a presentation and encountered a technical difficulty. While he waited to have the problem fixed, we approached the podium and opened up our wallet, showing off our global currency hedge fund.

We had five, five unit notes in our billfold at the time. We had five New Zealand dollars, five Australian dollars, five American dollars, five Canadian dollars, and a five euro note. We asked Chuck which he thought would have the greatest purchasing power a year from the day. What do you think he said? What would you say?

We’re going to ask him again. But if you want to hear for yourself, you should consider joining us. If you book your fare while the Aussie dollar is strong now, it won’t matter as much what happens by July. And the worst case scenario is you get three days of world-class investment ideas and analysis, and some sightseeing in a gorgeous coastal city with the Canadian Rockies and Whistler an hour away.

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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