There seems to be an inverse relationship between the value of the dollar and Chuck Butler's popularity.
"In 2002, I could go to a Money Show and I might have my family and a few other people in the room," he said. "Nobody wanted to hear that the dollar was going to fall. Now wherever I go, the rooms are overflowing."
Butler is president of world markets for Jacksonville-based EverBank, which reinvented traditional bank CDs as a way to speculate on foreign currency. In addition to earning interest, EverBank customers can make or lose money on the rise or fall of the euro, the Japanese yen, the Chinese renminbi or whichever of the more than a dozen other currencies they've chosen as investments. Some products offer exposure to a basket of currencies.
If that isn't enough to make Butler popular at investment conferences, the bank also offers investment vehicles designed to cash in on surging gold prices.
Butler, 53, was at the Renaissance Vinoy Resort in St. Petersburg recently to speak to people attending "Investment U," an investment conference put on by the Oxford Club of Baltimore. Energy, gold, estate planning and investing strategies were other hot topics for the newsletter writers, money managers and other speakers courting the 300 or so attendees.
EverBank's offering stood out because it combines trendy investments with low minimum investments and bank security. The CDs carry FDIC insurance, although investors are not protected against currency losses. And EverBank periodically offers principal-protected products, sold as "MarketSafe CDs," which offer some of the upside of a hot investment of the moment (gold and silver, currently) without the risk of loss. The bank also offers traditional bank products, including mortgages and high-yield checking accounts, and uninsured investments in gold bullion.
It has been a winning formula for EverBank, which saw its total deposits increase by nearly a third last year, from $3-billion to $3.9-billion. A big chunk of that growth was in foreign currency deposits, which grew from about $700-million to $1-billion. The newer gold investments are now up to about $135-million, Butler said.
Investors who put their money on the euro have been particularly well rewarded. Introduced in 1999 and falling to as low as 82 cents shortly thereafter, the euro is now worth about $1.58.
Butler's view is that the dollar still has room to fall, thanks to fundamental economic problems and low interest rates in the United States that make investments in other countries more attractive to foreigners.
"The dollar rises and falls in cycles," he said. "But at no time before when the dollar was weak did we ever have these low interest rates, a credit crunch and major financial institutions failing. That could cause the dollar weakness to continue longer."
Butler and many economists agree that the dollar isn't likely to gain strength as long as the Federal Reserve is cutting interest rates. But once that easing cycle ends — which could happen this year — the dollar could stage a rally. Butler says he doesn't think the dollar is coming back soon, but "I don't believe in the collapse of the U.S. dollar. We're still the strongest economic engine in the world."
And if it happens, EverBank is ready. It already offers "Dollar Bull" CDs, which allow investors to benefit from appreciation in the dollar against any of 15 currencies.
Other bets against the dollar
• Rydex Investments' CurrencyShares funds (currencyshares.com) are among more than a dozen exchange-traded funds investing in currencies.
• All major mutual fund companies offer funds that invest in foreign markets. Part of your return comes from interest and dividends, part from gain or loss in stock and bond prices, and part from changes in currency value.
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