Having two kids in the technology era, it’s not easy to get everyone around a table for anything other than dinner.
As soon as they’re done, they’re glued to an iPad, playing a video game or attached to some other electronic device.
I decided to change that by purchasing Disney’s version of a classic board game — Monopoly.
Canyon Distressed Opportunity Fund likes the backdrop for credit
Now, practically every night my 6-year-old has the game on the table when I get home from work so we can either finish our old game or start a new one.
But, even at 6 years old, it didn’t take him long to figure out what the key to winning this age-old game is.
And the same idea rings true when it comes to accumulating wealth in the real world.
You need income that continually flows through to you. Unfortunately, the no-income world today doesn’t help that key to preserving and growing your net worth.
Bank CDs, bonds and even the average stock yield don’t do you any good. And the Federal Reserve indicated last week that rates are going to remain low, which is a long-held view here at The Sovereign Society.
In the zero-income world, we are forced to look for unique opportunities to generate income, which is exactly what I have for you today — an opportunity to collect an attractive annual yield without owning a single stock. Instead, you will own exposure to a much larger and more liquid market — the currency market.
Don’t worry though; you don’t have to open a currency trading account. There is an easy way to grab a currency CD that gives you exposure to global markets and pays out a high yield for one certain currency. I’ll get more into the CD itself in a moment, but first let me explain the opportunity.
Playing a Rebound
Right now, as part of this opportunity, the Russian ruble is paying an aggressive yield for having exposure to the currency.
Now, I wouldn’t recommend getting this exposure just for the yield, but you also have the ability to benefit if the currency appreciates over the time frame of your CD, and if the currency depreciates, well, your yield will help limit those losses.
The Russian ruble remains one of the most hated currencies. It was headed toward the brink of disaster as U.S. and European sanctions slammed the Russian economy.
That sell-off has now stopped but the currency remains volatile, which is why we are able to capture a yield just by holding the currency.
The Russian economy, while certainly hurt, has weathered the crisis a bit better than most people originally expected. As you will recall, the ruble’s problems are not organically created. Instead, its struggles are a byproduct of geopolitical tensions, which led to sanctions being imposed on Russia by many Western nations over the country’s involvement in Ukraine.
As a result, the Russian ruble plummeted against the greenback.
But, it has now created a short-term opportunity to benefit as sanctions are set to be eased and eventually completely lifted. Currencies are a reflection of an economy, so as the Russian economy heals and is able to prosper without sanctions, the ruble will improve.
The Russian currency currently trades at around 0.015 to the U.S. dollar in institutional markets. Looking back to the worst of its sell-off after sanctions hit, the ruble bottomed around 0.0144, or 4% below the current price.
Keep in mind, this is when the worst-case scenario for the ruble was being priced in — the dire view that the Russian economy and ruble could ultimately collapse.
But here we sit today, and the ruble is still intact … a bit volatile, but intact. And when sanctions in Russia are — not if, it’s just a matter of time — lifted, it will get back to being an economic powerhouse and trading partner with countries around the globe, and its currency will snap back as well.
Russian Ruble CD
Right now, a three-month CD on the Russian ruble is currently paying a yield that offers investors a head start.
In a world that is starving for income, a solid annual yield is ever so important.
This world requires us to continue seeking unique opportunities like the ruble CD to create our own source of income to preserve and accumulate wealth.
The Russian ruble CD I am referring to comes from our friends at EverBank. You can view the company’s currency CDs here.
It’s an easy account to open, and you can open it directly online. The minimum investment is $10,000.
It is important to note that at EverBank the ruble is a non-deliverable currency (NDC), which means that the currency itself cannot be delivered to you upon maturity. You will be required to conduct a currency exchange (with costs) in order to liquidate any gains. This also means that you should have the option at maturity of rolling this CD over for another term, but there are no guarantees of that either due to the uncertainty associated with NDCs.
In addition, EverBank itself is FDIC insured, meaning that if the bank was to fail, the USD value of your CD at that time is insured up to the standard $250,000 limit per depositor, per insured depository institution limit for each account ownership category, but this does not protect against losses due to fluctuations in currency values (including loss of principal).
And for the sake of full disclosure, we receive a marketing fee based on our relationship with EverBank. But, honestly, we’d work with them regardless.
Despite its fluctuations, I see a higher ruble in our future. And we get paid nicely to hold the currency.
Editor, Pure Income
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