By Gary Scott

My advisors all feel that the dollar could take a big dive now.

The press agrees. Yesterday’s Bloomberg article says:

“May 8 (Bloomberg) -- Li Yong, China's vice minister for finance, said he had heard a `rumor’ that the U.S. dollar was headed for a 25 percent drop. If the gossip was true, the consequences would be ‘shocking,’ he said.

“Li's comment, which he made at a discussion on global financial imbalances last week at the annual meeting of the Asian Development Bank in the Indian city of Hyderabad, was aimed directly at fellow panelist Tim Adams, the U.S. Treasury undersecretary of international affairs.

“The unspoken message was: ‘Don't try to talk the dollar down.’ And Adams knew better than to ask, ‘Well, what are you going to do about it?’ The answer to that question has already begun taking shape: Asia may be getting ready to fix its currencies to a local anchor, dumping the region's unofficial dollar peg.

“Even as they continue to pile up U.S. debt in their foreign- exchange reserves to keep their currencies stable against the dollar, Asian nations, China among them, are preparing for a scenario where the dollar does indeed collapse under the weight of a record U.S. current account deficit.” You can read this entire article at Bloomberg.com.

My portfolio agrees as well. Last month it rose 4% mainly due to US dollar weakness.

Yesterday we began looking at factors that affect currencies to see how the greenback might fare.

We began by looking at current account deficits and saw the current accounts in dollars and projections of % of GNP from best to worst.

This initial review suggests that the best major market currencies to invest in now are the Swiss franc, Swedish kroner, Japan yen, Danish kroner and Canadian dollar. However we decided not to jump to conclusions based on just this data. Let’s look more deeply.

Another factor to consider is how much of the current account deficit (or surplus) is from the trade balance and how much from investors.

Trade balances are difficult to shift in a short time. Investments, however, can flow much more quickly.

For example, the US had a $798 billion trade deficit over the past year. The current account deficit is $804 billion which shows that though imports far surpass US exports, there is not a huge outflow of investments from the US. So let’s compare Trade and Current Account positions:

We can spot some interesting facts right away. Switzerland, for example, has a small trade surplus of 7 billion, but huge current account of 50.2 billion. This means that 43.2 billion dollars were invested into Switzerland. This in Switzerland’s case is probably caused by fear oriented investors shifting to what they feel are safer Swiss franc accounts.

Watch out for this! The Swiss cannot let the franc appreciate much past the euro. If this happens, the Swiss National Bank may impose negative interest rates as they have done in the past

Japan is in a similar position. The Japanese have a great trade balance and a huge investment inflow. This suggests that some of yen appreciation has already taken place. Investors have already flocked to the Nippon state.

One key to profiting from currency investments is to hold currencies that have strong fundamentals but weak investor interest. The profit comes when investors flood in!

So Japan’s yen still looks strong in this respect, but does not have the potential of Sweden.

Sweden has a solid trade balance but not much investment inflow. This is a sign of potential future currency strength. If investors catch on to the fundamental strength of the kroner, it could rise. The euro is in this position even more so.

Denmark and Canada may have even more potential as they have great trade figures but suffer an investment outflow. I especially like the Danish kroner and hold a fair chunk in my portfolio. I am adding Canadian dollars to my portfolio for this reason now.

Britain, on the other hand, has terrible trade figures but a huge investment inflow. The investments are not enough to make up for Britain’s excessive imports, but the inflow may be coming from fear somewhat like the Swiss franc inflow. Much of the world still views England as the motherland. When British oriented investors don’t know what to do, they park their money in British property or pounds sterling.

Finally, the US and Australia stand alone in a class of their own, lousy trade figures and an investment outflow. No wonder both these currencies have dropped and probably will drop more.

This second insight into the major currencies gives the Canadian dollar, Swedish and Danish kroner the best look. We have narrowed the field from five to three major currencies, seeing reduced potential in Japanese yen and Swiss franc. However, there is still much more to do. So stay tuned tomorrow when we look at debt.

Learn how to cash in on distorted currencies. Join Merri, Thomas Fischer of Jyske Bank and me at our next International Business and Investing Made EZ Course in North Carolina, Friday, Saturday and Sunday, May 26, 27, 28. DETAILS (PS Our next International Business and Investing Made EZ Course in North Carolina, September 15, 16, 17. Friday, Saturday and Sunday. Sign up for September now!  We are full for May. www.garyascott.com/catalog/ibeznc.html  (Go to this sign up and type in the Comments Section for Sept.)

One way to survive currency turmoil is to be able to earn globally. Our Ecuador Import Export delegates agree and are doing well! One delegate at the end of April 2006 Import-Export Expedition reported:

“Merri, Well, here it is Friday and we have sold $300 of the things we imported to America. Many thanks to you and Gary. We are now working on our NC gathering and will give you an update next week. Again many thanks for all your love and support. David”

David is doing what he loves because while in Ecuador he spotted an artist that paints unique work with designs of silver and gold. He commissioned the artist to do a series of paintings based on Reiki figures. He has since reported that he has sold all these paintings (it is just 12 days since the end of that expedition).

Here is another reason people love Ecuador. Delegates love the rich fresh and ripe food, fruits and vegetables in Ecuador. This market is just three minutes walk from El Meson.

Enjoy R&R in Ecuador with the people of El Meson! DETAILS

Join Merri and me for a week of Quantum Learning and learning Super Spanish at El Meson. DETAILS

On the subject of vegetables here is an interesting health tip shared by my son-in law. We should know this because some vegetables in some conditions can ruin teeth and more.

A recent report in the BBC News says that roasting some vegetables can make them as acidic as soft drinks.

The study at Dundee’s dental school was undertaken because there had been claims that vegetarians have more cavities because of the large quantity of naturally acidic fruit and vegetables they eat. The research compared stewing vegetables with oven-roasting and found that roasting significantly increased acidity of green peppers, egg plant and summer squash.

Dr. Graham Chadwick, who led the study, said "The acidity of ratatouille prepared by oven-roasting is the same as that of some carbonated drinks that, when consumed in excess, are believed to contribute to the development of dental erosion."

Eating roasted vegetables can be like drinking a coke! This creates other important health implications because the pH level of the body affects every cell and long term acid imbalances can create disease. A body that is too acidic for too long is more likely to begin producing cancerous cells. The body regulates a very narrow pH range and keeps a blood pH of 7.365. It will deprive other body systems to maintain this balance. This means that long term acidification can reduce energy, create fatigue, excess weight, poor digestion, aches and pains, and even encourages more serious disorders such as cancer.

Yet a slightly alkaline body balance can discourage cancer, plus increase energy, and reduce fatigue, excess weight, poor digestion, aches and pains.

Dr. Larry Clapp wrote an entire book on this subject after contracting prostate cancer. He was discouraged by the poor options available and instead used nutrition, massage, herbs, homeopathy and other alternative healing approaches to stop his prostate trouble.

Clapp's program was based primarily on balancing pH levels in the body by clearing toxins, improving the diet, exercising and working toward a healthier emotional and sexual life.

Within two months of beginning the program described in this book, blood tests (PSA, CEA, Albumin) showed that his cancer was receding. Not only did he overcome his cancer, but he also became far healthier than he was at the start! You can read more about this at MERCOLA.COM

Numerous health studies have shown that your health can improve when your diet is alkaline and contains a hih percentage of vegetables. Now this new study provided us by British dentists suggests that though vegetablesmay be good, how they are cooked is important as well.

Until next message, may all your currencies, business and vegetables be good!

Gary

P.S. Join us this August with Dr. Terry Hambrick DC and a week long alkalization program here at the farm. DETAILS