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CurrencyShares Australian Dollar Trust (FXA) Message Board

  • bbbmmmbbb81 bbbmmmbbb81 Jul 3, 2009 8:01 PM Flag

    waht is the risk of FXA as opposed to investing directly in the currency

    waht is the risk of FXA as opposed to investing directly in the currency?

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    • Nice thread...

    • Read the fund prospectus

      • 1 Reply to wintersnowsfall
      • Here is my answer.

        1. Any account with an entity in the US (even if it is an Aussie/Canadian bank), will pay back in USD, and that is what you want to try and avoid.
        2.Any of these instruments FXC, Forex, FXA, etc, will still pay you back in USD, which, if you are bearish on the USD is not a totally safe option, for various reasons.
        3.To open an account in Canada, or Australia, in one of their own banks, you do NOT have to fly there. YOu can open an acct from the US, just that they ask you for a lot of verifications (where do u draw your wealth from, copy of passport, utility bill) etc, to confirm you do not have questionable funds. After you give them all kinds of proof, they will gladly open a local account in their country for you. Around June of every year, you have to file a form with the IRS, stating your HIGH WATERMARK in your foreign account, for the previous calendar year, and the interest earned. Opening a 'local' account in that country is not the same as opening a USD account in one of their branches in the US.
        SO, after you open an account with them in their country, you can wire them USD, and they will convert into their local currency and deposit their currency into your account, and you are thus free from the fluctuations in the USD. Or, you can ask your US bank to wire in CAD, or AUD.

        There is appromixately a 1 to 2.5 % loss when you buy foreign currency from your US bank, or from the target bank (depends on how much u wire, and how hard you negotiate with the bank that is converting your currency for you).

    • Ignore the pople who have responded so ignorantly to you.

      You have asked a very good question.

      If you know how to trade Forex, then I suggest you do that as you would have more cotrol and ability to limit your risk than with FXA. My second choice would be to trade currency futures. If you have not learned to trade either of these, then consider FXA as the third best alternative.

    • How do you plan to invest directly in the currency?

      • 1 Reply to theo2_2004
      • You open an account called a currency savings account with HSBC bank; that's the Hong Kong-Shanghai Bank Corp. Google on Offshore Bank and there it is. Then you can open an account in Aussie Dollars. Plus you get other benefits like a Debit/Credit card recognized around the world. You can hold accounts in Euros if your planning to go to Europe for example.

 
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