Economic Patriotism or Free Market Pragmatism

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Economic Patriotism or Free Market Pragmatism

The Obama administration is becoming quite critical of US corporations acquiring foreign firms in order to relocate their tax domicile to a country with a more favorable regime. Last week, US Treasury Secretary Jack Lew suggested American companies that have done so or are thinking about doing this lack a sense of economic patriotism. In his opinion, American corporations should not take advantage of the benefits of doing business in the United States and utilize loopholes in the US system in order to write down their tax liabilities. The President joined the chorus this week suggesting “some people are calling these companies corporate deserters.”

They’re both wrong.

US corporations are abiding by the current tax legislation that is in place. It’s simplistic and absurd to suggest they have a patriotic responsibility towards the United States. In fact, management of these corporations do have a responsibility, and that is after considering their stakeholders like their employees, suppliers, and customers, they are responsible to their shareholders. Thus, one would imagine US lawmakers would need to ensure that the United States is a competitive nation in terms of offering a favorable corporate tax rate that provides US business with the right incentives, but not put the onus on them to do ‘what’s right for America.’

For this, there is no question broad based corporate tax reform is desperately needed. It is evident from the fact that an additional 25 major US companies are considering relocating overseas by the end of this year in order to take advantage of a smaller tax bill. Senate Democrats have proposed raising the foreign ownership threshold required of a US company to re-domicile their tax base from 20 per cent to 50 per cent. Despite being backed by the current administration, this is not the solution. It is simply a Band-Aid fix, and one might even suggest that if such a significant tax advantage still exists, US corporations would flee more capital from the United States to acquire larger shares of foreign companies.

As The Economist points out, there are two major flaws with America’s tax code. First, on paper America’s corporate tax rate is 35%, which is the highest amongst the 34 member countries in the OECD, but their effective tax rate is less than the OECD average thanks to a laundry list of aimless loopholes. This alone illustrates the complexities and resulting inefficiencies in their tax code. The second is that the US taxes income regardless in which country it is earned, but doesn’t collect until funds are brought back to the US. This creates yet another disincentive to repatriate foreign profits and the consequence is less investment in the US.

If the US government wants better corporate participation at home, then it behooves them to rewrite the tax code. Ultimately, this is what will incentivize these same US companies that hold profits overseas to bring those profits home and lead to the positive contributions to the American domestic economy.

The original article can be viewed here.


Invitation to the Sprott Vancouver Natural Resource Symposium 2014

Rick Rule has been a longtime friend of Cambridge House International. On July 22 to 25 he is hosting a special event at the Fairmont Hotel in Vancouver. We want to make sure that you are aware that he is hosting the upcoming Sprott Vancouver Natural Resource Symposium.

Rick has gathered an outstanding speaker line-up, which includes mining billionaire Robert Friedland, legendary speculator Doug Casey, world-wide best-selling author Bill Bonner.

Rick believes that right now is “make it or break it time” for millions of investors… And if you do nothing, you could end up regretting it for the rest of your life. He will tell you why this could be the best time in 15 years to enter the resource sector. In fact, he says many of his favorite stocks are still at 90% discounts from their highs.

We are looking forward to learning what some of the most experienced and capable investors in the natural resource industry are doing right now. And you should too!

This event will take place in Vancouver, from July 22nd to 25th, at the Fairmont Hotel.

Although space is limited, this may be the only time that Rick hosts this unique conference, so we want to make sure that you seriously consider attending.

You can find out more details about the conference, including the venue, here.

Click here to order your ticket online today. You can also call 1 800 926 6575 or +1 561 243 2460, ext. 105 or 106.


Cambridge House International Inc.

P.S.: Attendees will also receive a reduced rate on rooms at the Fairmont, so be sure to mention you are coming to the conference!

Memories of a Euro Crisis

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Memories of a Euro Crisis

Gold prices gained for the sixth week in a row putting up the metals’ best winning streak since August of 2011. Beyond the technical factors that have been supporting this rally that started below 1,250 US per ounce, investors once again are demanding gold for its safe haven characteristics. It was the news of an extension of Portugal’s biggest bank missing an interest payment on their debt that saw investors sell equities and move into precious metals. And thus, the memory of the fears of a sovereign debt crisis in Europe (that investors had since moved passed), serves as a sobering reminder for the need of a hedge to equity exposure. This is amplified by the fact that we are in a rising interest rate environment when investors might want an alternative to bonds and other fixed income.

But it is interesting to think back to what the market reaction might have been two years ago if a similar event had happened to another one of Europe’s major financial institutions, and perhaps allows suggesting that the markets today are not as sensitive as they were in 2012. The selloff in the markets we saw on Thursday might have been much more drastic. And for that matter, the selloff could have followed through into Friday’s trading session as investors concern themselves over the condition of European banks’ balance sheets. Instead, banking fears in Europe translated to a half percent selloff in the S&P500 and the markets finished positive on Friday.

As immune as the markets may have been this week to the events in Europe, they have illustrated one thing, and that is as we remain in this low to moderate growth environment, we will continue to uncover vulnerabilities in our financial and economic system. This is simply because we are not seeing the robust economic growth that would allow us to put the crisis of 2007 behind us and move on. Portugal’s Banco Espirito Santo may not represent a major financial institution in comparison to perhaps the problems encountered by Spain’s Santander in October of 2012, and their exposure to the debunked Spanish housing market. But it does caution that there could be many more skeletons in the closet uncovered by this lifeless recovery.

The same is true for North America. Weak economic growth holds us back from correcting the shortfalls that led to the events of 2007. Despite analysts’ calls for a strong US economy in the second quarter of this year, it follows a near three percent contraction in the first three months. And it’s a similar scene in Canada, which is evident through the performance of a labour market in an economy that continues to illustrate a pure inability to create jobs.

My point is certainly not to be overtly bearish on some unforeseen events or hiding from what’s to come. Moreover, as the same structural problems are still prevalent in the global economy today, like stagnant employment growth, high government debt levels, and an ongoing societal debate surrounding social inequality, it’s hard to see what will spur a sudden shift to a rapidly growing economy. And for that reason it seems we can expect a few more shocks along the way, and investor’s continuing to turn to gold as the ultimate hedge.


GoldSeek TV will be hosting a special online event on Wed. July 9th (11am EST):

11am EST


Vanessa Collette of GoldSeek TV & Cambridge House Live will be moderating this special event which will include your questions!


  • Are the Gold & Silver bull markets coming back?
  • How to profit from the coming stampede into mining stocks.
  • How gold is playing its part in global monetary shifts.
  • Plus much more including your questions!


Please send us your questions online:

Top Juniors Take Off with Slight Move in Metals Prices

By Steve Todoruk, Investment Executive, Sprott Global Resource Investments Ltd.

In the past few weeks, several of the “top” junior exploration stocks have seen a pronounced move upwards, many beating gold and silver bullion by a wide margin.

After hitting a low of $1,180 per ounce this past December, gold moved up to a high of $1,392 by mid-March, 2014.

Outperforming gold by a wide margin…

Many of the junior mining stocks were swept along, and even outperformed gold substantially. For instance, Detour Gold Corp., a junior that I would consider “top tier,” was at around $4.10 on January 1. By mid-March, the stock stood at $12.15, a 196% move. That is nearly 20 times the returns from gold, which rose less than 10% over that timeframe. Continue reading

Sanguine Markets

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Sanguine Markets

A clear message from investors as we head into the July 4th Holiday weekend in the United States is that equity markets are poised to continue their march higher. Of the US indices, both the Dow Jones and S&P 500 continue in record territory, and the NASDAQ is just shy of it’s all time record high reached at the heights of the tech bubble in March of 2000. And what continues to give equity markets their buoyancy are the economic reports that continue to depict a American economy set to equalize the negative first quarter of this year.

Every economic release or piece of data put out this week points to the North American economy, particularly stateside bouncing back from that dismal performance in Q1. Auto sales had their best month since 2006, China’s economy continues to exhibit signs of picking up and in turn signalling strong demand for North American goods and services. As a result of this, Dr. Copper has bounced of its recent lows. But of course, the icing on the cake was the June job’s report with American employers adding a healthy 288 thousand positions.

It was the job numbers though that continues to be the single most important economic indicator for the markets. The health of the US labour market is the de facto concern for policy makers, and thus will continue to be their focus. This will lead an ultimately more dovish Fed to keep their policy more lenient. And although asset prices are not a direct target of their policy, with the Fed in no rush to raise interest rates, the equity market looks like they will continue to find buyers at these levels.

As BMO Capital Markets Chief Economist Douglas Porter observes, two decades ago the unemployment rate was as well at 6.1 percent, average hourly earnings were growing at 2.5% versus 2.3% today, and the consumer price index was at an annualized rate of 2.3% versus 2.1% today. In 1994, the Fed Funds Rate (their policy tool) was 4 percentage points higher than it is today. Obviously, more goes into what determines the FOMC to raise interest rates; however, this exemplifies they are in no rush to act anytime soon.

And this is what is supporting precious metals, particularly silver which made a tremendous 11% move higher in June. The question becomes whether the resurfaced optimism in the equity space will see downward pressure on the metals. Or (as we saw in June), will a cautious investor continue to question the gains in equities and maintain the bid for gold.


Another Bullish Signal for Gold

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Another Bullish Signal for Gold

The Financial Times reported this week that central banks around the world are in the process of repositioning their portfolios as they pare back their exposure to US treasuries. They are doing this ahead of the US Federal Reserve ending Quantitative Easing (QE) this fall. Their rationale is that without the US Fed acting as the biggest single buyer of US government debt, excess demand for US treasuries will not be absorbed by the market at elevated prices, and thus will lead to higher interest rates. This should insatiably create a demand for gold, and the demand is from those that need to hedge exposure to US currency and US debt.

And so continues the threat of financial instability for global markets. Contrary to this though, the theme on Wall Street for the last few weeks has been on the abnormally high reported levels of investor complacency. This is gauged by the VIX (commonly referred to as the fear index) touching its lowest level in seven years, which was right before the financial crises of 2007. And this is exemplified by the fact that the major US indices have not made a move one per cent or wider in either direction in a single trading session in the last two months. To some, this is unsettling and continues to prompt calls for that overdue correction in equities.

But looking longer term or perhaps examining the implications of what a diminishing appetite for government debt by the world’s largest money managers means is what is a greater concern verses a lull in the markets. Tighter monetary policy is prompting central bankers, pension funds, and large scale investors that traditionally steer towards fixed income to allocate more capital to riskier assets such as equities. This chase or reach for yield, that many of the world’s brightest thinkers have precaution of is taking place. Riskier assets, and at times less liquid assets will have trouble offering the consistency and performance that some of these funds, like pensions, seek to achieve.

The other caution though that stems from this is the potential of these large scale investors losing the flexibility of their liquidity. Arguably, this would more be a threat to the stability of global markets, but according to the IMF, as 62 percent of all central banks investments were held in dollar based assets last year, it was undoubtedly the utility of the greenback as the world’s reserve currency that offered this convenience. The uncertainty going forward is determining the effect of the end of the dominance or reign of the dollar.

And this is again where precious metals play a role. The greatest risk to financial markets is how the US treasury market preforms when its biggest buyer, the Federal Reserve, is no longer in its role as a never ending buyer of US debt. It in part served this role in order to support a market of suppressed long term rates. The belief is that the demand and rush for equities will keep their prices trading higher as all types of investors continue to raise their exposure to risk assets. Unfortunately, this continues to tell a story of the stark differences between the financial markets and the underlying economy.

One will have to budge.


Silver Or Gold – What To Buy? Mike Maloney, Ed Steer & Peter Spina



At the recent Canadian Investor Conference the question was asked whether to buy silver, or gold. Mike Maloney and others give some insight as to how he uses the gold/silver ratio to determine what he buys, and why that ratio is so important.

For more information about Gold & Silver or Mike Maloney, visit the Why Gold & Silver channel and subscribe:


Sizing Up Gold’s Rally

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Sizing Up Gold’s Rally

Gold had its best single day performance since September of 2013 on Thursday of this week. It begs the question, what contributed or led to the 50-dollar rally as it was not triggered by a single piece of economic news, geopolitical action, or policy announcements. One thing that is clear, however, is there has been a shift in investor sentiment and speculators no longer feel as comfortable with their short positions in the futures market. The advances on Thursday, made largely on the back of technical trading confirm this.

Wednesday brought the typical FOMC announcement, to which gold coincidentally has become accustom to not react to. It was perhaps Janet Yellen’s comments during her press conference later on Wednesday that pre-empted the weak dollar trade that in turn was positive for precious metals. Despite the Fed continuing their pace of tapering their monetary stimulus, it was the outlooks for the Fed Funds Rate that were analogous to comments from the IMF earlier last week, that low rates will ensue until at least the beginning of 2017.

The closest piece of contradictory evidence to this is that North American economies, particularly the US and Canada, are beginning to see signs of inflation. Still nowhere near levels that would prompt policy response as of yet, but it’s been the lack of inflation that’s been the concern of both Bank of Canada and the US Fed, thus these drastic upticks have caught their attention. To give context, in the US, core inflation has been 2 per cent or above in 10 of the 65 months since the recession of 2008. A few consecutive months like we’ve seen certainly don’t make a trend; it’s the fact that key components like rising food and energy prices could very well be sustained.

And it is the rise in energy prices, triggered by geopolitical concerns that have been another positive for gold. Tensions around violence in Iraq have investors worldwide keeping a close eye on crude oil prices. As crude prices elevate to higher levels, consumers face higher energy costs and that means less expenditure elsewhere. Gold once again is participating in a fear trade, which history tells us in not usually sustainable for the market on its own, but paired with other factors could be a different story.

The materialization of an increase in the rate of inflation (which investors who questioned the Feds experimental policies have been waiting for since the onslaught of quantitative easing) provides support for metal prices in here. The question becomes will it last, or once again be more transitory in nature.

It’s difficult to try and forecast this rally and the strength and breadth of it. But one thing is for sure, the move in gold this past week was impressive, and if conditions continue to manifest as they were, this rally could be for real.

As per usual, it’s a wait and see game.


Europe’s Deflation Fear

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Europe’s Deflation Fear

The European Central Bank, as expected, unveiled a shotgun approach last Thursday to uplifting the Eurozone’s stagnating economy. The story with the ECB was that all they had to do thus far was wave their metaphorical policy weapon without every firing a bullet. By acting last Thursday, investors should question whether Europe’s problems are just beginning, or if it’s just Europe’s turn to embark on a beggar-thy-neighbour policy through euro devaluation.

It’s too early to tell, and perhaps too bold to call for Europe to enter into a deflationary spiral. What we have seen occurring is a period of disinflation, which is seen when the inflation rate slowly gravitates towards zero. This has been the increasing challenge for policy makers as it is the lacking demand of a healthy economy that is seeing the price levels move lower. But this is a problem of the global economy in the manner in which central banks have operated, particularly over the last six years.

The strengthening euro, whether it’s a result of unconventional monetary stimulus from the Federal Reserve, Bank of England, or Bank of Japan, is the reason for Europe’s sluggish economy. As other economies boosted stimulus measures and coordinately weakened their respective exchange rates, they are essentially exporting their lower prices to their trading partners. As their goods are now priced cheaper in foreign markets they typically saw that pick up demand which saw their inflation rates track marginally higher. Eurozone nations and businesses, as we know, faced the consequences of importing lower prices from their trading partners at the result of their relatively strong euro. Following Thursday’s announcement, if the ECB can be successful this is soon to change.

The measures implemented by the ECB on Thursday are their best effort to devalue the euro. Akin to the United States when the Federal Reserve expanded the level of accessible credit in their financial systems, there lacks the demand for those funds. Monetary Policy can create the right incentives for borrowers to want and have access to capital. It cannot, however, make the small and medium sized businesses that fuel the economy take on debt, invest in machinery, equipment, and technology, and hire employees.

The ECB’s main measures were directed at their financial institutions. The first was lowering their deposit rate to negative territory to create a disincentive from banks leaving funds with the ECB overnight. As of late, however, European financial institutions have slowly decreased the level of deposits left with the ECB. As well, Mario Draghi, President of the ECB announced changes to their Long-term refinancing operation (LTRO). And again, the theory behind banks being able to lock in financing for near zero rates for up to five years creates great incentives for borrowers, but the dilemma remains whether or not they will be utilized.

Among many of his great quotes, Yogi Berra famously said, “in theory there is no difference between theory and practice. In practice there is.” The theory is that the recent steps taken by the ECB should create the right incentives for participants in the Eurozone economies. The practice is what’s to come, but the uncertainty is whether Europe will get a turn at the table in the beggar-thy-neighbour global recovery.

Is a Golden Opportunity Finally Presenting Itself?

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Is a Golden Opportunity Finally Presenting Itself?

There is a bizarre dichotomy between financial markets and the economy. According to Gillian Tett of the Financial Times, this stage of a global economic recovery would normally be associated with much more volatile stock markets as interest rates rise and there breeds a divergence of investor opinions on growth expectations. Instead lackluster economic growth reported for the first quarter in both Canada and the US are paired with muted market reactions and record low measures of both volatility and forecasted volatility in the days ahead.

This really is the first time investors have had to grapple with the question surrounding what role policy makers play in the financial markets. The shift between public to the private has many questioning whether the underlying economy on its own can assume this role. And naturally, this should be a point where the economy is reaching escape velocity (to borrow the words of superstar Bank of England, and former Bank of Canada Governor Mark Carney). Instead though, we are at a crossroads.

The sovereign bond market is telling a much different story than what is going on in the equity arena. While the S&P500 continued to make record highs through the final trading week in May, the US 10 year Treasury bond is sitting on its lowest yield in a year. Some analysts attribute this to the potential for credit easing in Europe pending future actions from the ECB Thursday of next week. Potentially, forward looking yield hungry investors are shifting across the Atlantic. But an additional scenario, again from the Financial Times this past week suggests China’s appetite for US debt is once again growing, having just recently peaked in November of last year. And with gold being the natural hedge to the US dollar, growing demand for Treasuries should be accompanied by stronger demand for the yellow metal from China.

Demand from Asia will always create a natural support for the price of gold. But given that growth in demand from China has been almost exponential, it’s hard to envision this will be the catalyst that sees the price of gold surge in the months and years ahead, accounting for the negative price action beginning in September of 2011. The price of gold, however, has two strong natural drivers, and they are inflation expectations and economic uncertainty. Economic uncertainty is almost an ex post or after the fact type of idea; it ads momentum to the market. Despite every doom and gloom analyst repeatedly trying to predict the next great recession since 2008, these past six years have illustrated their lack of skill in forecasting. Black Swans are a lot more apparent in hindsight.

It is inflation expectations, preceding actual future inflation that will sustain a rally in the price of gold. This did not occur immediately following the US Federal Reserve expanding their balance sheet. Inflation expectations were high; inflation did not ensue. One reason was the velocity of the money supply remains at record lows as money is not changing hands. With an uptick in the economy, which by expectations could come in the second quarter, and the velocity of money increasing, this could lead to inflation and will begin the renewal of the bull market in gold.


We will be at the Canadian Investor Conference this Sunday and Monday (June 1-2, 2014). We encourage you to come out and see us, and enjoy the event. Details can be found at

Tinkerine to showcase 3D Printers at #Canvest14


3D printing is far from new but a surge of expiring patents is breathing new life and excitement into the technology. Manufacturers and other industries have been using the technology for decades, but finally new, young, and innovative companies like Vancouver-based Tinkerine Studios Ltd are building a future for the unique machines. 

While printing figurines and trinkets can be temporarily cool, the novelty has worn off, making now an opportune time to be looking at 3D printing companies as investments. Their potentials are so vast, they are almost unthinkable. 

Consider that you could have invested in Apple. Would you want to invest after the iPhone 4S was released in hopes of small gains on new models, or would you want to be in before theiPod came out and see the company grow for years? (See Michael Berry’s Discovery Investing for more on this concept) That’s where 3D printing is at - the equivalent of an iPod introduction stage in its development.

3D printers have been comparatively expensive, but the costs are coming down and the printing material is improving. Its applications in the consumer markets could very well one day be a rival for Walmart or other big box stores. Why drive to the store when you can print it at home? Spatulas, mini-sticks, ping pong balls, water bottles, candle holders, and eventually even furniture, could all be printed at home.

3D printing may also hold a more industrial purpose. Printing parts in remote mining or drilling camps or even in space could save hundreds of thousands or even millions of dollars a day instead of waiting for shipping small parts. Having a 3D printer on site would make replacing a piece as easy as downloading the blueprint. While the ability to print with materials strong enough for heavy equipment is far off, we can recognize the immense potential for the technology.

Tinkerine (TTD.V) is currently producing some sleek 3printers that are available to the public. It will be showcasing some of them at the upcoming Canadian Investors Conference this Sunday and Monday June 1 & 2 in Vancouver. Tinkerine is generating cash flow and continuing R&D. Its goal is to make the printers more mainstream and get them in the hands of the public. 

This industry is definitely laying the foundation for something that will help shape our future and could see tremendous growth. There is no doubt that 3D printing will become common practice, thereby creating many investment opportunities.Come to the Canadian Investor Conference this Sunday and Monday to talk to Tinkerine about its plans and to check out some awesome printers!
About the Conference: The Canadian Investor Conference will be Canada’s leading diversified investment event, held in Vancouver, Canada. Various industries will come together for this 2-day event to cover Technology, Real Estate, Mineral Exploration, Oil & Gas, Agriculture, Life Sciences and Energy Metals. Top industry analysts, newsletter writers, c-suite executives, hedge fund managers, trends forecasters and finance celebrities will cover speculative and direct investments and strategies, economic outlook and macro trends. The tradeshow floor will host over 100 company booths, 3 speaker halls and an expected attendance of thousands of nationals and international investors.
*This is not a recommendation to buy or sell any security. Always do your own due diligence before making any investment. Speculative investing may incur substantial losses. Neither the author or Cambridge House holds any equity in the listed companies.

Back to the Bond Market

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Back to the Bond Market

Gold has not closed outside the range of 1,282 to 1,311 US per oz. since April 14, 2014. It has made the market action over the last six weeks decisively boring. That being said, the low level of volatility in the metals market has been accompanied by seesawing equities. Fridays close on the S&P500 above 1900, despite sitting on record levels, marks the fourth time since March the benchmark US index has attempted to breakout past that physiological barrier. Nonetheless, the one market that has made a significant move in one direction has been US treasuries. While it remains difficult to draw conclusions from passive metal prices or volatile stock markets, it’s the bond market that highlights the perplexities of the western economies stalling economic recoveries. Additionally, it questions whether the outlook for increasing long term interest rates is still intact.

The prospect of the US economic recovery yet again losing pace seems to be what has brought investors back into the US bond market. This too is what has prompted many analysts and money managers to suggest the equity markets are long overdue for a correction; however, the inflation story is what is retarding the earlier notion of an all but certain rise in interest rates. Minutes from the US Federal Reserve’s most recent April meeting even revealed that inflation expectations still remain relatively low for the remainder of 2014, and markets were left indecisive as to whether policy will return to normal perhaps sooner than later.

To make matters even more complex, New York Fed District President William Dudley (who may be one of the more recognized voting members amongst the FOMC) suggested this past week that the Fed keeps their 4.3 trillion dollar balance sheet status quo (see chart below). Quantitative easing was accomplished by expanding the Fed’s balance sheet to purchase Mortgage backed securities and treasury bonds. As these debt instruments mature, instead of removing the proceeds from the Fed’s balance sheet, Dudley suggests they reinvest in what is still a struggling mortgage market. Thus, the question of the long term implications or consequences of an inflated Federal Reserve balance sheet hangs over financial markets.


Famed bond investors have grabbed headlines over the last year for the comments on the end of the bull market in bonds. Most memorable was a tweet from Bill Gross of PIMCO, which read, “The secular 30-yr bull market in bonds likely ended 4/29/2013…” The misconception might have been that bonds were now entering a bear market as the economy springs back to life, but this leaves out another scenario, and perhaps the one currently playing out. And that is that interest rates are at historical lows, but they will remain at historical lows for some time. There is no question that is what a country like Canada has seen, when our 10 year yields recently touched a level not seen since June of last year. Furthermore, maybe some of the forecasts for 2014 like an 85 cent Canadian dollar, 3 percent GDP growth in the US, or US investment banks calling for $1,000 gold prices have to be rethought.

A Dose of Reality

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A Dose of Reality

2014 so far hasn’t really panned out as many had anticipated. While financial markets, particularly equities have seen the volatility that many analysts called for, the year of a strong greenback (US dollar) corresponding to a strong US economy is yet to develop. For this reason it is interesting to think back to some of the more high profile forecasts for 2014, and then weigh them with how the economy has fared thus far.

The key themes for Canada in 2014 were that the Canadian dollar was going to continue to decline and settle in the mid to high 80 cent range. While the dollar tested 4 year lows, the story lately has actually been of the apparent strength and resilience of the Canadian dollar.

Along with the loonie, commodities were certainly not in favour in the beginning of this year following many of the world’s natural resources entering bear market territory in 2013. And despite the story of extreme slack in the global commodity markets from waning demand and excess supply, it has actually been the rebound in energy and precious metal prices that has the TSX up close to 9 per cent year to date.

Even though it was the natural resource theme that carried this country through the global recession that began six years prior, growth in the economy will begin to be more broad based as the year progresses. There is no doubt though that natural resources will remain centerfold to Canada’s economy. Moreover, when it is accompanied with government policy that promotes growth in international commerce, Canada is really then set to prosper.

The most welcomed government policies have been the free trade pacts and agreements going into place with South Korea, the Eurozone, and the current negotiations involving 11 nations in the Trans Pacific Partnership. This is where the focus of Canadian business should lie in promoting relationships that see more of our goods and services offered outside this country. Removing barriers to increase the size of a marketplace in which we can compete gives us this opportunity.

Needless to say, this doesn’t omit that we remained challenged with some structural problems here at home. Bank of Montreal Chief Economist Douglas Porter estimates that for the 12 years spanning 2002 to the end of 2013, unit labour costs in Canada rose 98 percent verses a mere 10 percent gain in the United States. As Canadian labour costs increased significantly relative to the States, breaking down Canada’s gains reveals 28 per cent was attributed to weaker productivity versus 70 per cent being due to a strengthening loonie. As a strengthening dollar no doubt held back Canadian manufacturers, examples like the Canadian auto industry seeing zero new investment dollars in 2013 serve sobering reminders of where innovation is needed, especially when the fate of a currency is subject to market forces.

And with the dollar, Bank of Canada policy becomes an important factor. Like the US Federal Reserve though, as the economy gains strength and more stability, monetary policy will play a much smaller role with central bankers returning to the shadows. It is simply our central banks wish to see our economy return to normality, and with that the active role they have played will slowly subside. And as the US economy rebounds, the forecasts for a weaker loonie and stronger growth on the back of our neighbours to the south will ensue.