Multi Currency Sandwich Update

by | Oct 22, 2009 | Multi Currency Investing

Here is a multi currency update.

The last update Asset Allocation Shift at this site reviewed how I have altered my total portfolio allocation to:

US $ Real Estate 50%

Non US Equities   3%

Emerging Bonds 11%

Bonds                   26%

Ecuador Real Estate  (for sale) 15%

US$ Short             -5%

This is the first time I have leveraged my portfolio since April or May of 2007.

I borrowed US dollars and feel comfortable doing so.

An article by David Lynch in today’s USA Today entitled “Weak dollar raises talk of alternative world currency” explains why.

Here are some excerpts from that article:

Just about every day seems to bring more bad news for the dollar.  Recent months have witnessed a steady erosion in the greenback’s value, down 16% since March against the currencies of the top U.S. trading partners. On Wednesday, the euro broke through the symbolically important $1.50 barrier for the first time in 14 months.

Depending on whom you believe, a dollar hovering near its 52-week low represents either the market’s devastating verdict on the Obama administration’s profligacy or a salutary rediscovery of risk by newly emboldened investors.

Maybe it’s a bit of both. But the downbeat drumbeat bangs on. Chinese officials openly worry about taking a bath on their enormous U.S. Treasury holdings. Foreign bankers talk of promoting an alternative global currency, such as the euro, yuan or a new synthetic medium of exchange cooked up by the International Monetary Fund.

In the U.S., some voices on the right, such as Rep. Michele Bachmann, R-Minn., detect an anti-American conspiracy to scuttle the dollar. But the roster of those opining on the dollar’s woes includes establishmentarians such as Robert Zoellick, president of the World Bank and a former top official in Republican administrations. “Looking forward, there will increasingly be other options to the dollar,” he warned last month.

In March, Chinese Central Bank chief Zhou Xiaochuan proposed shifting global finance to a reliance on a new international reserve currency rather than the dollar or any other national unit. The aim would be to avoid the periodic crises that have characterized recent decades. But Zhou acknowledged that any such change would take “a long time.”

For now, the dollar’s fundamental standing remains what it’s been for decades: a convenient medium of exchange for buyers and sellers around the world. Just as Chinese merchants speak the global language of English when trading with Saudi oil barons, they use the global currency to buy the oil. “The reserve currency is a natural monopoly. It’s so convenient to list prices in a single currency,” says Harvard University’s Rogoff, co-author of This Time Is Different, a study of financial crises.

In the short run, the only currency that could challenge the dollar is the euro. It, too, has a continental-size economy behind it, and a decade after its introduction, the European currency has established itself as a fully convertible, stable store of value.

But for all its attractions, the euro lacks some essential attributes. Although the European Union has a central bank, comparable to the Federal Reserve, there is no European treasury. Instead, there are 27 European treasuries. Investors can’t easily track or influence fiscal policy on the continent.

There’s another potential dollar rival on the horizon, though its day likely lies a decade or more in the future. Just as the United States overtook the British empire, China’s economy one day is likely to pass the U.S.’s. When it does, the yuan would be in position to fill the dollar’s global role.

But before it does, China will have to thoroughly overhaul its existing financial system. Today, the yuan isn’t freely convertible into other currencies, and there are strict limits on the cross-border movement of the Chinese currency. Chinese officials publicly have committed themselves to freeing the yuan to float alongside the dollar, euro, yen and other major currencies. That change, however, won’t happen overnight.

Even if foreign investors have concerns about having so much of their national wealth tied up in dollars, there is a limit to what they can do about it in the short run.

Further to fall

The dollar’s long-run prognosis is negative. In the wake of the crisis, a retrenchment in cross-border financial flows will mean less demand for dollar-denominated assets. And with Uncle Sam’s printing press running overtime to cover the government’s trillion-dollar budget deficits, the currency is expected to be further cheapened, says Eichengreen.

The decline in the dollar’s value in the past seven months largely reflects an unwinding of the “flight to quality” that occurred during the most panicked crisis phase. Amid unprecedented levels of uncertainty late last year, investors flocked to assets denominated in the largest, most liquid currency. That drove the dollar’s value against the euro, for example, up about 13% over the three months ended in March.

Since then, the euro has regained the lost ground and then some. A euro, which settled at $1.50 Wednesday, was at $1.43 in December.

That said, neither the euro nor Japanese yen have had anything to celebrate. The biggest beneficiaries of the move out of dollars since March have been currencies of countries that heavily export raw materials, such as the Australian dollar (up 33% against the greenback) and the Canadian loonie (up 21%).

This is a good article (see a link to the entire article below) but one comment is ever so wrong!

The comment is: Even if foreign investors have concerns about having so much of their national wealth tied up in dollars, there is a limit to what they can do about it in the short run.

There are many ways to protect against the US dollar’s fall… which is why I borrowed dollars and invested in the Mexican peso, Australian and New Zealand dollar.

The multi currency sandwich employees the benefit of positive carry.  In other words you get paid to borrow dollars.

Look for example at a $150,000 investment that leverages one time with borrowed dollars.

$150,000 invested.

$150,000 borrowed at 3% (Jyske rates may even be lower right now).

$100,ooo invested in MEXICAN BONOS 10% Due 2024 117 yielding  8%
$100,000 invested in Australian dollar EURO INVESTMENT BANK 6% 2013 selling at 101.49 and yielding 5.56%
$100,000 invested in New Zealand dollar EURO INVESTMENT BANK 6.5% 2014 selling at 104.77 and yielding 5.38%

The average yield is 6.31% or $18,930

The loan cost is $4,500

The return before forex profit or loss is $14,430 or 9.62% per annum

Plus your investment has the forex potential to be gained if the dollar falls further.


There are two risks to be concerned about.  First whatever you read in USA Today is the news. Smart investors have bought on the rumor and will sell on the news.

The US dollar can rise… especially short term… in which case you would have a forex loss… on paper at least so do not risk more than you can afford to lose… especially short term.


The greatest asset of all is the ability to labor at what you love wherever you live. This brings everlasting wealth.

This is why we are providing a special three for one offer with our  course Tangled Web… How to Have an Internet Business

This course can help you create your own internet business.

Our emailed course “Tangled Webs We Weave – How to Have Your Own Web Based Business” is a continuing educational program.  You receive the first 28 lessons when you enroll and a new lesson every week or two.

This course teaches how to create a web based business and is developed from the ongoing experiences that we have from our successful and profitable internet business.

This course is well worth the enrollment fee of $299… but currently you also receive two additional courses FREE.

The other two courses are #1: International Business Made EZ, and #2: Self Fulfilled – How to be a Self Publisher.

These two courses have sold for $398 and thousands have paid this price. We add them to your course, at no added cost, as I believe they will help you develop a better business in these crucial times..

Even Better Get All three Courses Free

To make this offer even more compelling,  I am giving everyone who enrolls in all our seminars or tours for any one month, three online courses “Tangled Web… How to Have an Internet Business Course,”  “Self Fulfilled- How to be a Self Publisher” and “International Business Made EZ”  FREE.


Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

December 6-8 Blaine Watson’s  Beyond Logic & Shamanic Tour

December 9-10 Imbabura Real Estate Tour

December 11-13 Ecuador Coastal Real Estate Tour

Join us in 2010.   Attend more than one seminar and tour and save even more plus get the three emailed courses free.

Our multi seminar-tour discounts have grown!

See the 2010 winter schedule below.

2 seminar courses & tours

3 seminar courses & tours   $1199 $1,749

4 seminar courses & tours   $1,399 $2,149

5 seminar courses & tours  $1,599 $2,499

(Be sure to show in the comments section which courses and tours you are attending)

Join the International Club attend up to 52 courses and tours in 2010 free.

Jan.   8-11     Ecuador Export Tour ($499) Couple $749
Jan. 13-14     Imbabura Real Estate Tour
Jan. 16-17     Coastal Real Estate Tour
Jan. 19-20    Quito-Mindo Real Estate Tour
Jan. 22-23    Cuenca Real Estate Tour

Feb. 11-14   Quantum Wealth Florida -International Investing & Internet Business, Mt. Dora, Florida ($749) Couple $999
Feb. 15-16   Travel to Quito and Andes
Feb  17-18   Imbabura Real Estate Tour
Feb. 20-21  Coastal Real Estate Tour
Feb. 23-24  Quito-Mindo Real Estate Tour
Feb. 26-27  Cuenca Real Estate Tour

Mar. 11-14     Super Thinking + Spanish Course, Mt. Dora, Florida ($749) Couple $999
Mar. 15-16    Travel to Quito and Andes
Mar. 17-18     Imbabura Real Estate Tour
Mar. 19-20    Cotacachi Shamanic Tour
Mar. 22-23    Coastal Real Estate Tour
Mar. 25-26    Cuenca Real Estate Tour

Read the entire article “Weak dollar raises talk of alternative world currency