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 Reports and Commentary from the Investment World

Reports and commentaries are posted here on a regular basis.


Cash 2005


 Pink Investments Cash Strategy

Turning $1,000 into $41,000 with One Deal Per Year.

There are a number of ways to make a fortune in the investment markets.

One way is to identify a bull market near its beginnings, and then run with it until at or near the end. This way can produce great returns, but it is not easy.  How many people were able to identify the start of the greatest bull market in equities on record, in 1982?  And how many held and then sold at or near the top in late 1999?

There is another way to get rich however, which simply involves cash deposits.  It is not as glamorous, and it takes dogged patience. However; it works with clockwork efficiency. We are referring to compounding.

Compounding consists of investing in deposit instruments which pay interest, and then at the end of each year putting it, with the interest you got the first year, into another interest paying deposit, and doing the same, year after year.  After a few years you will start to see nice returns, and the longer you hold, the bigger your annual increases are.

In the early 1970s currencies began to float freely against each other. You were free to go into one or the other, if you thought it would be stronger. Much money has been made by experts who were able to guess correctly which currency would be stronger than another.

George Soros is notorious for making a fortune in one day on trading the British Pound.

The Pink Investments Cash Strategy  takes the guess work and the luck out of currency trading, and has given fantastic returns to anyone who has tried it. It is so simple to follow, that anyone can do it. No experience of Forex trading is required.

How Pink Investments Cash Strategy could have made you 4,000%
If you started with $1,000 on January 1st, 1970, and looked around the world for the major currency that paid the most interest for a one-year deposit. You invested your $1,000 in that currency deposit .Each January 1st since then you repeated the process - switching the money into whatever currency was paying the most.

The only parameter has been that it has to be a major currency. In practice, this means a currency of a country of the “First World,” a Western country, or one which has a long standing tradition of respect for markets and rule of law. There have been, and still are, some currencies that pay huge amounts of interest, but we stay away from them unless they meet the criteria wehave set out above.

Since 1970, the currencies that have yielded the best rates of return has included the currencies of the U.S.A, Germany, U.K., Japan, Italy, Australia, Spain, France, Sweden and New Zealand.

Since January 1st, 2001, the money has been in the New Zealand dollar, since this is the major currency which has consistently paid more than any other. And staying in one currency for a number of years in a row has been a common theme.

Just how much money has been made by this simple tactic? The US$1,000 invested in January 1970 would have accumulated to $3,913 by January 1st 1980. But then the big interest rates of the 1980s, coupled with the science of compounding, really began to kick in. By 1990, the amount had grown to $15,123. And by the time you switched into a new currency ($NZ) on January 1st  2001, the amount was $21,739.

The results so far in the 21st century have been astounding, even though not every year since then has been even profitable:

 How The Cash Strategy makes Money

During the year 2001, the New Zealand dollar paid 6.52%. But that currency fell against the U.S. dollar that year, by 7.15%. So subtrac­ting the exchange loss from the yield, Cash lost 0.63%. What had been $21,739 at the start of 2001 was only $21,6022 at the end of it.

There have, in the 35 years since 1970, been six years where this strategy has lost money, like it did in 2001 - but usually not by very much.

As the year 2002, started, interest rates had fallen all over the world. But, the New Zealand dollar was still paying the most, with 4.84% interest. But the currency itself started to soar that year, and over the year it rose by 24.81%.(against the $US) Add the yield to this, and you get a total return for that year of 29.65%. This turned the amount total into $28,007.

On Jan. 1st, 2003, the New Zealand dollar was again the highest Yielding currency: It paid 5.76%. And over that year, the New Zealand dollar again soared against the U.S. dollar.  It started out the year at 51.72 US cents, and finished it at 65.45 cents. That is an increase of 26.54%. Add to this the 5.76% yield, and you got a total return of a whopping 32.3%. This brought the total amount from $28,007 to $37,053!

Bear in mind, some of this is just due to the magic of compound interest. But a lot is also due to the appreciation of the currency against the U.S. dollar.

In 2004, what has The Pink Investments Cash Strategy done? At the start of the year, on January 1st, the annual interest rate was 5.48%. At the time, the NZ dollar again was US65.45 cents.
The New Zealand dollar ended the year at US69.40 cents. On currency alone, this equals an increase of 6.04%. Add the annual yield of 5.48% and this gives a total return of 11.52%.
This means that, what had been worth $37,053 at the start of 2004 was, worth over $41,000 at the start of 2005.

If you do the number crunching, you will find that by making just one decision a year, you would have turned $1,000 into just over $41,000 in 35 years.

This is a total increase exceeding 4,000%.

Of course, much of this has come from the power of compound interest, which should never be underestimated. But had you just compounded your interest in one currency during this time, you would not have done nearly as well as you could have, had you simply expanded your horizons to take the entire globe into account.

What To Do in 2005.

Yet again, in 2005, the New Zealand dollar is paying the most. And the good news is that the yield is higher than it was at the start of 2004. As of 1st January 2005, the one-year interest rate on the “Kiwi” dollar is 6.25%.

Note: We do not expect the Kiwi Dollar to continue appreciating against the US$ this year, but as the US dollar is still only paying slightly more than 2% , it is a more attractive return on your cash deposits, even if you do not get the boost from the additional currency appreciation.

The Kiwi Dollar isn’t the only currency that has appreciated against the US Dollar.

Consider these percentage gains against the U.S. dollar in 2004:

* 3.84% - Australian Dollar

* 8.57% - Canadian Dollar

* 10% - New Zealand Dollar

* 17.24% - South African Rand

That is an average gain of 9.91% against the dollar in the past year alone.

A Currency Index CD is a single CD combining all four of these currencies in one investment. A 6-month Index CD of these commodity currencies currently pays 5% (APR), and you earn the same interest rates on your foreign currency CDs that locals earn in those countries. This could be an additional Cash Strategy for 2005.

It is amazing just how much more you can get on your Cash deposits, by expanding your horizons world wide!


Disclaimer: All the information above is provided as a service for individuals and institutions. It should in no way be construed as a recommendation as an investment. Investment decisions should be based on the risk tolerance and planning horizon of the investor. Market participants must understand that past performance is also not a guarantee or predictor of future results.