Really, it’s a simple four-step process:

1. Decide to invest in a certain currency
2. Call your bank
3. Apply for the CD in a particular currency
4. Forget about your CD until it’s time to report your holdings on your taxes each year.

In fact, it’s so similar to your average dollar CD that it’s easy to forget the extra benefits you’re receiving by investing in a foreign currency CD.

So we thought we’d review these benefits quickly.

Benefit #1: You can actually beat inflation with a foreign-currency CD. Right now, you’re average dollar-based CD only pays 2 – 4%. If inflation is soaring above 6%, then you’re actually LOSING money over the long haul. But with a foreign currency CD, you can choose a stronger currency that has the power to appreciate faster than inflation.

Benefit #2: Two ways to profit. A foreign-currency CD earns interest similar to a normal dollar-based CD, but you also get an extra profit bonus if your foreign-currency appreciates in value vs. the U.S. dollar. In this way, your foreign-currency CD actually gives you two ways to profit.

Benefit #3: Instant diversification. If your entire portfolio is in dollars, then a simple foreign-currency CD gives you instant diversification to other stronger currencies around the globe. It’s one of the best ways to inch into the currency markets, if you’re not interested in trading.

Source: What’s the Difference Between a Dollar CD and a Foreign Currency CD?

U.S. Dollar (USD): The majority of trades in the forex market involve the U.S. dollar against a different currency because it is currently used as the world’s reserve currency.

Euro (EUR): This is the new kid of the currency majors. Lately, the euro has been stepping up to take its place as a reference currency, as well as a larger component of foreign reserves by banks. It is also known as the anti-dollar because the euro tends to appreciate as the dollar depreciates.

Japanese Yen (JPY): The yen has been known as the carry-trade currency because for years, investors have borrowed yen to fund their carry-trades. Because Japan imports all of its oil, when crude oil prices begin to climb this hurts its economy and greatly impacts the value of the yen.

Swiss Franc (CHF): Also known as Swissie, it is sometimes called a ‘safe heaven,’ due to Switzerland’s independent stance, economy isolation, and strong private banking system. This in turn has made their currency very neutral.

The British pound (GBP): Frequently called, Cable or Sterling, the pound first got these nicknames because it was the first currency the Forex market traded through ‘cables’ across the Atlantic. The pound is the fourth most traded currency on the market and Great Britain’s economy is one of the strongest in Europe.

Canadian dollar (CAD): This currency’s unusual nickname, the Loonie, comes from the coins appearance which features a loon, a common Canadian bird, on the coins backside. Canada is a resource-focused economy, so the price of oil drives this currency along with commodities.

Australian dollar (AUD): Known as the Aussie, this currency is popular in the Forex market because of Australia’s currently high interest rates and generally stable economy. The Australian dollar is greatly influenced and driven by gold prices.

New Zealand dollar (NZD): Also known as the “kiwi,” the New Zealand dollar traditionally tracks the Aussie dollar’s path because these economies are tied together through exports. However, sometimes the New Zealand can fall while the Aussie dollar rises as we have recently witnessed.

Source: Let Me Introduce You to the Seven Major Currencies…and the Dollar

So far this year, eight banks have collapsed. At first blush, eight banks failing doesn’t sound quite as bad if you consider 834 banks went under during the S&L crisis from 1990 to 1992.

But if you want to know the real extent of this crisis, you need to look at the bottom line. Worldwide, the credit crisis has already cost US$476 billion in losses, write-downs, etc.

Seventeen years ago, the Savings and Loan Crisis cost the global economy US$190 billion (or US$350 billion in inflation-adjusted dollars).

The Federal government already bailed out Bear Stearns Cos (NYSE:BSC), Fannie Mae (NYSE:FNM), and Freddie Mac (NYSE:FRE) this year to stop a systemic risk, but at a massive cost to taxpayers.

On top of that, the government’s actions did nothing to fix the credit crisis, which is still the big looming threat to all the other smaller banks and mortgage lenders that aren’t getting bailed out.

The Federal Reserve won’t dirty its hands or spend the money to bailout smaller lenders.

That means it’s going to be a long, painful recovery for the banks going forward. And a few banks won’t make it.

Take IndyMac (OTC:IDMC) for example…

When IndyMac’s clients got word that the bank was in trouble in early July, thousands of concerned depositors pulled their cash out of the bank to salvage as much as they could.

All totaled, depositors walked away with US$1.3 billion in 11 days.

That’s when the FDIC stepped in and shut IndyMac’s doors for good.

And the remaining IndyMac clients had to depend on the FDIC to recover their deposits – assuming their accounts were fully insured.

What Good Is FDIC Insurance in the 21st Century?

As I said, when a bank fails, the FDIC accountants swoop in to tally the books.

The FDIC agents officially close the bank. They freeze the accounts at the bank. Then they begin the long painful process to determine exactly which funds are insured or not.

In the meantime, if the FDIC is dismantling your bank, you’re stuck waiting to recoup what you lost. You can’t write checks. You can’t pay bills. You can’t use your debit card. You can’t even go to the grocery store to buy food unless you have cash lying around.

Technically the FDIC insures every account up to US$100,000, and every retirement account up to US$250,000. But the devil is in the details. It’s generally US$100,000 per holder of account.

So for example, if you and your spouse have a joint savings account, you could hold up to US$200,000 in a single account. Then in theory, if your bank failed, you would recoup your entire account.

But these limits get dicey when you’re talking about trusts, annuities and other accounts – depending on how the account is titled. (Get the full rules here.)

In IndyMac’s case, a whopping US$1 billion of the US$19 billion deposits was uninsured. According to FDIC, US$2.6 TRILLION is currently uninsured in the United States.

So the question is: What do you do if your accounts are simply too big for the FDIC to insure?

A Masterful Solution to This FDIC Insurance Problem

For years, we’ve recommended you seek refuge from possible bank failures by diversifying your holdings.

For example, you can hold up to US$100,000 at several U.S. banks, or invest your long-term safe funds in a bank account overseas where liquidity is much higher. And in our recommended jurisdictions, there hasn’t been a bank failure in over 125 years.

But now, we’ve discovered another unique solution.

Our friends at EverBank have devised a new “Insured Advantage Certificate of Deposit,” that protects your capital up to US$50 MILLION. You can literally park your funds in this CD and the FDIC will insure you up to US$50 million no matter what happens.

You can open this CD for yourself, your business, your non-for-profit organization, etc.

Also, you don’t have to hold this CD for years (unless you want to) for it to mature. You can hold this CD for as little as three months.

Plus, your funds receive high yields at the same time. EverBank is able to do this by spreading the risk out among many banks, to ensure your money is fully protected.

Please take a moment to review the balances and the title on your U.S. bank accounts. Make sure that you don’t exceed the FDIC limits in a climate like this. And, if you discover you do, find the time to find the right solution for you and your family.

The best time to do it is now before the next bank goes bust and takes your savings along with it.

Source: How to Protect Your Life Savings When You’re Over the $100,000 FDIC Limit

If you’ve ever seen a quote screen for the foreign-exchange market, you may notice that currencies trade in pairs. For example, rather than just buying the Japanese yen, you’d buy the USD/JPY pair (the U.S. dollar vs. the Japanese yen). To invest in the FX market, you have to understand how these pairs work.

Currencies come in twos because a currency is only worth something when you compare it to another currency. (For example, you can only know what the dollar is worth if you compare it to the euro, yen, Aussie dollar, Swiss francs, Canadian dollar etc.)

In other words, the price of any currency is only relative to the price of another. But which is which?

The first currency in the pair is called the “base currency.” It’s always equal to “1″ of that particular currency. (So one dollar, one euro etc.)

The second currency in the pair is called the “quote currency.” It’s how much of itself “1″ of the base currency will buy you. This is the price you see on a quote screen because otherwise everything would be quoted as “1″ (which makes no sense).

Say I’m looking at the U.S. dollar against the Swiss franc. I’d find a market that quoted me the USD/CHF (”CHF” = the “Swiss franc”). The quoted price would tell me how many francs I could get for my dollar.

So let’s say the quoted price was .7500. Now this is where things get a little weird. That means for US$1 I could buy three quarters of a Swiss franc.

Let’s say I check the prices again the next day and the USD/CHF pair now trades at 1.25 (that would be a big day in the markets). Suddenly, my US$1 will buy one and a quarter Swiss francs. That means I’m buying MORE of the other currency.

When your dollar buys you more of anything, whether that’s foreign currency, gold, hamburgers, beer, whatever – your dollar is getting stronger.

The flipside is true too. If I check back the next day and I see a price of USD/CHF is .95. Then my dollar is buying less….and therefore you technically have less cash to spend.

That’s why understanding foreign currencies is so important: If you know how your dollars are performing against the other currencies in the world, you can diversify into stronger performing currencies.

Source: The First Thing You Need to Know Before You Jump into the FX Market

First, the average American is not saving enough for retirement, especially with inflation on the rise. Second, pension schemes are coming under increasing scrutiny from lawyers and IRS auditors.

Add the grim outlook for the US dollar into the equation, and it becomes a no-brainer: You should move your retirement plan to another country before its too late…

One way to beat the restrictive US retirement systems of IRAs, 401Ks and other plans is to move your retirement plan offshore.

It’s a little-known approach, but it can spew out huge profits. An offshore retirement plan also demands fewer taxes and plays a greater role in producing and managing your future income.

You’re probably scratching your head right now. I don’t blame you. I did that too in the beginning. I won’t bore you with the details of the Internal Revenue Code that can give your retirement plan some very attractive advantages. Rather, I’ll share with you the threats and challenges you potentially face as you approach retirement and the solutions open to you.

The harsh truth is there are two very real threats to your retirement account.

The Survey Says: “Don’t Even THINK of Retiring Now!”

The first is that you won’t have nearly enough income to sustain yourself in your post-career years.

Surveys repeatedly show that we are NOT financially ready to retire. In a country with a negative personal savings rate, millions of so-called future retirees are simply not planning for the future…especially when US$4 gas, rising food costs, and a flat-out credit crisis are eating away at their savings.

Second, your retirement assets are exposed to several types of risk. Over the past few years, all types of retirement plans have come under attack in the courts. Certain lawyers have made careers out of going after retirement plans just like yours.

In fact, one very well-known attorney in the asset protection field said, “The successful attack on retirement plans is one of the fastest-growing areas of the legal profession.”

Beware of Uncle Sam and His IRS Agents

And it’s not just lawyers you should be concerned with. The IRS continues to take more than their fair share out of retirement plans if you make a “mistake” in reporting.

Our friend and expert retirement professional, Larry Grossman told us a story about a small business owner he knows. This small business owner had the misfortune to have the IRS audit his retirement plan. The IRS agents looked at all his investments over the years and all his paperwork.

The IRS said in effect: “Congratulations. Your investments have been perfectly in line with the rules.” But then the IRS agent asked for a piece of paper dating back to 1981 – a plan amendment required by a 1981 law. The business owner had no idea what they were talking about. (Imagine if the IRS asked you for a paper that was over 25 years old!)

So because of a missing piece of paper, the IRS ruled the business owner’s plan was disqualified and was now fully taxable. The plan totaled US$145,000 and the IRS wanted to take US$60,000 penalty! The owner was forced to settle with the IRS for US$10,000 and got stuck with US$13,000 in legal fees.

As you can see, it’s sink or swim when it comes to planning your retirement.

And What About the U.S. Dollar?

You may think you have plenty stashed away for a post-career rainy day, but if your assets are denominated in U.S. dollars then your retirement plan is already in trouble. As I’m sure you know, the U.S. dollar’s long-term outlook is pretty grim. If the U.S. dollar continues to plummet, then the value of your retirement plan will plummet right along with it.

That only increases your chances of running out of retirement savings half way through your golden years.

Fortunately for you, there are ways to maximize the potential benefits of your retirement plan to ensure these threats don’t affect the quality of the rest of your life.

If you seek positive investment returns, financial privacy, and a secure and prosperous retirement, it’s time to move your retirement plan offshore.

Source: Your IRA is More Flexible Than You Ever Thought Possible

Not only are they relatively cheap but currency ETFs also mean investors can diversify out of the dollar and into other currencies right on the New York Stock Exchange.

The Sovereign Society’s Erika Nolan has some great ideas about how to build ETFs into your portfolio…

Global investors have fallen in love with ETFs since the first one was created back in 1992. And in 2006, the ETF market took another giant leap forward for average investors by creating currency ETFs.

But still, not many would-be currency investors know they can diversify out of the dollar and invest in currency ETFs right on the NYSE. That means you can call up and buy one with your average stock brokerage account. They’re cheap too. Some currency ETFs sell for less than US$100.

Also, here are some ideas about how you can use ETFs to build your portfolio:

1. Create a diversified currency portfolio with the click of a mouse – Protect your capital against a falling dollar.

2. Use ETFs to hedge currency risk in an international stock portfolio – If you have major position of a stock or international fund, you can short-sell the corresponding currency ETF to guard against currency risk.

3. Ride a long-term currency trend – Since they have no expiration date, you can buy and hold for a major trend.

4. Actively trade currency ETFs to position yourself for special situations – One of the major themes we’re watching relates to “overheating” in the global economy. In this market, you need to be able to “short” some of the most vulnerable currencies.

In this case, you would simply ask your broker to “sell short…” It’s that easy! And you can always place a buy-stop order to exit the position and limit the risk of being wrong.

Since most currency ETFs trade on the New York Stock Exchange, there is no problem using stop-loss orders for risk control.

Source: How to Jump in the Currency Markets with Less than $100

If you’re in the currency world, you’ll often hear about an inflation dove or an inflation hawk.

Usually in the news, the talking heads are discussing our very own dove, Fed Chief Ben Bernanke or the eternal inflation hawk, European Central Bank (ECB) President, Trichet.

But what’s the difference?

A hawk is known to be an aggressive predator that keeps a sharp eye out for potential prey. In a similar fashion, a “hawkish” central banker keeps a sharp eye on interest rates because they’re ready to swoop in and aggressively raise rates to fight inflation if necessary.

The dove has a harmless, docile nature. Therefore if you hear a central banker referred to as “dovish” or called an “inflation dove,” then he’s not concerned with inflation (think Ben Bernanke when he refuses to hike rates). He would rather lower interest rates because he feels inflation will have a minimal effect on society.

So these terms don’t describe the central bankers’ long-term stance on inflation, but just their current short-term views. These are likely to change over the course of their tenure.

During any Fed chairman’s tenure, he’s likely to raise interest rates and then lower them depending on the economy’s situation at the time. So the present view of the central bank is termed “hawkish” or “dovish.”

Up until now, “Uncle Ben” has proved he prefers doves to hawks. But down the road, he could change his tune (he’s known to do that every once in a while).

Source: What Gives a Dove His Wings?