Montreal, Canada

Can you name the only economy in Western Europe with a positive trade and budget balance?

If you guessed Norway, then you’re right on. No other country has amassed greater wealth as a percentage of GDP (gross domestic product) since 2002 on the heels of surging oil prices and prudent fiscal management. That’s a rarity these days as most European economies struggle with explosive budget deficits while others contemplate big cuts in government spending in order to avoid a run on their domestic bond markets.

Norway is Europe’s biggest oil-producing nation. The country is a prime example of fiscal discipline and though its economy struggled amid the 2008-2009 financial crises, it quickly snapped back.

The Norwegian krone, or NOK, has been a favorite among global investors over the past few years but has trailed the mighty Swiss franc in Europe since 2008. In times of economic turmoil, investors prefer the relative safety of the Swissie; the NOK is a thinly traded unit and when markets shudder, the NOK usually declines quite sharply in a wholesale flight-to-safety.

Recently in The Sovereign Individual, I plugged one of Norway’s largest banks. The stock has since rallied and continues to spit-out a nice yield in the NOK and trades at a low multiple compared to other banks in the Nordic region.

The NOK is also heavily tied to the oil price, which largely explains why this small country of less than 5 million people harbors one of the world’s highest budget surpluses as a percentage of GDP.

In October, Norway’s sovereign wealth fund, managed by the Norges Bank (central bank), topped NOK 3 trillion for the first time in history, the equivalent of $518 billion dollars. That’s a huge leap from where it started back in 1996, with just NOK 1.98 billion or $258 million dollars.

The Norwegian wealth fund got slammed in the 2008 credit crash but has since recovered sharply with shrewd investments in the emerging markets among others. The fund holds approximately 1% of all global tradable stocks and is the second-largest sovereign wealth fund after Abu Dhabi’s.

For dollar and EUR-based investors, I prefer the NOK and the CHF as a long-term store of value. Both countries exercise responsible fiscal management and rank as the few sovereign nations actually reducing, not increasing, foreign debt obligations. Norway and Switzerland are also net creditor nations.

Of course, compared to gold since 2005, both currencies are in a secular decline. I would anchor any anti-dollar or anti-EUR strategy with gold followed by positions in the NOK and the CHF.