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Showing posts from June, 2012

Canadian Super Recession?

June 28 2012 -- Canadians so far have slipped by the global slow down and the economy has remained robust. Canadian dollars are considered a bit of a safe haven and Canada brags to the world about out lowering of government debt before it was popular or necessary along with a continued boom in commodities. But before we get too smug, we should look at some very troubling signs on the horizon:

The graph below shows the 5 year price of commodities:

The economist pointed out that in some ways Canada has the highest real estate prices in the world -- that can’t stay out of balance long. We laughed at America's boom bust market but it is happening here too.The Toronto Stock Exchange is a proxy for China and China is not doing well    . It is even obvious in the USA that Canada would be the worst hit in China mealtdown  The TSX is increasingly a “banana republic” stock exchange with some 25% of stock related to oil and 20% in mini…

After the Gold Rush.

June 2012 -- I first wrote on this subject back at the end of 2010. At the time I knew I was right, but often you can see the market through a telescope, and react too soon, and that was certainly my concern back then. Gold was overvalued but the famous axiom says that markets can stay irrational longer than you can remain solvent.
However I believe the turn is here and it is real. My new concern is based on this graph of weekly prices. Here are the 10 and 50-week EMA lines for GLD. For the first time in 11 years (not counting the sub-prime crises) there has been a serious crossing of the lines.
I have included a graph of Gold vs the stock market (gold is on the bottom) but you don’t need a graph to know the price is way too high already.
The gold market works much like any other, with supply and demand eventually equalizing, and runaway prices returning to long-term averages. Since 1980, the price of gold has averaged about $440 an ounce in U.S. dollars. But much like U.S. home pr…