Yen for Profit


Recent currency trends are creating a yen for profit.

Cotacachi-house

Finding good value is the key to good investing. We’ll look at the value of these Cotacachi Ecuador houses in a moment.

First, let’s review the role of the US dollar in Ecuador and how currency distortions can affect Ecuador real estate value and create extra income.

The March 18 2010 message Borrow Low Deposit High in Japan looked the potential of borrowing the Japanese yen to invest in other currencies that paid higher returns.

The March 25 2010 Yen Yuan Fault message fortified the thought that the Japanese yen was overbought and could be a good  currency to borrow.

These messages looked at the weakness in the US dollar’s strength… but suggested that the real fortunes may be in an even greater over valuation weakness create by  the Japanese yen’s recent rise.

This first chart from www.finance.yahoo.com shows how the dollar fell steadily versus yen until December2010.  Then a recovery began.  Now in a second wave of recovery that began in early March, the yen is in a downswing and this first alerted me to the turn around.

finance.yahoo.com-currency-charts

However the previous messages also reviewed how there may be even greater profit potential in the drop of the euro.

This euro dollar chart below shows the euro’s fall versus the dollar which creates even greater potential from that euro fall…

finance.yahoo.com-currency-charts

Here in another www.finance.yahoo.com chart, we can see how the euro has fallen and now is also showing signs that there are rising pressures. This potential may be even stronger when comparing the euro to the yen.  This www.finance.yahoo.com chart shows how the euro has now risen from 122 yen per euro to 128 yen per euro since that first march 18 alert.

In other words one would have had to borrow 12,200,000 yen to have euro 100,000 worth of yen when the rate was 122. At the current rate of 128, they  would  need only 95,312 euro to pay off the loan for a forex profit of almost 5,000 euro in a month.

finance.yahoo.com-currency-charts

However this is not the reason to make a multi currency sandwich. The goal is to enjoy positive carry… earn more than the cost of the loan.  Quick forex profits like this are just a bonus…  and certainly a good start.

Positive carry is extra income.  You can earn extra income to increase profits or enhance your lifestyle with the MultiCurrency Sandwich.

One reason this play makes good sense now is that the investment community panicked over the Greek debt crisis.  During times of panic, the market usually oversells during the exit stampede.  This pushed the euro lower than it’s real fundamental value.  Such lows are always good times to buy.

Now the Greek tragedy is fading. Investors are growing less worried.

Lars Stouge, president of wrote Jyske Global Asset Management just wrote this opinion entitled “The euro – an ongoing project. Greece, the unavoidable tragedy:

The euro is making headlines and therefore we have produced an article on the crisis in the eurozone. We conclude that the euro is not going to break up. •    The Greek drama has been anticipated since the euro was born.  Europe is not an “optimal currency area” and creating the European Monetary Union was only a half-union and the founding fathers knew it.  However, the Greek tragedy is not going to be the end of the euro.  Greece will not be kicked out of the euro and they are better off not leaving the eurozone.

The euro is only a half step

The euro and the eurozone was created 10 years ago. In 1992 the Maastricht Treaty was signed by the European Community.  The treaty created the European Union and led to the creation of the euro in 1999. Many years of struggle between EU members had gone ahead of the Maastricht Treaty. The discussion was on how much of a true supranational union Europe should have and how fast. France has always been eager to create a real federal union with a powerful European government capable of ruling over member countries on economic policy, foreign policy, military policy etc. On the other hand Germany and especially Great Britain have never loved the idea of a supranational EU power.  Therefore, the Maastricht Treaty was a compromise where member countries agreed on a “half union” as only a monetary union with a common currency, the euro, was established. Fiscal and political powers were not unified. But a “half union” is like trying to jump a river in two steps, with the result that your feet get wet.

Therefore, Greece is a predictable “wet sock”.

The eurozone is not an optimal currency area

The fundamental trouble is that Europe is not an optimal currency area. An optimal currency area is a place where countries or regions have a high degree of a common economic structure and basically equal conditions and development. Economies move in parallel, and hence there is no need for corrective currency movements between participating countries in an optimal currency area.
Normally it’s difficult to find large areas that fulfill the conditions of an optimal currency area. However, divergences can be overcome if “factor mobility” is in place. E.g. if one country in a common currency area looses competitiveness and jobs to a neighbor, unemployed people will move across the border to find employment. This is what happens to some degree in the US, but it’s an illusion in Europe. Alone the language barriers prevents this.
Now, if factor mobility does not exist then you can install a federal government with a federal budget to pay for regions in bad shape. This is the kind of union that the super or supranational Europeans dream of, but the majority of European populations fears. Few European countries have dared to ask their voters for their opinion. Denmark is an exception and the outcome has on several occasions been a “no”. Therefore, Denmark is not part of the eurozone. Neither is the UK.

Germany is too tough a benchmark for southern Europe

Faced with the resistance of the common man in Europe, the fathers of the Maastricht Treaty gave up on the supranational part of the union and instead supplemented the monetary union with a set of rules on how members should conduct fiscal policy. Limits were put on running budget deficits (max 3% of GDP) and public debt (max 60% of GDP). The thinking was that eventually countries would converge into economic regions alike, becoming de facto an optimal currency area. However, history has taught us that it didn’t happen, at least not yet. Almost since the start of the euro the southern part of the eurozone has lost competitiveness to the north due to too high unit labor costs and too low productivity. Only in the first few years after the euro was established, the southern members were able to follow the north. That was in the period when Germany was struggling with the after effects of the reunification between the two Germanys. But it was only a brief respite. Today, it is estimated that Greece should devalue its currency – if it had one – with some 40% to make up for the accumulated loss in competitiveness. Without a currency of their own this correction shall take place through years and years of thrift and wage restraint. The southern countries of the eurozone do not exactly have a good track record on these measures, on the contrary. What should make them change behavior now? Maybe the threat of being thrown out of the euro club.

Despite all the euro is not going to break up

But being thrown out is not a realistic threat as it is in the interest of the big European countries to keep the eurozone intact. The eurozone creates a large and stable export market for countries like France and especially Germany. Both countries have invested decades of political capital in the euro project and have significant economic interest in a large and stable eurozone, and therefore they will not allow the euro to break up. This is also why it was foreseeable that eventually these two countries would come up with a “rescue package” for Greece. Involving the IMF also makes sense as it signals to other debt burdened euro members that there is no free lunch. IMF and Germany will demand tough economic discipline on countries that does not make it on their own and seek help from other euro members and the IMF. Also, Germany can tell its skeptical population that they are not going to pay the total bill for the Greek “party”.
What then about the Greek’s taking the initiative to vote with their feet’s and leave the euro? Fact is that leaving is not really an option for Greece. Not only is there no rules in place on how a euro member could leave the eurozone, but the economic consequences for Greece would be scary. If the Greek left and got their own currency back, then they would get an even harder time finding investors willing to put their savings into default and devaluation threatened Greek bonds. The Greek would have to pay a significant penalty premium on the bond yield to attract foreign investors and most likely a premium significantly above the interest rate Greece pay today. Therefore, the Greek cannot afford to leave the eurozone.
We conclude that Greece and other debt burdened euro members are not going to leave the euro or be kicked out of the eurozone. The euro will not break up but demand for fiscal discipline is back and it will in the long run make the euro a stronger currency.

If this opinion is correct… then the Greek crisis will fundamentally strengthen the euro.

There you have it.  A fundamentally overvalued yen… ready to fall (actually falling) with a low interest rate.  A fundamentally undervalued euro with higher returns and some forex profit already underway. This is the perfect multicurrency sandwich situation.

However sine there are always things unseen, undercurrents we cannot know and events we cannot predict, we always calculate in advance what we could lose. We always take a long term view. We focus on the positive carry… not the forex and we never borrow more than we can afford to lose.

One of the greatest profits I have made in past decades was from borrowing yen when it was too strong.  The current yen distortion looks so overvalued that I am updating my report Borrow Low Deposit High to take advantage of this.

You do not have to wait and miss this yen opportunity, buy our report “Borrow Low-Deposit High” for $49.  I will email it to you immediately… plus when the new update is complete, I’ll email that to you also… FREE.

The report helps you see why and where to invest and learn why and how currencies and interest rates rise and or fall.

Finally, as always you are protected by our 30 day completely satisfied or your money back guarantee

Borrow Low Deposit High – How to Use the Multi Currency Investment Sandwich… click here to get this emailed report for only $49.

Gary

Save $100 more. There is another important benefit you gain when you order my emailed report “Borrow Low-Deposit High”.  You can save $100 at the next Jyske seminar where I review this tactic.

Share borrow low deposit high strategies with me in California and Save.

I speak at the Jyske Global Asset Management’s April 30 – May 2 Foreign Exchange Investment Seminar in Laguna Beach, California.

The normal seminar fee is$499 or $750 for two.

However Jyske is providing the same discount to our premium subscribers (including those who order Borrow Low – Deposit High) as to their clients… $399 single and $599 for a couple.  You save $100…even though the emailed report “Borrow Low Deposit High” is only $49.

Order “Borrow Low-Deposit High – How to Use the Multi Currency Investment Sandwich”… click here to get this emailed report for only $49. Save $100 on JGAM’s California seminar.

See more on the JGAM California seminar here.

If you have questions about Jyske’s seminars contact Thomas Fischer of JGAM at fischer@jgam.com

Cotacachi-house

Ecuador real estate is worth more when the US dollar is strong, because…

Cotacachi-house

the US dollar is Ecuador’s currency.  See more about these houses below.

Join us in North Carolina this June to learn more about how to bank abroad. June 24-27 International Investing and Business North Carolina

Gary

See how to own the view above with these sunsets.

ecuador-ocean-view

See how one person can earn $540,000 or more on an Ecuador beach view investment now.

Learn how to gain earning freedom with Ecuador exports at our Ecuador Export Expedition Tour ($499 or couple $749)

Apr. 17-18   Imbabura Real Estate Tour ($499 or couple $749)
Apr. 20-21  Coastal Mid Coast Real Estate Tour ($499 or couple $749)
Apr. 23-24  Quito & Mindo Real Estate Tour ($499 or couple $749)

April 26-27 Cuenca Real Estate Tour

May 9-12       Super Thinking + Spanish Course, Cotacachi Ecuador

May  13-14    Ecuador Shamanic Minga

May  16-17    Imbabura Real Estate Tour

May  19-20    Coastal Real Estate Tour

May  22-23    Quito Real Estate Tour

May  25-26    Cuenca Real Estate Tour

You enjoy discounts by attending multiple seminars and tours.

Here are our multi tour adventure discounts.

Two Pack… 2 seminar courses & tours $998 Couple  $1,349 Save $149 on couple

Three Pack… 3 seminar courses & tours   $1399 Couple  $1,899 Save $98 single or $348 on a couple or more

Four Pack… 4 seminar courses & tours   $1,699 Couple $2,299 Save $98 single or $697 on a couple or more

Five Pack… 5 seminar courses & tours  $1,999 Couple $2,699 Save $496 single or $1,046 on a couple or more

Six Pack… 6 seminars courses & tours  $2,199 Couple $3,099 Save $795 single or $1,395 on a couple or more

Here is the balance of our 2010 schedule.

June 24-27 International Investing and Business North Carolina

June 28-29    Ecuador Travel & Andes

June 30-Jul 1 Imbabura Real Estate Tour

2010 Summer Schedule

July 3-4      Coastal Real Estate Tour
July 6-7      Quito Real Estate Tour
July 9-10     Cuenca Real Estate Tour

Sept.   3-6   Ecuador Export Tour
Sept.   8-9   Imbabura Real Estate Tour
Sept. 11-12   Coastal Real Estate Tour
Sept. 14-15   Cuenca Real Estate Tour
Sept. 17-18   Ecuador Shamanic Mingo

Oct.    7     Quantum Wealth North Carolina
Oct.   8-10   International Investing & Business North Carolina
Oct.   11-12  Travel to Quito and Andean Tour
Oct.  13-14   Imbabura Real Estate Tour
Oct.  16-17   Coastal Real Estate Tour
Oct.  19-20   Quito Real Estate Tour
Oct. 22-23    Cuenca Real Estate Tour

Nov.    4-7   Super Thinking + Spanish Course Florida
Nov.    8-9   Travel to Quito and Andean Tour
Nov. 10-11    Imbabura Real Estate Tour
Nov. 13-14    Coastal Real Estate Tour
Nov. 16-17    Quito Real Estate
Nov. 19-20    Cuenca Real Estate Tour

Dec.   3-5    Ecuador Shamanic Mingo
Dec.   7-8    Imbabura Real Estate Tour
Dec.  10-11   Coastal Real Estate Tour
Dec. 13-14    Quito Real Estate Tour
Dec. 16-17    Cuenca Real Estate Tour

Cotacachi-house

See why these Cotacachi houses offer good value here.


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