# Safe way to protect your money incase Canadian dollar drops



## emperor (Jul 24, 2011)

I currently have a lot of money in a HISA. I'm worried with all the house bubble talk that the Canadian economy might take a hit. How can I protect myself incase the Canadian dollar nose dives. I don't have much faith in the US dollar either.


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## Just a Guy (Mar 27, 2012)

Well, I'd say gold was your best bet as historically it's value is supposed to remain constant relative to the dollar. Of course, lately, in my opinion, people have been trying to manipulate the gold market by saying it's an "investment".

So, in a typical pump and dump fashion, the gold market is probably overvalued compared to where is should be. 

Another place I like is real estate, but because of the low interest rates, the housing market is also way out of whack. Still, I've managed to find a couple of places that are "value" investments. The difference between gold and real estate is ALL gold has the same value, whereas in real estate, there are always some people who need to sell, despite a loss, so there's at least a chance of finding something good. 

Of course, real estate is sooo out of whack, the odds of finding something low enough to keep up with inflation at least is small. But people always need a place to live.


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## HaroldCrump (Jun 10, 2009)

emperor said:


> I currently have a lot of money in a HISA. I'm worried with all the house bubble talk that the Canadian economy might take a hit. How can I protect myself incase the Canadian dollar nose dives. I don't have much faith in the US dollar either.


You haven't told us what you _do_ trust in?
Any particular currency? Gold? Commodities like oil, NG?
Bit coins?

Basically, to hedge against any given currency vis-à-vis another one, you take an opposite position in the currency pair.
For instance, to hedge your assets denominated in CAD vis-à-vis the USD, you take a short position in the CAD and a long position in USD.

If you are afraid of currency devaluation, you can take out a liability (loan) denominated in the same currency.
In this case, you'd take out a personal LOC or a mortgage loan in CAD.

You can do this hedging by basically converting part of your CAD into USD at this time (with the lowest possible fees such as a stock gambit), and then take out a CAD loan.
If CAD crashes, your USD holdings will appreciate and you can cover your CAD loan anytime with the appreciating USD.

But as I said, you haven't told us what you do have faith in.


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## OhGreatGuru (May 24, 2009)

emperor said:


> I currently have a lot of money in a HISA. I'm worried with all the house bubble talk that the Canadian economy might take a hit. How can I protect myself incase the Canadian dollar nose dives. I don't have much faith in the US dollar either.


What do you plan to do with this money? If you are going to spend it in Canada, do you care if the Canadian dollar drops?


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## atrp2biz (Sep 22, 2010)

If CAD drops relative to what? USD? That would imply a relatively stronger USD which is not correlated with higher gold prices. To protect against a falling CAD vs. USD, one would protect themselves by investing in USD denominated investments as noted by HC.


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## fatcat (Nov 11, 2009)

what the heck do you even mean ?

the dollar takes a hit ? ... except it is your home currency
it would only get hurt relative to other currencies
if you aren't planning to move somewhere, your biggest worry would be runaway inflation which isn't really part of your scenario

a housing crash would be deflationary which would mean that money in your hisa would likely be worth more

if the canadian housing bubble pops, like really pops, having all your money in a hisa would be the smartest thing you could do ...


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## humble_pie (Jun 7, 2009)

OP says he doesn't like USD either.

rhetorical question: is there something wrong with a strong 3rd currency such as CHF?

chf are not paying any interest, but then, neither are gold, palladium or gas futures, which others are suggesting as alternatives to canadian dollars.

there are no storage or redemption problems with chf, or really with any strong currency. Some might consider yen or euro.

TD bank & HSBC offer non-interest-paying chf accounts. Smaller amounts - under 100k - can easily be accommodated at Interactive Brokers, which also offers forex trading, enabling investors to slip from one currency into another & back again if desired, all at a very low cost.


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## emperor (Jul 24, 2011)

Sorry should have been more clear, I want to keep it in cash, just not CAD or USD. I was hoping I'd still get a savings rate but I guess not. CHF is Swiss? Is their economy more stable? Do they have a silver coin like the Canadian $20 for $20.


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## avrex (Nov 14, 2010)

The Swiss franc (CHF) is basically tied to the Euro. 
The Swiss National Bank set a minimum exchange rate of 1.20 francs to the euro.

I remember this, because I woke up on Sept 7, 2011, looked at my account and
realized that I lost a s**t load of money overnight, all because I held CHF cash.

Where do you feel safer? CAD, USD, or EUR.


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## humble_pie (Jun 7, 2009)

avrex said:


> The Swiss franc (CHF) is basically tied to the Euro.
> The Swiss National Bank set a minimum exchange rate of 1.20 francs to the euro.
> 
> I remember this, because I woke up on Sept 7, 2011, looked at my account and
> realized that I lost a s**t load of money overnight, all because I held CHF cash



och laddie tis only the swiss national bank that's presently tying chf by a wee whisker to the euro. It's a decision they deliberately took to protect their all-important export & tourist industries.

parties holding chf, though, are betting that market forces will pressure chf upwards in the end & the SNB will have to break the temporary link they cobbled together a couple years ago


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## Rusty O'Toole (Feb 1, 2012)

I have a part of my money invested in gold and silver (about 10%). I don't mean paper certificates, I mean coins and bars locked in a safety deposit box.

I don't even consider this an investment in the usual sense. I consider it a form of insurance.


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## blin10 (Jun 27, 2011)

Rusty O'Toole said:


> I have a part of my money invested in gold and silver (about 10%). I don't mean paper certificates, I mean coins and bars locked in a safety deposit box.
> 
> I don't even consider this an investment in the usual sense. I consider it a form of insurance.


for what ? if end of the world comes, who is going to need or buy your gold/silver ?


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## humble_pie (Jun 7, 2009)

who's the cmf member you'd pick to chum up with if the end of the world arrived?


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## Toronto.gal (Jan 8, 2010)

^^ U 2 make me laugh; both good questions, lol.

But HP, why limit the choice to just one member when there are many stimulating personalities here? 

I would pick a combination of characters, but I can already hear blin ask why would you need BS [brain stimulation] at such an apocalyptic time. :biggrin:


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## crazyjackcsa (Aug 8, 2010)

I'd pick money gal or toronto gal, cause they're gals, and I'm not!:tongue-new:


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## HaroldCrump (Jun 10, 2009)

crazyjackcsa said:


> I'd pick money gal or toronto gal, cause they're gals, and I'm not!


Yeah but, what do _they_ think about that idea.
That's more important, isn't it ;o)


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## Jungle (Feb 17, 2010)

I'm going to say usd.. easiest way is to buy us stocks. I know op doesn't like usd but all indications are pointing to low growth and inflation in Canada and the US being one of the only nations showing higher potental out out of the recession. Hence why the s&p 500 is up almost 35% in two years and cad has dropped 7% to usd.


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## fraser (May 15, 2010)

We have been steadily increasing our US equities and we maintain a USD bank account.

Agree with jungle...the TSX has performed poorly. We are getting a double dip with US equities- growth and currency gains.


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## Sampson (Apr 3, 2009)

Like some others, I don't much understand the question.

What type of risk are you worried about, most have interpreted your post that you are worried about currency risk, since you also state you fear declines in the USD. But you have no exposure to currency risk if you work, live and buy in Canada.

The main risk of holding your CAD will be inflationary risk, and if the housing market crashes, and the economy tanks, then it is not likely that there will be high levels of inflation.


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## Rusty O'Toole (Feb 1, 2012)

You could keep your savings in pennies and nickels. Pennies contain 2 cents worth of copper (if they were made before 1997) and nickels contain 7 cents worth of metal. They will hold their value if the dollar drops and if it doesn't you can always spend them.


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## fatcat (Nov 11, 2009)

the problem is that the question, with respect to the op, makes no sense ...

the dollar can only "drop" against another currency

and it is always rising and falling against other currencies

i think pie was on to it, buy a a basket of other currencies, convert the loonie into 3 or 4 currencies that you like better

when you know which ones are better, let me know ...


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## humble_pie (Jun 7, 2009)

i think i'd just gather up a tribe of children plus a few interesting adults who have strong practical skills. Then ask Islenska if there's any land for rent up there near the beeyootiful carrot river.

we'd pitch our tipis, go on field trips with native trappers to learn how. Islenska knows trappers. Fishing is probably good, maybe he knows the best fishing holes. We'd sow some crops although i'm a good wild foods forager. I'd be looking for purslane, wild greens, mushrooms, edible roots & berries berries berries.

it's handy, too, that islenska is a pharmacist, you never know how this could play.

for clothes we'd have to bring in a shipment of boots, jeans, sweats, parkas, gloves, mitts, tuques. Women who knit would be welcome to join. Has anybody heard yet of knitting with wild bison hair?

fuel, blankets, batteries, Aladdin lamps, etc would hopefully last a year while we waited for southern canada to get over the end of the world & pull itself together.


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## james4beach (Nov 15, 2012)

Answering the OP, this is a very difficult thing to do in an environment where there's "competitive devaluation" which means that every country (well, central bank) wants to reduce the value of their currency. Because we're currently in a period where economic scholars think that the greatest wealth comes from having a worthless currency ... go figure right ... but this is what economists and government officials think, until either Mr. Market or democracy snaps them out of this delusion.

If this was a few years ago I'd say hold a basket of other currencies (USD, EUR, CHF, AUD, GBP, JPY) except I wouldn't give the same advice today. All of them are trying to make their currencies worthless.

It's a truly unique time in history. Your guess as to "what to do" is as good as anyone else's.

Personally I hold some USD, CHF, and gold.

Also remember that deposits in non-CAD currencies do not have CDIC deposit insurance.


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## humble_pie (Jun 7, 2009)

where u holdin them chf & gold james4 :tongue-new:

ain't rightly heerd a them b4


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## james4beach (Nov 15, 2012)

humble_pie said:


> where u holdin them chf & gold james4 :tongue-new:
> 
> ain't rightly heerd a them b4


lol. The Francs are in a fire proof safe, and the gold is in a few places but some in CEF.A


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## humble_pie (Jun 7, 2009)

they say for end of the world scenarios it's best to have silver coins. Like u can't pay for dozen ears of corn plus 5 cans of beans at the grocery store with a gold bar, but maybe they'll take a silver coin worth old $20.

they sez, too, to keep the silver coins buried here & there on the property.

the advantage of that, the way i seen it, is that when the end of the world is over, you can keep on getting the kids to mow the lawn


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## james4beach (Nov 15, 2012)

humble_pie I think you're being overly dramatic with the end of the world stuff.

Society doesn't have to crumble for gold/silver and foreign currencies to be useful. It's a valid diversification. Think of Icelanders holding krona... those of them holding forex or precious metals were probably pretty happy. Then again foreign stocks & bonds would also work.


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## humble_pie (Jun 7, 2009)

james4beach said:


> humble_pie I think you're being overly dramatic with the end of the world stuff




nah i'm just looking for a chance to grab the kids & cut out school for an entire year Huck Finn style

hang up north with picturesque dudes

trap me enough silver fox skins for a furrier to sew into a dream fashion coat soon as i get back to what's left of civilization in the south
.


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## My Own Advisor (Sep 24, 2012)

Too funny....nice coat. Bringing sexy back.


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## Four Pillars (Apr 5, 2009)

Sampson said:


> But you have no exposure to currency risk if you work, live and buy in Canada.


The problem is that a lot of the items we buy are imported, so it's possible that you could experience higher inflation if the Canadian dollar drops. This is why I like to diversify my fixed income outside of CDN$. I've read many times that if you are retiring in Canada, you should be ok to have Canadian dollars in the 'safe' portion of your portfolio (ie non-equity), but I disagree.


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