Currency Exchange, Investment Gain, or Just Good Luck?

Posted: Jan 14, 2016 12:01 AM
Currency Exchange, Investment Gain, or Just Good Luck?

As most readers of this column are well aware, I have been a long time proponent of a heavy dosage of cash as the investment vehicle of choice. In addition, I have been a strong supporter of the good old American greenback. A review of my past writings and you will find I am no Johnny come lately. As an Austrian economist the awareness of world sweeping deflation could lead me to no other conclusion. I could, of course, have disregarded the facts and covered myself in Federal Reserve fairy dust. I chose not to. It is one thing to philosophize, however, and it is another to actually enjoy the fruits of your beliefs.

For several years, I would cross the border of New York and Canada to engage in both business and pleasure in the land of the Maple Leaf. It would seem whichever I was engaged in my credit card always came forth when it was time to pay for the evening’s entertainment. That was when the reality of currency exchange hit home. It always seemed that if the bill was $100 Canadian, my American Express card, or whatever I happened to be using at the moment, wanted at least $110 and sometimes more. It seemed that every time I foraged across the border my investment of cash in pocket lost me at least 10% with the so-called differential.

Now the tables have turned and the loonie (Canadian dollar) has suffered an historic drop versus the US greenback as others in the world are also experiencing.

Breaking below $.70 has created a much different American Express bill than I had before. Now, that $100 dinner bill comes in around $70.

Canadians, as tourists, shoppers or even snowbirds, are discovering what I learned a long time ago, and that is, if you are on the wrong side of the currency it can be very expensive. In this instance, 30 percent more for the Canadians and 30 percent less for the Americans. For one who decided to forego the Wall Street and mainstream media noise and recommended keeping a large portion in cash, traveling across the border has become a much more pleasurable financial experience.

If the Fed continues to persist in talking interest rates up the land of the “oot and aboot” will become a new American destination spot.

Investments are made to ultimately be spent and gaining 30%, on my supposedly inert cash, is, in anyone’s book, a very good thing.