Alternative Currencies, A Look at the AUD to USD Chart

With the mounting debt faced by the U.S. government, it makes sense to exchange a part of your USD portfolio into a basket of alternative currencies. Long-term the devaluation of the dollar is almost inevitable. For a refresher, please watch this video by Congressman Ron Paul that succinctly covers the subject of the falling USD.

I recommend basing your alternative currency investments on your perception of the home countries political stability and future economic potential.

In the above two regards, The Australian Dollar is a good hedge for safely protecting your cash holdings. Australia is a politically stable country with a GDP per capita higher than the UK, Germany and France. Australia is rich in many commodities.

Taken from the Australian Government Mines Atlas on Iron:

In 2007 Australia had about 13% of world EDR of iron ore and was ranked fourth after Ukraine (19%), Russia (16%) and China (14%). In terms of contained iron, Australia has about 15% of the world’s EDR and is ranked second behind Russia (19%). Australia produces around 16% of the world’s iron ore and is ranked third behind China (32%) and Brazil (19%).

Taken from the Australian Government Mines Atlas on Gold:

The USGS estimate of world gold reserves of 42,000 t was similar to 2006 According to the USGS, South Africa still has the world’s largest reserve of gold at 6000 t (14.3%), similar to 2006. According to the USGS Australia has the second largest reserve with approximately 12% of the world’s holdings.

Taken from the Australian Government Mines Atlas on Uranium:

Australia has the world’s largest resources of uranium in RAR recoverable at <us $80="" kg="" u="" (equates="" to="" edr),="" with="" 34%="" of="" world="" resources="" in="" this="" category="" at="" december="" 2007.="" other="" countries="" with="" large="" resources="" include="" kazakhstan="" with="" 12%,="" canada="" 11%,="" south="" africa="" 7%="" and="" the="" russian="" federation="" 6%.<="" p="">

Olympic Dam is the world's largest uranium deposit. Based on ore reserves and mineral resources reported by BHP Billiton as at June 2007, Geoscience Australia estimated that the deposit contains 26% of the world's total resources in RAR recoverable at <us$80 kg="" u="">.

</us>

Taken from this page on Australian Natural Resources:

If your long-term view is that the USD will fall, now would be a good time to build an alternative currency portfolio. The AUD has the benefit of high interest rates with one year deposit rates still hovering in the 3.5-5% range. For multi-year strategies you may want to look at buying Australian Government Bonds. A quick look at Bloomberg.com for Australian Government Bond Rates shows that a 5 year government bond is currently yielding 3.3%.

Compare that to what Bloomberg.com shows for US Government Bond Rates we can see that a 5 year US treasury bond is yielding 1.49%.