[jasonraymondson]

Well the subject explain it all. But take a look at this chart. I wish I would have invested all of my money into canadian after 9/11

[Blacksmith]

Note to americans: Stop buying Canadian dollars.

[strider3700]

I've been hitting reload on xe.com every 20 minutes or so while I'm sitting here. It's scary to watch the canadian dollar climb so quickly. It's currently 1.00 CAD = 1.07442 USD
in the past 3 hours it's gained .002 cents. at this pace I'll wake up to 1.08 when it was 1.068 when I got up this morning.

[Blacksmith]

$1.08 today. Stop buying Canadian dollars and support your own economy.

[jasonraymondson]

$this->bbcode_second_pass_quote('strider3700', 'I')'ve been hitting reload on xe.com every 20 minutes or so while I'm sitting here. It's scary to watch the canadian dollar climb so quickly. It's currently 1.00 CAD = 1.07442 USD
in the past 3 hours it's gained .002 cents. at this pace I'll wake up to 1.08 when it was 1.068 when I got up this morning.

[kabu]

This will support your economy.

[strider3700]

Yep I woke up to 1.081 this morning. It's now 1.082

Holiday long weekend this weekend with cdn at $1.10 us the border crossings should be insane.

[strider3700]

Actually my location wraps. I live on Vancouver island. You could never convince me to live in the big city.

As long as the americans pay their taxes and agree to live by our laws and rules I have no issue with accepting american refugee's. I do not want an open border flood similar to the mexicans into the US however. Go through the proper channels and become legal immigrants.

Everyone should get health care period. In the long run it's easier and cheaper for us to fix minor injuries/ailments then it is to let people fall apart and become entirely dependant on society.

and just to add 1.08479 now

[deMolay]

Be careful what you wish for, this is not good for our exporter's. When the USA gets a sniffle we get pneumonia.

[Nicholai]

Yay for living in Canada! I feel sorry for young Americans. Not much to look forward to, especially if you're aware of peak oil.

[Denny]

I saw an economist from Citibank tonight on the business news channel, she claims the C$ will be down to $1.03 U.S. by December and then she is looking to a significant turnaround in the U.S. $ valuation, among world currencies thorugh early 2008.

Seriously, right now the C$ is too high, and its not sustainable. I am guessing some major employers like GM are looking seriojusly now at shifting work to the U.S. plants, as the big C$ premium is offsetting their health cost advantages to doing work in Canada.

[strider3700]

$1.09843 right now.

When the oil report tommorrow tanks and we blast through $100/barrel we're off to the races for $1.25

[Denny]

1.09969 at 00:44

[Denny]

1.10021 at 1:14 Nov. 7

[some_math_guy]

I have been thinking about the future stability of the Canadian dollar (as opposed to the US dollar) for some time and decided to do some of my own research. I read a very interesting book some time ago called 'The Coming Collapse of the Dollar and How To Profit From It' by James Turk. In the book (which is a very down-to-earth and compelling read about the reasons why the US dollar must inevitably go south), Turk describes how gold is like a shadow currency...it's value wanes when times are good but bounces back when times are not so certain. All major trading countries severed their 'official' link to the gold standard by the 1970's because it hindered the government's ability to grow the money supply at whim, but most kept substantial gold reserves on deposit to shore up the value of their currencies. The US Government, for example, still has a huge amount of gold on deposit (over 8,000 tons) which acts as a kind of tacit anchor for the US dollar. Unfortunately, the US has been running the printing presses flat out for a long time now and is subsequently devaluing the dollar.

Over 20 years ago, Turk developed an indicator for the US economy which he calls the 'Fear Factor', which is basically

value of gold holdings / amount of money in circulation

What this essentially measures is the amount of gold that is 'backing' the official currency. Turk notes that when this indicator goes up from it's 21-week moving average, that is a strong 'Buy' signal for gold. This indicator has called all 4 of the bull markets in gold over the past 30-odd years and is screaming 'Buy' right now as the US runs the printing presses flat-out to finance the war on terror and other projects of dubious value.

Being a Canadian, I wanted to do some research about the future stability of the Canadian dollar and discovered that in 1965, Canada had about 1023 tonnes of gold on deposit. By 1980, Canada had sold about half of their gold reserves, and had only about 650 tons of gold on deposit. By January 2000, Canada had sold all but 46 tons of their gold on deposit! Even so, the selling continued and today Canada has only 3.2 tons of gold remaining! In the words of one of the senior financial managers at the Bank of Canada in 2002, the decision to sell gold was made because 'gold does not generate any returns'.

The following articles came from Financial Sense University:

"While the European countries now hold nearly 40 percent of their reserves in gold, Canada has sold its entire holding of 1023 tonnes, making it the only G7 nation that has no gold backing for its currency. "

"The Central Bank of Canada has ignored thousands of years of monetary history and bought into the “archaic relic” view, and has sold off nearly all the gold it held in its foreign exchange reserves. From a peak of 1,023 tonnes in 1965, Canada now holds only 100,000 ounces of gold valued at $45 million. This places it in 77th place, below third-world developing countries such as Bangladesh, Guatemala and Tunisia."

I wonder if the thinking at the Bank of Canada has been that since the Canadian economy is utterly dependent on the US economy anyways, there is no need to back our currency. Besides, the US dollar is the world's reserve currency and they hold substantial gold reserves...why worry? This opinion may have been justified during the US 'fiscally prudent' days of yesteryear, but no longer.

In other words, the Canadian dollar is no longer tacitly backed by any tangible asset whatsoever and it's stability is completely dependent on other fiat currencies - primarily the US dollar, but also the Euro, and yen - all of which are inflating. Buying precious metals NOW may be even more prudent for Canadian citizens than for Americans!

[Tyler_JC]

Excellent analysis!

This is exactly the kind of thread that we should be having in this forum. Good job and keep up the good work.

That being said...I'm not sure if I agree with the final conclusion.

Canada's currency is arguably backed up the country's large trade and current account surplus as well as its wealth of natural resources.

Canada's oil reserves are among the largest in the world. With the potential for polar/artic oil and gas, these reserves are even more valuable.

Arguably, the Canadian dollar is on the oil standard.



As the price of commodities rose dramatically in US dollar terms, prices remained mostly flat in Canadian dollar terms.

[Snowrunner]

$this->bbcode_second_pass_quote('some_math_guy', 'I')n other words, the Canadian dollar is no longer tacitly backed by any tangible asset whatsoever and it's stability is completely dependent on other fiat currencies - primarily the US dollar, but also the Euro, and yen - all of which are inflating. Buying precious metals NOW may be even more prudent for Canadian citizens than for Americans!

[gampy]

Very good idea. Interesting perspective, for sure. Thanks for looking into all that.

I am of a mind to agree with Tyler, though.
Oil, agriculture, and natural resources are probably what's keeping the Loonie high (relatively speaking, of course.) Oil is fungible, and I would argue that it has taken the place of gold in that regard.

This also ties in with the idea of the petrodollar, and petrodollar recycling.

But it may have not been wise to liquidate the country's reserves of bullion, because current economic conditions, and paradigms may not last too much longer.

Nice food for thought. Thanks again for the work.

[FoxV]

$this->bbcode_second_pass_quote('some_math_guy', 'E')ven so, the selling continued and today Canada has only 3.2 tons of gold remaining! In the words of one of the senior financial managers at the Bank of Canada in 2002, the decision to sell gold was made because 'gold does not generate any returns'.

[MrBill]

$this->bbcode_second_pass_quote('Snowrunner', '')$this->bbcode_second_pass_quote('some_math_guy', 'I')n other words, the Canadian dollar is no longer tacitly backed by any tangible asset whatsoever and it's stability is completely dependent on other fiat currencies - primarily the US dollar, but also the Euro, and yen - all of which are inflating. Buying precious metals NOW may be even more prudent for Canadian citizens than for Americans!