Montreal, Canada

Buy currencies supported by positive budget and trade surpluses while avoiding those mired amid rising deficits. That investment strategy has produced solid long-term gains for investors over the last 39 years since Nixon broke the gold window in August 1971. Over this period the United States and other fiscally weak nations have produced big deficits while surplus countries have seen their respective currencies rise.

Winners over the long-term vis-à-vis the dollar include most international units with the deutschemark, Swiss franc, Japanese yen and gold posting the biggest gains; and since the introduction of the single currency in Europe in 1999, the euro has ranked among the many winners along with the formidable Brazilian real and the Norwegian kroner (NOK).

As we shortly conclude another decade the next ten years might reward investors who avoid high deficit currencies while rewarding those who invest in surplus currencies, including gold. Since it's highly unlikely the United States will post a fiscal surplus any time soon – if ever again – currency investors should remain focused on the primary trend, which is supported by fundamentals.

This suggests sticking to the strongest currencies for long-term gains, including gold, the Norwegian kroner and even crude oil, a surrogate hedge against the dollar. Other currencies with greater potential are the Canadian dollar and the Brazilian real.

The Chinese yuan also holds potential but it must be fully convertible before truly logging big gains. It would seem inevitable that at some point over the next 10-15 years that China will make its currency convertible – as it must should it truly emerge as the leading economy in the 21st century.

While it remains true that the U.S. dollar is cheap and most things American are undervalued versus most things European, the prospects for a secular bull market for the dollar are non-existent until the Fed starts raising interest rates. And the Fed won't begin a series of rate hikes any time soon because of the state of employment, bank credit growth and real estate trends – all still badly fractured and requiring a period of extended easy money to fuel lagging consumption and employment growth.

In my view, the dollar's rally is one to sell. The best currencies to buy now include the Norwegian kroner, which I expect to continue rallying against the dollar and the euro in 2010 as the Norges central bank gradually raises rates. Norway, a small currency market by global standards, is nevertheless home to all the bullish factors for why an investor should hold a strong currency.

Norway, unlike most currencies, beckons a positive trade and budget surplus and is home to Europe's largest budget surplus-to-GDP ratio – greater than even Switzerland or Germany. Also, the central bank is hiking interest rates while others are not. Though heavily overbought, the Brazilian real holds the same bullish credentials.

Another reason why the dollar won't sustain additional gains in 2010 is because the Fed will trail other central banks tightening credit; the Norwegians are raising lending rates and the cost of money is becoming more expensive. Therefore, I want to own the NOK.

For dollar-based investors heading into 2010 I hold about 14% in gold, 5% in NOK, 4% in EUR and 4% in Canadian dollars. On this correction, I plan on buying some silver – targeting the $16 to $16.50 area for accumulation.

I expect the U.S. dollar to rally into 2010, which is consistent with risk rising in the first quarter coupled by a major correction in risk-based assets. Yet once that event passes, the dollar will once again decline because there's only "hot air" supporting the prospects of a Fed tightening. It won't happen in 2010.

Fundamentally, it's pretty hard or impossible to make a bullish case for the dollar while it's pretty easy to make one for the NOK. Norway has surpluses, America does not.

The United States continues to increase its budget ceiling, boosting its military commitments while showing no fiscal restraint. Spending is on a bull market trajectory in Washington and nobody really cares, except Ron Paul of Texas.

It's worth noting the Fed has never raised interest rates while unemployment is rising. Unless there's a hiring boom, which is unlikely, the dollar will remain soft and rallies like this one are rallies to sell in favor of accumulating gold, silver and the NOK.