It’s possible to make a lot of money off moment-to-moment currency moves, but it takes significant time and resources to make a living doing it. Another way to profit is to follow a long story, such as the evolving relationship between the US dollar and its Canadian counterpart. No snapshot can tell this tale. Parity–100 US cents on the Canadian dollar, which the loonie reached Tuesday morning–is just another check-post on the way to a long-term ascendency.

It’s difficult to stay with a long story, particularly amid such treacherous times. Not too long ago academics and central bankers spoke of “The Great Moderation.” Harvard economist James Stock coined the phrase in an August 2002 paper, Has the Business Cycle Changed and Why. Ben Bernanke, then a governor on the Federal Reserve Board, used it as the title of his remarks at meetings of the Eastern Economic Association in Feb. 20, 2004.

As we know all too well, reality has answered Professor Stock’s rhetorical question with what we now like to call “The Great Recession,” and Bernanke is one of the guys trying to clean up the mess. One way to mitigate the agita that’s just part of being in the market is to have exposure to tangible resources–things like gold that have “store of value” characteristics. Even better are those commodities that are seen in some light as “real money,” but that also have industrial uses.

Crude oil–or “black gold”–is the quintessence of this combination. As the price of black gold rises, the Canadian dollar gets stronger. Canada is going to benefit as the US–still its largest trading partner, with more than 70 percent of total trade conducted with its southern neighbor–regains its economic footing, and the impact of rising emerging market demand for commodities already helped it come out of the recession on stronger fundamental footing than its G-7 peers.

We now have real evidence that things have turned for the better in the US: Light vehicle sales were up 24 percent year over year in March, the biggest non-cash-for-clunkers-inspired jump in a while and the best single month since August 2008. This is good for Canada. But even with the US gains, General Motors still sold more cars in China in March than in America–this is a statement about future economic growth leadership. And Canada is in good position here, too.

China is evolving toward a domestic-demand-driven growth model that will carry it past Japan in terms of regional influence and Europe on the global stage to a place of mutually beneficial co-dominance with the US.  The challenges facing what is still the world’s biggest economy–the US is still more than two times as big as Japan in GDP terms–are serious. But history shows the American economy to be resilient and adaptable. And it’s in both Chinese and American interests to work toward a “first between equals” posture.

This is a mid-21st century concern–the long, long story–but there are profitable trends to follow and moves to make now. For example, more concrete evidence of strength can be found in Australia and Canada. The Land Down Under, because of its proximity to China, historic ties to the West, and its abundant natural resources, is positioned to benefit from this change in the global economic order. Canada’s relationship with the US, its maturing ties to China and other Asian markets, and a resource base that separate it from the G-7 will help it prosper over the next 10 years.

Already well down the course of combating inflation, the Reserve Bank of Australia (RBA) overnight raised its target interest rate another 25 basis points, bringing to cumulative total to 125 basis points since it became one of the first central banks to boost borrowing costs in September 2009. But 4.25 percent is still 300 basis points below the prevailing rate in August 2008, before Lehman Brothers fell. The Aussie hit a three-month high against the buck as the loonie hit parity today.

Among its other distinguishing factors, Canada had 10 years of federal budget surpluses when authorities passed stimulus legislation. Government had the wherewithal and the balance-sheet strength to support such efforts, which will also, therefore, be more effective in the long run. It’s realistic to forecast a time when Canada’s books will back in balance. And the Bank of Canada (BoC) is on course to hike its benchmark interest rate in July, ending a period of extraordinary monetary flexibility.

This afternoon the Fed released minutes for its March 16 meeting, following which it released a statement that preserved the “an extended period” language. In light of today’s release, “an extended period” can be defined to mean “as long as the economy remains week.” All members of the Federal Open Market Committee (FOMC) agreed the inflation outlook in the near term remained subdued, and “most” agreed that significant resource slack was continuing to restrain price increases.

According to the minutes, “A few noted that the risks to inflation expectations and the medium-term inflation outlook might be tilted to the upside in light of the large fiscal deficits and the extraordinarily accommodative stance of monetary policy.” But the Fed won’t mess around with any calendars; its decision will be based on real inflation, of which there just doesn’t seem too much of–yet. The Bank of Canada’s intentions, on the other hand, are explicit, and the data suggest the BoC will boost by at least 25 basis points at its July meeting.

The feeling that BoC Governor Mark Carney will beat Bernanke to the tightening cycle is already priced in to the currency relationship, as is crude oil’s rise to above USD80. But Fed language and trade math argue in favor of an unpredictably long period of a bottom-scraping fed funds rates, whereas Australia and Canada have made assets denominated their respective currencies more attractive to US and global investors–the result of short-term as well as long-term fiscal and monetary management.

The US dollar has strengthened against the euro, the British pound and the Japanese yen; it hasn’t fared so well against currencies of structurally healthy economies with ties to Asia and/or commodity exposure, such as the Australian dollar and Canada’s loonie. These are early signs of a long-term shift in the composition of the world’s growth leaders. Australia and Canada, by reason of sound policy and good fortune, are well-positioned to benefit from this shift.

One efficient, cost-effective way to gain exposure to the Canadian dollar is through CurrencyShares Canadian Dollar Trust (NYSE: FXC). Another is to build a basket of high-quality, high-yielding Canadian companies recommended in the Canadian Edge Portfolio. This way you enjoy the benefits of a strengthening loonie.

The Canadian dollar is, basically, back to where it was before the “official” start of the recession in December 2007; it sank during the initial flight to the safety of the greenback but has rallied strongly here in the early stages of recovery. The S&P/Toronto Stock Exchange Income Trust Index has generated a total return of more than 15 percent in US dollar terms–illustrating the long-term power of sticking around to collect dividend checks.

You Cruise, You Win

Roger Conrad and his KCI Investing colleagues have been combing the globe for their next luxury investment cruise: Any ports of call must be ripe with investment potential, of course, but they must provide a rich slice of the world’s treasures and unique insights into human luxury. And after the brutal year we just finished, who couldn’t use some luxuriant down time learning how to prepare their portfolios for what this next decade has in store.

Save the dates: Thursday, October 21, through Monday, November 1, 2010. Explore the wonders of Turkey and the Greek Isles while learning about the newest investment strategies from Roger, Elliott Gue, Yiannis Mostrous and GS Early.

While you enjoy unfettered access to the finest minds in investing today, Seabourn Cruises will upgrade the way you think about luxury cruising as you are feted aboard the brand new Seabourn Odyssey. From its all-included open bar of premium liquor, wine and beer to its almost better than 1-to1 staff-to-passenger ratio, to its maximum capacity of only 450 passengers, you will understand why it immediately jumped to the top of the luxury cruise line ratings charts when it hit the water in 2009.

For those of you lucky enough to have sailed with this keen crew in the past, you know you are in for a meticulously planned journey into the business, investment and cultural offerings of the region. KCI in partnership with Joseph H. Conlin Travel Management is offering this journey solely to KCI subscribers and their friends.

For more information and reservations, please click here.

The Roundup

We’re taking an in-depth look at non-Portfolio companies in our How They Rate coverage universe in the coming issue of Canadian Edge, which will be published Friday afternoon.

Meanwhile, here are tentative first-quarter reporting dates for Portfolio recommendations.

Aggressive Portfolio

• Ag Growth International (TSX: AFN, OTC: AGGZF)–May 7
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)–May 5 (confirmed)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–May 11
• Daylight Resources Trust (TSX: DAY-U, OTC: DAYYF)–May 6
• Enerplus Resources Fund (TSX: ERF-U, NYSE: ERF)–May 7
• Newalta Income Fund (TSX: NAL, OTC: NWLTF)–May 11
• Paramount Energy Trust (TSX: PMT-U, OTC: PMGYF)–May 7
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–May 6
• Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF)–May 13
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–May 7
• Trinidad Drilling (TSX: TDG, OTC: TDGCF)–May 6
• Vermilion Energy Trust (TSX: VET-U, OTC: VETMF)–May 7

Conservative Portfolio

• AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF)–April 29 (confirmed)
• Artis REIT (TSX: AX-U, OTC: ARESF)–May 13
• Atlantic Power Corp (TSX: ATP, OTC: ATLIF)–May 14
• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)–May 4 (confirmed)
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)–May 13
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)–May 12
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–May 12
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–May 7
• Colabor Group (TSX: GCL, OTC: COLFF)–April 29
• Davis + Henderson Income Fund (TSX: DHF-U, OTC: DHIFF)–April 27
• Innergex Renewable Energy (TSX: INE, OTC: INGXF)–May 13
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)–May 14
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)–May 5
• Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF)–May 12
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–May 12
• Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF)–April 29
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–April 29
• TransForce (TSX: TFI, OTC: TFIFF)–April 23 (confirmed)
• Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF)–May 6 (confirmed)
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)–May 7