Everyone Is Talking About the Dollar. Let's Talk About Currency ETFs.

Exchange traded fund (ETF) investors are fully aware of the value of the dollar these days as they snap up products that allow them to hedge its losses. But now more than ever, even the average Joe knows what the dollar is (or isn't) worth.

It's invaded pop culture: you've got Jay-Z waving euros in a video. McDonald's commercials talk about how the dollar is "dropping like a lead balloon." Model Giselle Bundchen was rumored to be asking to be paid in euros awhile back.

Since when are exchange rates the subject on the minds of so many? People are becoming increasingly aware of the fact that it's possible to spend your dollars on other forms of currency, says Rob Walker for the New York Times. Some point to the internet and the wide choices of financial news sources.

One bank has sold foreign-denominated certificates of deposit (CDs) for years, and they're more popular today than ever.

Don't count out foreign currency ETFs and exchange traded notes (ETNs) - there are more choices than ever, and more are likely to come along. Investors can hedge the falling dollar against the euro or the Japanese yen and a number of other currencies, or they can simply bet on a bullish or bearish dollar.

Among the many currency ETFs and ETNs:

• CurrencyShares Euro Trust (FXE)
• PowerShares DB US Dollar Index Bullish (UUP)
• Market Vectors Rupee/USD ETN (INR)
• WisdomTree Dreyfus Brazilian Real (BZF)

Read the disclosure, as Tom Lydon is a member of Rydex Funds.

As ETFs Have Evolved, So Have Investors

Exchange traded funds (ETFs) are such phenomenal investing tools they are actually changing the way investors invest.

They've come a long way since they first landed on the scene in 1993. Billy Fisher for The Street highlights some major advances arising from the advent of the ETF.

• Betting on the bears: ETFs make it much easier to take a bearish stance and hedge against downside risk. ProShares Short S&P 500 (SH) delivers performance that is the opposite of the index it tracks. Investors no longer have to buy puts or sell short. The high risk is also offset. Rydex also offers a line of inverse funds, including the Rydex Inverse 2x Russell 2000 (RRZ).

• Active management: Actively managed ETFs have finally gained approval from the Securities and Exchange Commission (SEC) and are now awaiting investor approval. PowerShares recently launched ETFs coupled with the skill of an active manager and the diversification of an ETF. PowerShares Active Low Duration Fund (PLK) or the PowerShares Active Alpha Multi-Cap Fund(PQZ) are a few examples of the ones available. XShares and State Street are also planning to launch products of this type.

• Access granted: Areas of the market individual investors once found hard to access, such as commodities or preferred equities, are now available. iShares S&P US Preferred Stock Index (PFF) and the PowerShares Financial Preferred Fund (PGF) have shown strong interest.

• Plays on the dollar: The weakening U.S. dollar has been the topic du jour, and now investors can put their money where their mouth is and invest in currency. PowerShares DB U.S. Dollar Index Bullish (UUP) is a favorite among some analysts.

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

With ETNs, Risk Is Small, But It's There

Exchange traded notes (ETNs) are distant relatives of the exchange traded fund (ETF) and they come with their own unique issues attached.

Matthew Hougan for Index Universe points out that while the credit risk is small, it's still there. The Bear Stearns (BSC) fiasco showed that crazy things can happen. When you invest in an ETN, you're investing in a 30-year debt instrument. They are a promise by the provider to pay the investor the amount reflecting a change in the underlying index.

ETNs do have some tracking error, but the difference is that they will never trade below the value of their index. This is part of what the provider offers to the investor. However, there's no guarantee that they won't trade above their net asset value (NAV). With ETFs, any tracking error is borne by the investor.

Late last year, the iPath MSCI India (INP) traded at a big premium to its NAV after the government clamped down on foreign investing.

The issue of taxes and ETNs is still a matter of ongoing debate. While the IRS has ruled on taxes regarding foreign-currency ETNs, they don't appear to be any closer to a decision, according to Stephanie Carreras at Barclay's. Open discussions are taking place until the middle of this month.

Will China's Inflation Halt Bull Run of ETFs?

China wasn't just rattled by a major quake today: inflation is also shaking up the country and its exchange traded funds (ETFs).

Trade in the shares of 45 listed Chinese companies will be suspended tomorrow. They're in the Sichuan province, where the earthquake that has killed thousands hit, reports Scott Tong for Marketplace.

Within hours of the quake, the central bank also announced steps to tighten liquidity in the banking system, and numbers continue to show that inflation is near a 12-year high. Consumer prices in April shot up 8.5% in April over last year. The Chinese currency is up 15% against the U.S. dollar.

There's a new exchange traded note (ETN) on the market for investors looking to hedge the dollar if the Chinese Renminbi continues to rise in value: Market Vectors Chinese Renminbi (CNY).

Many economists believe that the days of low-cost goods coming out of China are coming to a close as China passes on the rising cost of material and energy.

China's ETFs were down slightly in trading today.

• iShares FTSE/Xinhua China 25 Index (FXI), down 10.9% year-to-date
• SPDR S&P China (GXC), down 12.6% year-to-date

For full disclosure, some of Tom Lydon's clients own shares of FXI.

As the Dollar Ticks Up, Picking An ETF Can Be a Challenge

After months of a downhill slide, the dollar is making gains again and it's benefiting some exchange traded funds (ETFs).

It lost a little ground last week, but so far in trading today, it seems to have resumed its climb. The gains have helped calm some worries about inflation, reports Tim Paradis for the Associated Press. When the dollar is weak, it can heighten price increases. Commodities like oil then become more attractive to investors who are looking to hedge inflation.

With that, oil retreated from its record high and fell to $125.41. Last week, it gained $10.

Jack Crooks for Money and Markets points to the G7 meeting in early April as the kick-off point for the dollar's about-face. Traders began to dissect the events of the meeting and perhaps became concerned that a bottom had been hit, and now there's a battle between the dollar bulls and bears.

There are many ways to play your sentiment on the dollar and other currencies around the world. Rydex's CurrencyShares allow investors to hedge the falling dollar relative to a variety of currencies. Market Vectors has two new exchange traded notes (ETNs) that allow investors to go double long or short on the euro. And PowerShares has two ETFs that capitalize on either bullish or bearish sentiment on the dollar.

There's also an all-in-one ETF if you find it hard to pick and choose: the PowerShares DB G10 Currency Harvest (DBV). It contains exposure to the dollar, euro, yen, Canadian dollar, Swiss francs, British pound, Australian dollar, New Zealand dollar, Norwegian krone and the Swedish krona.

Among your other options:

• PowerShares DB US Dollar Index Bearish (UDN)
• PowerShares DB US Dollar Index Bullish (UUP)
• CurrencyShares Australian Dollar Trust (FXA)
• Market Vectors Indian Rupee (INR)
• CurrencyShares Swiss Franc Trust (FXF)

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Oil, the Dollar and Gold ETFs Are Working Together

Slight upticks in the dollar against the euro this week may be in sync with investors timing their re-entry into the market and exchange traded funds (ETFs).

On Thursday, the U.S. dollar was up to an eight-week high against the euro in overseas trading, with the speculation of a possible slowdown in Europe that will allow the European Central Bank to cut rates, reports Peter A. Grant for GoldSeek. The dollar seems to be contained against two other major currencies, the Japanese yen and Swiss franc.

All the while gold has kept a solid stance, and oil is only heading higher lately with the newest record high reached on Friday: $126.20.

The streetTacks Gold Shares (GLD) has been turning around with positive performance in the last week, up 3.4% in that period. As long as oil continues to rise in price, it's believed that gold should continue rising along with it.

Morgan Stanley's New ETNs Go Long Or Short On The Euro

 

Morgan Stanley has joined the exchange traded note (ETN) game, with the announcement of two new notes, based on the euro. They're both now trading on the NYSE Arca.

The new notes are:

• Market Vectors Double Short Euro (DRR)
• Market Vectors Double Long  Euro (URR) 

These notes seek to provide leveraged directional market exposure to the euro and U.S. dollar exchange rate. At the same time, this is Morgan Stanley's first crack at the leveraged index world.

URR is aimed at providing two-times leveraged, long investment in the euro. For every 1% strengthening of the euro relative to the U.S. dollar, the level of the Index will generally
increase by 2%, while for every 1% weakening of the euro relative to the U.S.
dollar, the index will generally decrease by 2%.

DRR is designed to two-times leveraged short investment in the euro. For every 1% weakening of the euro relative to the U.S. dollar, the level of the index will generally increase by 2%, while for every 1% strengthening of the euro relative to the U.S. dollar, the index will generally decrease by 2%.

Today, the dollar has declined against most major currencies, reports Madlen Read for the Associated Press.

The Commodity ETF Picture Looks Different This Week

Gold futures and exchange traded funds (ETFs) began to stage a turnaround in trading today after the dollar once again fell and oil futures hit new records.

Gold today rose to $870.70, reports Bob Ewing for Digital Journal. Meanwhile, the dollar stepped back from its growth spurt, falling against the euro, and oil hit a record $120.01 a barrel, John Wilen for the Associated Press reports.

That sent investors once again scurrying for cover.

The gold-focused ETFs, streetTRACK Gold Shares (GLD) and iShares COMEX Gold Trust (IAU), surged higher after a difficult stretch a few days ago. They both closed on Friday down 3.1% for the week. iShares Silver Trust (SLV) was trading higher today, too. All three funds rose 2% at the end of trading today.

Last week, the situation looked a little different. Gold for June delivery closed on Friday at $858 an ounce. The U.S. dollar jumped after new of the U.S. labor market was not too shabby, as expected for April, report Polya Lesova and Mayra P. Saefong on MarketWatch.

As prices fell, the questions began: has the commodities bubble burst? Much like gold, wheat, rice, and silver were also on losing streaks. There was a slight rebound Friday as some of the losses appealed to bargain hunters, but are the commodities-as-a-safe haven thoughts in the past?

Where it goes next is anybody's guess.

A View of ETFs In An Obama White House

If Barack Obama were to win the election for presidency this November, what would happen to the investment world, particularly exchange traded fund (ETF) investors?

Awhile back, we talked about funds that could benefit in a McCain win, as well as an overall Democratic win.

Jonathon Bernstein for ETFZone believes that the most immediate and powerful impact of an Obama win would be the within the area of foreign policy. He could help to ease tensions with the Middle East and Venezuela, which would in turn calm oil prices and shift the overall momentum of the markets. Currently, oil is at all-time highs, so just the thought of Obama in the White House would send oil lower in funds such as Unites States Oil (USO).

The dollar might end up in a stronger state, as a major reason the dollar fell against the euro is oil imports. If the United States were to import less oil, or or pay less for the oil it does import, we might see an improved trade deficit, thus upping the demand for U.S. dollars. CurrencyShares Euro Trust (FXE) would reflect the dollar-euro ratio.

Obama says he would keep tax cuts for the middle class, and doesn't support Bush's tax cuts for the wealthy. Both those and his dividend tax cut expire in 2010. Dividend-focused ETFs such as iShares Dow Jones Select Dividend Index (DVY) or the State Street SPDR Dividend (SDY) could be vulnerable if the tax cuts aren't renewed.

Obama also supports working to put an end to global warming and a push to reduce U.S. carbon emissions by 80% by 2050. He also supports ending the ban on stem cell research.  Both iShares Nasdaq Biotechnology (IBB) and the WildersharesClean Energy (PBW) could experience positive movement if these issues are addressed.

Currency ETF Moves Depend on Many Factors

One reader wanted to know about foreign currency exchange traded funds (ETFs). Thanks to ETFs, foreign currency is a market the average, everyday investor can get exposure to an area that previously wasn't accessible to them.

The rise and fall of currency has a lot to do with several factors, according to George D. Lambert for Investopedia. The value is impacted by economic growth, government debt levels, oil and gold prices, and more.

Just look at what happened recently in the United States: gross domestic product (GDP) slowed, government debt rose, oil and gold prices spiked. Suddenly, our dollar was hitting record lows against the yen and euro.

Currency ETFs replicate the movements of the currency in the exchange market either by holding currency cash deposits in the currency that's being tracked, or by using futures contracts on the underlying currency.

Currency ETFs can either track the specific currency you'd like, or a group of them, as in the case of the DB G10 Currency Harvest Fund (DBV).

How they operate is cut-and-dry: when you sell it, if the currency has appreciated against the dollar, you'll earn a profit. If the currency has dropped relative to the dollar, it's a loss. Foreign currency ETFs are bought and sold just like regular ETFs, throughout the day.

Keep an eye on the dollar, though: it strengthened yesterday, reports Madlen Read for the Associated Press. Dropping oil prices and the Dow's close above 13,000 for the first time since Jan. 3 are viewed as signs of optimism.

The options investors have for currency ETFs have exploded. Among the many choices:

• CurrencyShares Australian Dollar Trust (FXA)
• WisdomTree Dreyfus Brazilian Real Fund (BZF)
• ELEMENTS British Pound (EGB)
• CurrencyShares Swedish Krona Trust (FXS)

Depending on your feeling about the dollar - will it continue to strengthen, or is this just a temporary lift? - there's also the PowerShares DB US Dollar Index Bearish (UDN) and the PowerShares DB US Dollar Index Bullish (UUP).

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Gold Miner ETF Hits Low on Dollar's Strength

The dollar's renewed vigor is good news for most, but not for the gold miner's exchange traded fund (ETF).

Yesterday, the Market Vectors Gold Miner (GDX) hit its lowest point since Sept. 18 of last year, reports Wanfeng Zhou for Thomson Financial. Year-to-date, the fund is down 7%.

Gold is weakening, too, closing yesterday at $848.50. As the metal loses ground, so do the ETFs that hold futures: both streetTRACKS Gold Shares (GLD) and the iShares COMEX Gold Trust (IAU) year-to-date are up 2% and 1.7%, respectively. They both currently sitting at their lowest points since Dec. 31.

Lately, it doesn't seem like gold has done much of anything but go down. Even though commodities have been hit lately, and some more so than others, with ETFs it's easier to carve out those areas that are performing. Be sure to check in regularly with your funds and have your stop-loss points firmly in place if you choose to invest in commodities.

Meanwhile, the dollar hit a five-week high against the euro today and a two-month high against the yen after the government announced that fewer jobs were eliminated than expected, report Ye Xie and Bo Nielsen for Bloomberg.

One-year chart of the dollar vs. both the yen and the euro:

Exxon Earnings Put the Brakes on Energy ETFs

Some energy exchange traded funds (ETFs) are down more than 4% in midday trading after Exxon Mobil (XOM) reported a first-quarter profit jump that was less than what Wall Street was expecting.

You can't blame Wall Street for expecting more, considering the price of a barrel of oil these days. Even though Exxon's 17% profit jump to $10.9 billion was the second largest U.S. quarterly profit ever, it still wasn't enough.

Analysts were expecting $2.13 per share, but instead got $2.03 a share, reports John Porretto for the Associated Press. Exxon posted the largest quarterly profit in history for a U.S. company at the end of 2007.

Exxon's shares were down nearly 5% midday, weighing down some of the energy ETFs that count the company as a major component:

• iShares Dow Jones US Energy (IYE): Exxon is 23.1%; up 4.4% year-to-date
• Energy Select Sector SPDR (XLE): Exxon is 18.5%; up 3.3% year-to-date
• iShares S&P Global Energy (IXC): Exxon is 15.8%; up 2.9% year-to-date

Also, if you were thinking of moving out of the country in order to escape those high gas prices - not so fast. Of 155 countries surveyed, it turns out the United States is the 45th cheapest, says Steve Hargreaves for CNN Money.

Next time you drive by the pump and sob at $4 gas, think about how people in other countries must feel: in Europe, the average is more than $8 a gallon; in Aruba, it's $12.03 and in Sierra Leone it's $18.42.

If you're really itching to move, consider Venezuela, where it's 12 cents a gallon. Or Saudi Arabia at 45 cents.

But the numbers don't take some things into account: the falling value of the dollar, the differing salaries in countries and so on.

In Europe, the trade-off for the gas prices is cheaper health care and higher education, which is paid for partly through gas taxes. Europe also sports a better public transportation system.

Dollar Up, Gold Down, While ETFs Reflect Activity

The U.S. dollar is toughening up, much to the dismay of gold which hit a three-month low on Tuesday, weakening the focused stocks and exchange traded funds (ETFs).

Also on the decline were oil prices along with weak sentiment just ahead of the Federal Reserve's big meeting today. U.S. gold futures for June delivery on the COMEX division of the New York mercantile exchange settled at $876.80 an ounce, as of Tuesday. As the dollar gains strength, it makes gold more expensive for holders of other currencies, thus lowering demand.

Meanwhile, the dollar hit its highest level against the euro in four weeks. It's on track for its largest monthly gain in a year after expectations that the Fed will end its easing campaign, reports Reuters.

Returning strength in the dollar would be the major reason streetTracks Gold Shares (GLD) is experiencing money outflow. But one trader said gold's fundamentals are still firm, despite the sell-off.

The performance of the dollar vs. the euro in the last year:

Foreign Currency ETF Offerings to Pour In Next Month

Exchange traded fund (ETF) providers Dreyfus and WisdomTree are teaming up to offer five actively managed foreign currency ETFs next month.

They will include the WisdomTree Dreyfus Euro Fund, Japanese Yen Fund, Indian Rupee Fund, Chinese Yuan Fund and the Brazilian Real Fund. These will be the first of 12 to be launched under the WisdomTree Dreyfus banner. Two others include two U.S. current income funds, reports Mariana Lemann for Ignites.

Later this year, more funds will launch and cover the Australian dollar, British Pound sterling, Canadian dollar, New Zealand dollar, South African rand and South Korean won. Several of these funds will be a first in currency ETFs.

When they launch, they'll join a growing lineup of both currency ETFs and exchange traded notes (ETNs), including:

• CurrencyShares Euro Trust (FXE)
• CurrencyShares Japanese Yen Trust (FXY)
• Market Vectors Indian Rupee (INR)
• Market Vectors Chinese Renminbi (CNY)
• PowerShares DB G10 Currency Harvest (DBV)

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Currency ETFs Watching if the Dollar Rebounds

Is there hope for the U.S. dollar and if so, what about the currency exchange traded funds (ETFs) and exchange traded notes (ETNs)?

The dollar has hit lows against major currencies such as the yen and euro.  The weak dollar has helped increase the price of commodities, such as oil and food, made imported goods more expensive for the U.S. consumer and probably affected travel plans for the summer.

Investors looking to benefit from the falling dollar can look at ETFs and ETNs that cover currencies from the euro, to the yen, to the rupee.  Among the offerings and their performance year-to-date:

• CurrencyShares Euro Trust (FXE), up 8.6%
• CurrencyShares Japanese Yen Trust (FXY), up 8.7%
• Market Vectors Indian Rupee (INR), up 2.4% since March 18th inception

There are some who think this might be it for dollar lows.  In fact, the dollar rose today against the euro and has been rebounding against the yen since March, reports Paul R. La Monica with CNN Money.  If the Federal Reserve puts a halt on the lowering of interest rates, then the dollar could benefit.  If the European Central Bank were to begin cutting rates, this could help the dollar rally.

If indeed the dollar turns around, then it becomes important to have an exit strategy for any funds that might not like the rising dollar.  Our exit strategy uses the 200-day moving average, so if the ETF falls below the trendline, then it is time to sell.

For full disclosure, some of Tom Lydon's clients own FXY.
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Speculators and Bargain Hunters Go Fishing For Metals ETFs

The more positive outlook on the dollar led to a selloff of precious metals and their related exchange traded funds (ETFs). Today, the outlook is a little better.

streetTRACKS Gold Shares (GLD) and iShares COMEX Gold Trust (IAU) both finished 3.9% lower yesterday. Market Vectors Gold Miners (GDX) and iShares Silver Trust (SLV) fell 2.8%.

As evidence of the drubbing precious metals took on Tuesday, June gold fell $33.70.

All funds today are trading up near 3% midday, thanks to speculators and bottom-fishers, highlighting the volatility in commodities. The dollar dipped back down, crude oil bounced higher and both incidents reignited demand for gold and silver, reports Allen Sykora for Dow Jones Newswires.

Copper also moved higher on Wednesday, Sykora reports, although experts can't seem to agree on why. Some say it's a matter of technical buying or a result of overall precious metal-market strength, others say it's a result of ideas that the U.S. economy could be in a state of recovery.

Exposure to copper can be had in either the iPath DJ AIG Copper TR Sub-Index ETN (JJC) or PowerShare DB Base Metals (DBB), which holds one-third each of copper, aluminum and zinc.

For full disclosure, some of Tom Lydon's clients own shares of GLD.

Taiwan Had a Busy Week, Sending Its ETF Lower

The Taiwan exchange traded fund (ETF), iShares MSCI Taiwan Index (EWT), fell 7.8% this week after the central bank raised its benchmark interest rate for the 15th consecutive quarter.

It also signaled that yet more increases are likely, report James Peng and Chinmei Sung for Bloomberg. The bank said that inflation might top the government's target of 2%.

The Taiwan dollar fell from a ten-and-a-half-year high on Thursday, because of foreign fund outflows, causing the stock market the Taiwan stock market to fall lower. Before then, the dollar had posted gains for seven consecutive sessions, says Reuters.

The United States also is breathing a sigh of relief that Taiwanese voters chose a president who is committed to easing tensions with China and expand trade with the country, reports Foster Klug for the Associated Press. President-elect Ma Ying-jeou has promised to reverse the policy of emphasizing political separateness from China, and instead work to take more advantage of the mainland's economic boom.

If this new era of cooperation works out, both economies could benefit.

Barclays Throws Hat Into Foreign Currency ETN Ring

Barclays Global Investors is set to roll out three new exchange traded notes (ETNs) that will track currencies in Asia, the Middle East and emerging markets. The ETNs have already acquired $150 million during the month ahead of their launch.

Jesse Emspak for Investor's Business Daily says the new ETNs are:

• Asian and Gulf Revaluation: This tracks an index Middle Eastern and Asian currencies tied to the U.S. dollar. Included are the yuan, Hong Kong dollar, Saudi Arabian riyal, Singapore dollar, and United Arab Emirates dirham.
• Global Emerging Markets Strategy: Tracks 15 emerging markets countries' currencies, including Asia, Latin America and Eastern Europe, through money markets.
• Intelligent Carry Index ETN: Follows the 10 most liquid currencies in the world, designed to give market-neutral returns.

These ETNs are just in time to join two other currency ETNs that have recently launched: Market Vectors Indian Rupee (INR) and Market Vectors Chinese Renminbi (CNY). CurrencyShares by Rydex was the first to cover currency through exchange traded products.

Bear in mind, the IRS has done away with the tax breaks on foreign currency ETNs. A ruling on other types of ETNs is awaited sometime this year.

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Tom Lydon Talks Foreign Currency ETFs on "ETF Tracker"

Tom Lydon appeared on CNBC's "ETF Tracker" segment last Tuesday and discussed how the falling USD is opening opportunities for individual investors to buy foreign currencies as a way to hedge against low yields in money market funds, bonds, and CDs. Video from Tom's segment appears below:

Rydex Puts ETFs to Work In a New Mutual Fund

Rydex is proving that it's possible for mutual funds to be creative in how they use exchange traded funds (ETFs).

The provider is launching a new long-short index mutual fund that takes a fund-of-funds approach, says  Murray Coleman of Index Universe. The idea will be to invest in alternative benchmarks, and the fund will allocate its assets to five strategies in five segments using ETFs or mutual funds.

The fund takes a fresh approach using the following allocations, in order of total assets:

• The Rydex Managed Futures Strategy Fund (RYMFX)
• PowerShares DB G10 Currency Harvest (DBV)
• The Rydex Commodities Strategies Fund (RYMEX)
• The Rydex Real Estate Fund (RYREX)
• The Rydex Alternative Strategies Allocation Fund (RYFOX)

The fund rebalances monthly, but can do so more often. The annual expense ratio is 1.75%, and no fund of fund fees are charged.

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

New ETNs Track Chinese and Indian Currency

Two new exchange traded notes (ETNs) will give access to the Chinese and Indian currency, the first of their kind.

The funds, Market Vectors Indian Rupee (INR) and Market Vectors Chinese Renminbi (CNY), are issued by Morgan Stanley, reports Business Wire.

Both funds track the performance of rolling investments in short-term forward contracts for their respective currencies.

Up until now, the main path for investors who wanted currency exposure was through Rydex's line of CurrencyShares. The advent of these new ETNs are adding to the convenience of currency investing.

Read the disclosure, as Tom Lydon is a board member of Rydex funds.

Is Canadian ETF & Economy Unstoppable?

Canada is strong enough to weather a U.S. economic slowdown, says one official - does that mean its exchange traded fund (ETF) is, as well?

Bank of Canada Governor Mark Carney says that while our depressed economy will cause demand for commodities to dip and prices to fall, he predicts Canada will emerge on the other side fairly unscathed, reports Alexandre Deslongchamps for Bloomberg.

Canada has strong consumer spending, in particular, that could help keep its economy afloat in the tough times.

iShares MSCI Canada Index (EWC) is hovering around its trend line (200-day moving average) and is down 2.9% year-to-date. The fund is allocated in commodities, energy and materials, and it also gives investors a play on the Canadian dollar, which is worth slightly more than the U.S. dollar.

Get Serious With Currency ETFs As Dollar Hits New Lows

As the dollar hits new lows, currency exchange traded funds (ETFs) are getting more attention than ever.

Rydex Investments, home of the CurrencyShares lineup, and the first family of currency ETFs, introduced CurrencyShares the website for information and commentary on Foreign Exchange Analytics (FXA), which is under the "research and tools" option.

The new commentary gives information on the world's major currencies, representing the largest and most liquid asset class. Currency as an asset class provides investors with diversification benefits and the chance to capitalize on the cyclical nature of currency valuations. Currency tends to follow longer-term trends over time.

Currency ETFs will benefit as long as the dollar continues to drop. Year-to-date, these ETFs are delivering:

• CurrencyShares Euro Trust (FXE), up 6.7%
• CurrencyShares British Pound Sterling Trust (FXB), up 1.9%
• CurrencyShares Swiss Franc Trust (FXF), up 12%
• CurrencyShares Japanese Yen Trust (FXY), up 10.5%

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Presidential Elections in Taiwan Could Lift ETF and Economy

Changes are afoot in Taiwan that could impact its exchange traded fund (ETF) in a postive way.

A presidential election is going to take place on March 22, and the odds-on favorite to win is Ying-jeou Ma, a candidate from the pro-business and less China-averse political party, reports Michael Zhuang for Guru Focus.

China and Taiwan's relationship has been tense. China wants to reconcile on its own terms, while Taiwan is divided over whether to stay separated or leave the door open to patch things up.

The outgoing president favored total separation, and the government has been blamed for hampering economic interactions with China and causing the Taiwanese economy to suffer while China was growing by leaps and bounds.

Now that a new leadership is going to come in, investors are liking the looks of Taiwan a little more these days, says Andrew Batson for the Wall Street Journal. In February, the iShares MSCI Taiwan (EWT) went up 10.4%. Its currency has been rising in value, as well, and is seen as evidence that more money is coming into the country.

Better days could lie ahead for this country if they play their cards right.

For disclosure, some of Tom Lydon's clients own shares of EWT.

Bear Stearns's Troubles Take Down Financial ETFs and the Dollar

The Bear Stearns (BSC) mess is weighing on the dollar and financial exchange traded funds (ETFs).

The investment bank sought and received emergency funding today from the federal government and JPMorgan Chase & Co., reports the Associated Press. The trouble began when the firm realized it wasn't going to be able to keep up with demand from lenders and others who were trying to get their cash back.

The CEO said the bailout would allow the company to "get back to business as usual."

Does "business as usual" include the impending launch of their actively managed ETF - the first in the industry? It was slated to begin trading on March 18, but we wouldn't be surprised if it got moved to the back burner while the companies fries some bigger fish.

Meanwhile, The Associated Press reports that the dollar tumbled further amid the trouble, trading at record lows against the euro.

Financial ETFs weren't faring much better in intraday trading, either:

• iShares Dow Jones US Financial Services (IYG)
• iShares S&P Global Financials (IXG)
• Regional Bank HOLDRS (RKH)
• Financial Select Sector SPDR (XLF)
  

Ugly Prices for Gold and the Dollar Are Pretty for ETFs

Gold-related exchange traded funds (ETFs) were higher in intraday trading as gold futures seemed to be trying out for high jumping in the Olympics.

April futures reached a record $1,001.50 an ounce, continuing its steady climb that's been going on since 2001, reports Allen Sykora for the Wall Street Journal.

The rising price of gold is only accelerated by the falling value of the dollar and the rising cost of oil, which hit a record $111 a barrel today. Oil ETFs such as the Oil Services HOLDRs (OIH) and United States Oil (USO) so far haven't shown much movement in trading.

streetTRACKS Gold Shares (GLD), iShares COMEX Gold Trust (IAU) and Market Vectors Miners (GDX) are all benefiting from the Ripley's Believe-It-Or-Not prices:

Meanwhile, the dollar hit new lows against the yen, says Yuka Hayashi for the Wall Street Journal. For the first time in 12 years, it dropped below 100 yen, threatening Japan's exporters and increasing the chances that the world's number two economy would slow. It also hit new lows against the euro, at $1.56.

The dollar vs. the yen:

CurrencyShares Euro Trust (FXE) and CurrencyShares Japanese Yen Trust (FXY) were up slightly in intraday trading.

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Even In These Markets, You Can Still Find ETF Movers and Shakers

Yesterday, the markets delivered outstanding performance and some exchange traded funds (ETFs) finished up in the double digits.

But one good day doesn't mean we're out of the slump yet. It's still time to take a defensive stance with your portfolio and make sure you've got that exit strategy firmly in place. But while it seems as though everything is in a downward spiral, but there are still some buying opportunities, believe it or not.

At our asset management firm, we track a list of about 100 ETFs and review it daily to see how things are performing and if there are any trends emerging. Of particular interest to us is which funds are above their 200-day moving averages. We never buy something sitting below that line.

Once we own an ETF, we keep an eye on it to make sure it's still above that line and continuing to perform. Once it dips below the trend line or falls 8% off its high, we sell. No ifs, ands or buts. A sell strategy from which emotions are entirely removed is the only kind that will benefit any investor.

It can be hard to let go of a little mover and shaker you've always had that soft spot for, but if you want to protect your money, you have to. It's like your parents always said when they were grounding you every other week: "This hurts me more than it hurts you." But sometimes it has to be done for everyone's good.

There are no guarantees that when you let a fund go, it's not going to turn around and deliver the numbers again. But that doesn't mean it won't, either. It's exactly why you have to remain as stoic as possible and stick to the plan and rationalize nothing.

There are a number of ETFs sitting well above their trend lines. Take a look at them, keep an eye on them and if they fit into your overall portfolio and are moving in an overall upward direction, they could be well worth considering:

• iShares MSCI Taiwan Index (EWT), 6.2% above
• Claymore/BNY BRIC (EEB), 5.9% above
• iShares S&P Latin America 40 Index (ILF), 10.1% above
• iShares MSCI Brazil Index (EWZ), 13.7% above
• Market Vectors Russia (RSX), 8.1% above
• iShares S&P GSSI Natural Resources (IGE), 6.8% above
• PowerShares DB Commodity Index Tracking Fund (DBC), 27.7% above
• iShares S&P GSCI Commodity-Indexed Trust (GSG), 23.9% above
• United States Oil Fund (USO), 28.3% above
• iShares Dow Jones US Oil & Gas Exploration Index (IEO), 14.4% above
• Energy Select Sector SPDR (XLE), 6.7% above
• iShares Dow Jones US Energy (IYE), 6% above
• Market Vectors Steel (SLX), 14.4% above
• iShares COMEX Gold Trust (IAU), 21.2% above
• streetTRACKS Gold Shares (GLD), 21.1% above
• Market Vectors Gold Miners (GDX), 16.5% above
• iShares Silver Trust (SLV), 30.3% above
• SPDR S&P Metals & Mining (XME), 11.5% above
• PowerShares DB Base Metals (DBB), 8.5% above
• PowerShares DB Agriculture (DBA), 30.8% above
• Market Vectors Global Agribusiness (MOO), 11.4% above
• CurrencyShares Euro Trust (FXE), 6.9% above
• CurrencyShares Swiss Franc Trust (FXF), 10.2% above
• CurrencyShares Japanese Yen Trust (FXY), 8.5% above

For full disclosure, some of Tom Lydon's clients own shares of EWT, IEO, DBB and DBA.
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Gold Miner ETF Benefits from Price Surge

Gold miner stocks and exchange traded funds (ETFs) ticked upward this week as gold futures spiked to record highs.

April gold futures contracts settled at $991 after hitting an all-time high of $993.30 in intraday trading, reports Brigid Gaffikin for Thomson Financial. Gold indexes have performed better than overall market indicators, according to an analyst at National Bank.

Gold prices could only continue to surge amid ongoing stock market volatility, an ease in U.S. monetary policy, U.S. recession risk and a weak dollar.

The Market Vectors Gold Miners (GDX) will benefit as long as the fund's heavily weighted components - such as Barrick Gold Corp. (ABX) and Goldcorp Inc. (GG) - continue to perform well.

Lehman Brothers; The Newest Exchange Traded Product Provider Introduces Its Line of ETNs

Lehman Brothers Holdings has jumped onto the exchange traded note (ETN) bandwagon, just as the tug-of-war between exchange traded funds (ETFs) and the notes heats up.

John Spence for The Wall Street Journal reports that last month the company listed a trio of ETNs, and plans to launch more because some ETNs cover a more illiquid market better than ETFs. The funds are welcome additions, as two of them track the red-hot commodities market and a third follows a private commodity index.

Although ETNs and ETFs are often mistaken as alike, the approach is very different. An ETN is a long-term debt security issued by the investment manager. They promise to pay back the return of a certain index, minus the fees.

ETN investors take on the credit risk that the issuer will be solvent when they want to sell shares or when they reach maturity. Index tracking error gets shifted to the issuer, not the investor.

ETNs took a hit last year when the IRS took away the tax advantages of notes that provide exposure to foreign currencies. A decision on the taxes for commodity and stock ETNs is in a public comment period, but if the IRS makes a ruling against them, it could be a sharp blow to the business.

Lehman is undeterred, though, saying that they believe ETNs have a place in investor portfolios regardless of their tax treatment.

Barclays, Goldman Sachs, Bear Stearns and Deutsche Bank are other ETN providers.

ETF Investors Dig for Platinum, Gold and Silver

Yes, investors are flocking to gold exchange traded funds (ETFs) as the dollar weakens.

Case in point is streetTRACKS Gold Shares (GLD): after gold surged to a record $992 an ounce earlier this week, the fund traded nearly 11.5 million shares, reports Joanne Von Alroth for Investor's Business Daily. No one is particularly surprised, though.

What is surprising is the performance of white metals.

Platinum, in particular, has continually hit record highs. On Tuesday, it rose to $2,275 an ounce, and is up 50% year over year. The supply has also taken a hit from the continuing power supply problems in South Africa, which are interrupting mining activity. In addition to that, there has been a platinum deficit since 1999. Mining gets about 7 million ounces of platinum a year.

Why, with all of this shortage and growing investor demand, is there no platinum ETF available in the United States? We've been getting a lot of questions from our readers, so we put the question to Kevin Rich, CEO of DB Commodity Services.

"[Platinum] is not liquid enough to support an ETF," is the simple answer. "There are not enough players transacting it."

The last thing anyone would want, Rich says, is for a fund to take money in but find that it couldn't buy the underlying asset. Platinum is scarce enough that it's possible for an investment product to take away the supply. "When you bring in an ETF, you make sure the supply and demand of the commodity are still driving the market," Rich says.

The Commodity Futures Trading Commission (CFTC) is careful to make sure that trading activity doesn't lead to a situation in which investors corner the market.

The London Stock Exchange lists a platinum ETF from ETF Securities (PHPT), and its existence is likely just a matter of different rules and regulations. "They've done things that wouldn't be as easy to do here in the U.S. from a regulatory perspective," Rich says.

The largest silver ETF, iShares Silver Trust (SLV), is up  33.7% year-to-date.

The metal could be benefiting from its versatility. Not only is it used in jewelry and some is held for profit, but it has a number of industrial applications. It's the best conductor of both heat and electricity. It's used in batteries, conductors, fuses, contacts and a water purifier.

You'd think there would be a ton of the stuff lying around, but it isn't the case: the price bottomed in 1980, much of the existing stockpile was melted down and mining slowed down.

Metals, like any commodity, are volatile. They're doing great now, but be wary of sudden dips and watch the trends closely so you know when it's time to jump ship.

Nickel and ETN Are Part of the Commodities Bull

The falling dollar has investors scurrying for cover under exchange traded funds (ETFs) representing gold, silver and...nickel?

There's no nickel ETF, but there is an exchange traded note (ETN): the iPath Dow Jones AIG Nickel TR Sub-Index (JJN). The fund is up 20.2% year-to-date and 10.3% during the past week. Besides the usual suspects of the weakening U.S. currency and general economy, what else is behind this performance?

A big nickel mine should start production next year in Brazil. Mirabela Nickel Inc. is making solid progress with its Santa Rita project in Brazil, with insiders saying they could double the amount of nickel in reserves, reports Drew Hasselback for the Financial Post.

The cost of the nickel and copper used to make a nickel has gone up so much that producing one of the coins now costs 7 cents, says Zubin Jelveh for Portfolio, wasting $14 million a year. The government usually steps in and rebases a coin to get its actual value back in step, but this probably won't happen until after the elections.

ETFs Reap Rewards of Continuing Oil Price Records

Oil came within inches of the $104 mark, pushing exchange traded funds (ETFs) that hold oil futures and companies to new heights.

If you were crying at the pump this morning, you weren't alone. The rising price of oil is pushing up prices at gas stations, too: the average price of a gallon was $3.165 today, according to AAA.

Crude for April delivery hit $103.76, the level many analyst consider a true record high when adjusted for inflation, reports John Wilen for the Associated Press. The soaring price of oil continues to owe much to the falling dollar, because futures bought and sold in U.S. dollars are more attractive to foreign investors when it's not worth as much. It hit a new low against the euro today, to $1.5275.

Gold, copper and wheat are experiencing a rally as of late, as well.

Where do we go from here? Opinions vary. Some analysts predict that prices will eventually head south again, to the $65-$70 range. Others see oil rising as high as $120.

If the latter prediction holds true, oil ETFs could flourish:

• United States Oil (USO)
• iShares Dow Jones US Energy (IYE)
• Oil HOLDRs (OIH)
• iShares Dow Jones US Oil & Gas Exploration Index (IEO)

For full disclosure, some of Tom Lydon's clients own shares of IEO.

U.S. Dollar Falls Further and Currency ETFs Rally

It could be just what exchange traded fund (ETF) investors who are bearish on the U.S. dollar want to hear: another day, another low.

After two