Updated Multicurrency Sandwich

by | Mar 26, 2002 | Archives

See how the European Union can create extra income for you now.

Dear International Friend,

For the past decade many of my readers have learned how to cash in on lowinterest rates and weakness of the Japanese yen. We have borrowed yen atrates as low as 1.5% and invested the loan for 8%, 10%, 12% and even more.This has been one of the longest lasting international economic distortionsI have seen and it remains still. The multicurrency sandwich is a tactic ofborrowing a low interest currency and investing the loan in investments withreturns higher than the loans.

Jyskebank Denmark's third largest bank) in Copenhagen specializes in thisstrategy and the message below from my friend Thomas Fischer, marketingdirector of Jyske's private banking sector shows how the multicurrencysandwich gives you potential to earn 27.75% (or more) on your deposits now.

“Dear Gary

Regarding the MultiCurrency Sandwich here is a current suggestion toexamine:

Borrow 50% of your loan in yen at 1.625%- the yen has strengthened from133 to 129 against the USD but we believe that the yen will weaken again.

Borrow 50% in USD at 3.50% -the dollar interest rate is now so low that itmakes sense to take some of the currency risk out by funding in US dollars.

Invest 25% of the loan Hungarian government bonds 24/11-03 A1 issued inHungarian forint yielding 7,40%.

Invest 25% of the loan in Norwegian government bonds 30/11-04 AAA issuedin Norwegian kroner yielding 6,58%.

Invest 25% of the loan in Poland government bonds 12/10-03 A+ issued inPolish Zloty yielding 9,09%.

Invest 25% of the loan in Transco corporate bond 15/12-08 A2 issued inAustralian dollars yielding 7,09%.

We feel Transco is attractive because of the lack of corporate bondsissued in Australia, plus feel there is a positive outlook for Australiandollars. Transco is a natural-gas transportation and storage subsidiary of aUK company Lattice Group Plc. (UK). The company has a monopoly on gasdistribution in the UK – a positive cash flow outlook as the UK`s office ofGas and Electricity markets set Transco´s prices for a 5 year regulatoryperiod. The next period runs from 2002-2007. The rating is A2/A with astable outlook from all rating agencies.

Norway's outlook is positive as its budget surplus is transferred to apetroleum fund, which is managed by the Norwegian central bank. The objectof this fund is to spread oil revenues and wealth on several generations.The assets of the fund are invested in foreign assets and thus helpstabilize the Norwegian economy. Any change in oil prices which affectssurplus on trade balance will be neutralized through a corresponding changein the capital exports of the petroleum fund which means that correlationbetween oil prices and the value ofthe Norwegian kroner is very low.

Poland and Hungary will both join the EU as its first new members – the currencies are stable.

An investor can start this program with a US $20,000 investment that acts ascollateral for a US$40,000 and $US40,000 equivalent Japanese yen loan. Basedon depositing the total $100,000 ($20,000 and $80,000 loan) in the abovenumbers the projected return before foreign exchange fluctuation and nominalfees will earn a return on the initial $20,000 deposit of 27.75%.”

This updated portfolio is an excellent way to diversify against the U.S.dollar and to increase returns at a time when interest rates are normallyvery low.


I will be speaking at Jyske Bank's international investment seminar, August28 to September 3 where you can learn about the multicurrency sandwich andmuch more. Click here for details on how you can join me and save $200.

Tomorrow's message shows how you can now invest even IRAs and pensions infast rising real estate markets such as Ecuador. Until then, good globalinvesting!