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. http://www.economist.com/node/21540231 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 mining and a big part of the rest in banking that makes all it income based on the health of mining and oil. With the death of Nortel and the impending death of RIM, technology companies are only 1% of Canadian publicly listed companies. http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/some-shocking-stats-on-the-state-of-the-tsx/article4376206/
- The commodity super cycle is ending, http://www.bloomberg.com/news/2012-04-16/commodity-super-cycle-may-be-coming-to-end-citigroup-says-1-.html
- Even gold is dropping. http://www.cnbc.com/id/47990167 and http://cme4pif.blogspot.ca/2012/06/after-gold-rush.html
- Canada is balancing its books the wrong way, with too much tax, http://www.canada.com/nationalpost/news/story.html?id=4fabe2b0-a61a-4749-8284-717f9ce58eed
I just don't see a healthy economy in Canada in the next 3 years. I think this is a great time to buy some US dollars. http://www.theglobeandmail.com/report-on-business/top-business-stories/economist-sees-canadian-dollar-sinking-to-86-in-2013/article4370816/