In an economy where just about every government in the world is dreaming up unique ways to devalue its currency, there are few safe places for investors to park their cash. Inflationary fears have driven up the price of gold more than 31 percent since the start of year, and they’ve buoyed the Swiss franc (CHF) as well. Since January alone, the U.S. dollar has dropped 13 percent against the franc putting the exchange rate at 1 USD to 0.79 CHF.

I expect that trend to remain intact as the Swiss government recently moved to dispel rumors that it would peg its currency to the Euro. That leaves the franc, and perhaps the Aussie and Canadian dollars, as three of the most attractive currencies on Forex. Here are four ways you can hedge against inflation by investing in the Swiss franc:

1) Currency trading. I wouldn’t recommend currency trading for beginners without a lot of time for practice and research. The currency markets are the most liquid and volatile markets in the world, and – since they’re so leveraged – they can wipe out your trading account in minutes. Still, if you’re willing to put in the time to learn, it’s probably a safe bet that the Swiss franc is going to outperform the U.S. dollar in the coming months and perhaps years. Try a Forex practice account with Zecco.com (my broker of choice) before putting real cash on the line.

2) Go long the Swiss Franc ETF (NYSE:FXF). The CurrencyShares Swiss Franc Trust has rocketed up more than 17 percent since the start of the year. The ETF tracks the franc against the U.S. dollar, which means a weak greenback is good news for FXF-holders. Best of all, FXF’s chart is in a slow and steady uptrend. So long as the Swiss government’s willing to put up with a strong currency, you won’t get the stomach-churning ups and downs that come with investing in precious metals.

3) Invest in Swiss stocks. While it’s not a direct play on the Swiss franc, you could consider investing in Swiss stocks. That might not be a bad idea since the economy in Switzerland looks as if it’s emerged relatively unscathed by the housing and financial collapses that have rocked the U.S. Unemployment currently stands at a mere 2.8 percent in Switzerland (compared with 9.1 percent in the U.S.). The iShares MSCI Switzerland Index Fund (NYSE:EWL) gives you broad-based exposure to the Swiss equities market, or you can add specific Swiss stocks to your portfolio including heavy-hitters like food giant Nestle SA (ADRs, which trade on the Pinksheets under ticker NSRGY), healthcare company Novartis AG (ADR) (NYSE:NVS), international finance company UBS AG (NYSE:UBS), or pharmaceutical company Roche Holding Ltd. (ADR) (PINK:RHHBY).

4) Open a Swiss franc bank account. An interesting play on the Swiss franc is simply opening a global currency savings account that allows you to deposit your cash in Swiss francs. Jacksonville, Fla.-based Everbank does just that. Everbank doesn’t currently pay you a yield for stashing cash in francs, but it doesn’t matter if every other currency around the world is falling. Just convert your dollars to francs, and don’t touch them for a year. When you exchange your francs back into dollars, you should gain quite a bit of purchasing power (especially if the dollar falls another 13 percent against the franc!).

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Tags: currency, currency trading, Everbank, EWL, forex, FXF, How To, NSRGY, RHHBY, Swiss Franc, UBS, usd

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