Economies of U..S.A. and Canada on divergent paths!

According to the U.S. National Bureau of Economic Research, U.S. and Canadian job markets have struck a divergent path since December of 2007 when the recession in the USA began.  This chart explains how divergent those paths have been in graphic terms.

At this writing, Canada has reproduced all of it's recession job losses and, in fact, has increased that number by 2%.

When the Canadian dollar was trading at .77 cents I wrote an article that basically told you to "hold on to your loonies".  I reiteratted that sentiment over a year later when the loonie was trading at .97 cents to the usd again telling you to hold on to your loonies.  Now, even with the Cannuck buck trading at over $1.04 usd I am reiterrating that same sentiment. Hold on to your loonies!

In the 1950's the Cannuck buck traded around $1.08 to $1.10 to the usd.  I believe those levels will be reached again and will hold true for the forseeable future. There are many reasons for this opinion, not the least of which is the massive debt load of the U.S. and a number of it's states.  The U.S. bond market is in for a financial tsunami at some point beyond when quantitative easing ends, and maybe before that time.

The U.S. has been, for the past year, buying up to two thirds (2/3) of all of it's own debt on the bond market. As that giant Kenseyian experiment ends, listen carefully for the underwater earthquake that could eventually spawn a Tsunami called hyper inflation.

Markets usually like inflation. Commodities like inflation. Even housing likes inflation and remember, the U.S. Federal Reserve always errs on the side of inflation. The problem is, once this Genie is out of the bottle, no one really knows where it will go, but it does not bode well for the usd.

Since commodities love inflation, and Canada is a country rich in almost every single commoditiy from water, to wheat, grains, cattle, oil, gas, gold, silver, lithium, diamonds, gypsum, lumber, seafood, coal, etc. etc  look for the cad to strengthen, even from these levels.  As two billion more people from China to India, Brazil, Russia and Indonesia join the middle class, the demand for all commodities will climb, and climb and climb.

Anyone who thinks the commodities bull market is over will miss out on huge upside. This lull is a buying opportunity and when everyone gets extremely negative over the next month or so, it will be even a better buying opportunity.

Look for Canadian interest rates to remain above U.S. rates, to rise slowly and strengthen the Cannuck buck.

Now remember, "hold on to your loonies"!

Happy investing.

HP

Related articles

• Loonie falls amid fears of China slowdown (thestar.com)
• Pros and Cons of Investing in Canada (mint.com)
• Loonie makes strides past 105 cents U.S. (ctv.ca)
• Loonie rises as trade surplus improves (thestar.com)
• A recession is coming but not yet (theglobeandmail.com)
• Loonie keeps soaring against U.S. greenback (ctv.ca)

The 15 Best and the 15 Worst Mining Jurisdictions in the World

Image via Wikipedia

April 15th, 2011

 

With the announcement yesterday that Bolivia President Evo Morales will announce a decree on May 1st to “dismantle the privatization model” of the mining industry and expropriate all assets owned by private mining companies, is this just an isolated example or will this be the start of a trend that many other governments will follow? Since gold and silver mining companies will exhibit the fastest earnings growth rate among any industry for the next several years, one should expect to consider political risk as a much greater part of the equation when investing in mining stocks in coming years.

So where are the riskiest mining jurisdictions in the world and where are the safest? According to the most recent Fraser Institute survey, here are the mining jurisdictions that graded the best and the worst for “encouraging mining investment” and granting “legal processes that are fair, transparent, non-corrupt, timely, and efficiently administered”. In order to rank these mining jurisdictions from top to bottom, the Fraser Institute asked mining executives and exploration managers in 79 mining jurisdictions around the world to grade the effect of government policies on mining operations (including restrictive regulations, uncertainties about land use, and the ever looming issue of restrictive taxes), the nature of trade, environmental, and operational barriers, and the effect of mineral potential on additional exploration investment. Furthermore, to encourage objective responses to the survey questions, the Fraser Institute surveyed all mining executives anonymously.

By comparing the grades of the jurisdictions below, you should be able to assess the risk and future probability of an Evo Morales type event happening to a mining company whose shares you own.

Unlocking the hidden value in TNR Gold Corp!

Subject: TNR Gold Corp

If you owned 18 valuable properties consisting of gold, silver, copper, lithium and rare earths, in various locations in North America, South America and Europe, you might have a problem explaining to shareholders and potentioal shareholders, just how much value is stored up in those properties. Frustration could set in for both you, and your shareholders.

That is the position TNR Gold  (TNR-v) finds itself at this writing. Management has spent the past few years acquiring some very promising properties, and is now struggling to release the value inherant in owning a fairly large number of various resource discoveries under only one banner.