Let’s face it: As a viable investment, the U.S. dollar is out. It’s why investors looking to protect their purchasing power are moving into Canadian dollars. 

Canadian dollars… But what about our own dollar? 

Our currency is everywhere these days – a dollar here, dollars there. Unfortunately, that doesn’t mean it’s worth more. In fact, it’s worth less, much less.  

Fiscal deficits growing into the trillions are going to devalue the U.S. dollar for years to come. It’s time to seriously consider diversifying out of “George Washington.” 

This isn’t a call to expatriate or radically alter your retirement plan. Instead, it’s a plan to protect the value of your hard earned dollars – before they become worth a little less each year. 

And mark my words: That’s exactly what will happen. 

But it’s not the end of the world. There are ways to not only hedge against a loss of your purchasing power and make a profit as well. 

Natural Reserves And Careful Planning Make For One Good Investment 

The Canadian dollar is currently down about 30% from its highs in 2007. And far from a negative, it means we’re facing a prime buying opportunity… and a market set to push it to new levels. 

We don’t need the International Monetary Fund (IMF) to tell us how bad things are. We already know. 

Along with the U.S., The Euro-zone and Britain are both victims of the sub-prime crisis, though the latter is in the worst shape of all. And with all of the money those countries involved have pumped into the system, commodity price inflation has nowhere to go but up in the long run… 

…Which will drive the value of the Euro, the Pound and the U.S. dollar straight down, and their purchasing power right along with it. 

But we expect just the opposite for their Canadian cousin. Since Canada is a major exporter of commodities like oil, lumber and metals, commodity priced inflation actually helps its currency. 

Not to mention that Canada has shown greater fiscal responsibility in the past two decades than too many other countries out there. While other governments have racked up their deficits, Canada actually brought its federal debt down from 70% of GDP in 1995 to under 30% last year. 

Currently, it’s actually running a small annual surplus, though this year the country will likely head into its first deficit in years due to the global slowdown. 

That hardly means that it faces the same type of financial crisis the U.S. is suffering from. Canadian banks are sound, in large part because their residential market operated under completely different standards where sub-prime lending was much harder to come by. 

And because they also didn’t have any significant or lingering exposure to the U.S. sub-prime lending market, those banks don’t have nearly as many defaults to worry about then their international counterparts. 

One Major Currency Set To Profit 

Think of it as the dollar that will buy you more in years to come, especially considering that this year alone, United States residents will spend nearly $2 for each dollar in taxes the Treasury collects. 

And as a free trading currency, the Canadian dollar has no trading restrictions, which makes it much easier to work with. You can buy and sell the Canadian dollar in: 

• Your brokerage account
• Through U.S. banks
• Over the border on your next visit

If that’s one too many options for you, look into Everbank – one of the best Canadian Dollar banks by far – which offers both a Canadian dollar account and a Canadian dollar CD.

When to Buy Canadian Dollars 

But before you make a trade at Everbank or in your brokerage account, you need to know when to buy the Canadian dollar. For that I turned to our resident technical analyst Jim Stanton, Editor of the wildly successful 123 Trader. 

According to Jim, the Canadian dollar looks to have a solid base around $0.77 cents, and that is the maximum price you should pay for it. However, if the Canadian dollar makes new lows, the ideal entry point should be when it trades around the $0.7360 area, which is in the next major support zone. 

Stick a limit order in or put a post-it note on your PC and check the price every couple of weeks. 

Trust me when I say that little bit of extra effort to fortify your portfolio from the inevitable decline in the US dollar will be well worth it.

Karim Rahemtulla
Smart Profits Report