“This is the last safe country on Earth,” I explained to our group in Miami this week. I was meeting with some of the most successful businessmen I know.
“I haven’t heard anyone out there talking about this idea,” I told them. “But this is a much more attractive cash investment than the U.S. dollar.”
Here’s the story…
In short, the U.S. government is in hock to its eyeballs… And Europe is in worse shape than the U.S. But according to the IMF, Australia will be net debt free by 2020.[ad#Google Adsense 336×280-IA]While the U.S. government will stay busy printing money, the Australian government will stay busy cashing mining royalty checks with no end in sight…
You see, the Australian government owns the mineral and petroleum resources of Australia. (That’s different from the U.S., where mineral rights can be privately owned.) And that makes Australia rich…
Australia is chock-full of commodities that are in demand all around the globe…
I remember standing in Iceland a couple years ago, staring at a massive aluminum smelter that was a few city blocks long. The raw bauxite was shipped in from Australia – as far across the planet as you could get. In short, the far corners of the world need bauxite… and Australia has it.
Aluminum is only a tiny part of the big story of Australia’s commodity reserves…
Australia leads the world in “economically recoverable reserves” in many commodities… lead, zinc, uranium, nickel, and more. It ranks second in the world in economically recoverable reserves in gold, silver, copper, and more, according to the Australian Bureau of Statistics.
And then there’s “China’s Gold” – iron ore… the raw material in steel making. China needs it… Australia’s got it.
“Where on earth is your money safe these days?” That is THE question. When you look at the debt trends, it’s NOT safe in America. And it’s NOT safe in Europe.
But the fact that the Australian government owns its resources, and it will be net debt free by 2020, makes Australia a safe country for your money. In a way, the nation’s currency – the Australian dollar issued by the government – is solidly “backed” by the country’s vast natural resources, owned by the government.
And the Australian dollar is paying you to own it. Right now, you earn next-to-nothing in interest on your money in the bank in U.S. dollars and euros. But in Australia, astoundingly, you earn 4.25% interest on your cash.
The major risk here is what happens to Australia if China crashes?
There’s no mistaking the fact that the Australian dollar is highly correlated to commodity prices. Exports of iron and coal alone make up 39% of Australia’s total merchandise exports. If China stops buying, Australia will take a big hit.
However, I think the Australian government is in better shape to handle a crisis than any country in the world. The typical government “tools” to fight back a crisis are to 1) borrow money and 2) cut interest rates.
With no debt and a very high (4.25%) deposit rate, Australia has plenty of room to do both today.
I could go on. But you get the idea…
For the long run, Australia’s dollar is safe. And with high interest rates, it’s good for the short-run, too.
As I told subscribers to my True Wealth letter last month, the simplest way for Americans to own Aussie dollars is through the CurrencyShares Australian Dollar Trust (FXA). It’s an exchange-traded fund you can buy through any U.S. broker. It currently pays a 4% dividend.
FXA has perfectly tracked the Australian dollar through its history, AND it’s paid solid dividends along the way.
Australia might just be the last safe country on earth for your money. So consider Australia… and FXA… today.
Source: Daily Wealth