The Gold-Silver Ratio – Another Look

The gold-silver ratio (GSR) measures how many ounces of silver one can purchase for an ounce of gold, on a certain date. Reference to the ratio has a long history. One of the first mentions was that upon the death of Alexander the Great, the ratio was 12.5 to 1. During the Roman Empire, the ratio was set at 12. By the late 19th century, the ratio had risen to 15. Interestingly, these historical ratios roughly reflect geologists’ estimates that silver is 17 times more abundant than gold in the earth’s crust. This gives many investors a reason to believe that 17 is the natural balance between these elements, and that eventually the GSR will return to it

Bill Gross: ‘Low policy rates represent an immediate threat to investment portfolios’

Bill Gross: Low policy rates and the increasing negative real yields that they engender as inflation accelerates represent an immediate threat to investment portfolios. Bond prices don’t necessarily have to go down for savers to get skunked during a process of “debt liquidation.” PIMCO advocates a renewed vigilance, stressing bond market “safe spread” alternatives available globally, including developing/emerging market debt at higher yields denominated in non-dollar currencies.

On Greenspan’s pandering and the example of Canada’s banking system

I was on Business News Network with Rob Cox of Reuters Breakingviews yesterday. We were talking to Howard Green about all things economic. The video clip is linked below. But let me say a few words about the discussion. One of the two major topics of discussion was financial regulation and Alan Greenspan. As a

Oil Sands: Fueling the Future

By Marin Katusa, Casey Energy Opportunities For many years, trying to tap an oil sands deposit accomplished about as much as sipping molasses through a straw, but that is changing. So do oil sands companies make a good investment now? Humans and bacteria share a surprising number of features, not least in what they consider

Looking Past Canadian Retail Sales

Canada reported weaker than expected retail sales report. Instead of a 1.0% rise in January, StatsCan reported a 0.3% decline. Weakness was especially noted in the ex-auto component which was flat instead of up 0.7% as the consensus expected. This is the second consecutive monthly decline (Dec -0.2%) and should reinforce perceptions the BOC is on hold until at least midyear. Canada led the G7 countries in growth in Q4 and is the first to regain all the jobs lost in the economic downturn. However, the consumption is expected to slow this year and the central bank expects housing to be a drag on growth. In addition to the disappointing retail sales data, Canada’s fragile political climate warrants caution for CAD bulls.

Canada and Oil: More Complicated than One Might Suspect

We have found that the correlation between oil and the Canadian dollar has collapsed. We conduct the correlation analysis on a 60-day rolling basis, using percent change. The correlation peaked at the end of last year near 0.76. It now stands at -0.1 (see graph from Bloomberg below This is the first time the correlation is inverse since the July-Oct 2007 period. In the 1992-2002 period, the correlation was often inverse, but in recent years this is an exception

Rosenberg: Fifteen Reasons To Love The Loonie

From this morning’s Breakfast with Dave missive: FIFTEEN REASONS TO LOVE THE LOONIE (WE COULDN’T STOP AT TEN!) Better growth than in the U.S.A. and without need for stimulus Responsible central bank, limiting growth in its balance sheet Better fiscal backdrop More conservative political environment Triple the exposure to raw material than the U.S.A. Investors

Recent thoughts on jobs and economy via BNN

I spoke to Paul Waldie on BNN this past Friday about the US and Canadian jobs reports. The BBH note that morning on the risk of “buy the rumor sell the fact” ahead of the jobs report was on the money. After the stellar ADP data on Wednesday, the whisper number for US non-farm payrolls

A Vote for Gold

"…Bank of Canada Governor Mark Carney tried to calm everyone’s nerves by declaring that gold ‘has no role to play in the international monetary system.’"

Globe and Mail, November 12, 2010

Carney did not calm the nerves of Hans Merkelbach, investor, advisor, investor advocate, and watch dog of money manipulators, who wrote to the central banker from his office on Bowen Island, British Columbia. After quoting the above, Merkelbach rebuked Carney:

"Let’s get real! Would you explain to me why you, the ex-Goldman Sachs partner, besides having a warped idea of monetary matters, made such a ridiculous statement? The houses of cards are falling all around you, dear sir, but I guess it is hard to notice the bloody monetary mess from the ivory tower."

Carney, no fool, but offensively patronizing, replied: "I said in a recent speech…that it is the adjustment mechanism rather than the choice of reserve asset that ultimately matters."

Rosenberg: Ten Investment Themes for 2011

The following is an excerpt from David Rosenberg’s recent Lunch with Dave daily research piece highlighting Ten Themes for 2011. These themes are quite a bit different than the ones we highlighted just days ago from former colleague Richard Bernstein – much more cautious on the near-term future

Scotia Bank: Canadian dollar strength “driven by U.S. efforts to export its years of profligacy”

I think it’s fair to characterize the situation with the Fed’s Quantitative Easing Open Mouth Operations as somewhat out of control. Fears of a disorderly decline in the US dollar are certainly increasing. If anything, the US dollar is oversold right now as Marc Chandler pointed out this morning. Moreover, I think QE is a

Canadian Jobs Data Underscore Likelihood of Rate Hike

Canada reported incredibly strong jobs data before the weekend.  Canada grew 93.2k jobs, more than 4 times more than than market expected.  It grew almost 50k full time jobs.  These are impressive numbers and renews expectations that the Bank of Canada will raise rates when it meets again next week, even though there have been