In my previous post I mentioned that I was sitting on 20% cash. Today I decided to use almost all of that cash to buy the CurrencyShares Japanese Yen Trust (NYSE:FXY) for $82.75 per share. In effect, I am still in cash — albeit yen rather that dollars.

My motivation for this trade is that I believe the yen carry trade will soon end, which will cause the yen to appreciate against most currencies. Last year, the yen was one of the worst performing currencies in the world. This year it could be the best.

As a contrarian, I am also delighted to see that there is a record speculative short position in the yen.

It should be noted that, unlike the other CurrencyShares, the Japanese Yen Trust currently doesn’t pay any dividends because Japanese interest rates are barely able to cover the trust’s expense ratio. But I believe a rise in the yen will more than make up for this shortcoming.