I think most of the drop will occur into the spring and hold when the weather turns. Calgary needed to cool off anyways.

Agree. The housing price is crazy even not as bad as Vancouver. Calgary has the highest income in Canada and attracts a lot of new comers. It does have some fundamentals. However, lets see how long this hardship lasts.

I was living there during the last big downturn. Man, could you ever get great deals on Motorhomes! You might remember it Lawence. Like every farmers field had one out front the yard with a for-sale sign and tall weeds growing up around the tires. Cars and trucks were a bargain too. The mood in the oilpatch was verydepressed and lots of people were idle. But the bars were still full.

When was that, I don’t remember. I got here on 1988. I heard it was bad in 1980-1983

About 1981 then again in the early 90’s after the government did a budget slash and burn then finally during the Global Credit Crisis…..I was there for all three but there were a couple other big slowdowns I missed.

OK, I heard the house price went down 50% in early 80s. The 90s were good since Ralph cut the budget and private industry boomed.Government paid down the debt. I was not in oil gas at that time. House was actually affordable. Did not feel bad at all.

I have been in this area all my 50 some years and this is the quickest reaction by the oil industry that I have ever seen by a long shot. Two quarters of recession or near 0 growth and we will come out. Lots of time for the industry to upgrade and streamline their business a bit. Nothing better could have happened. I hope they put a lot into environment and safety with the exploration dough they save. (;-)

Dan, we were .61 once I remember. Paul Martin was the finance minister. I saw his face all turned red and looked very panicky.

What was I thinking…of course you would not shop there.

I have friend that works in Malls, the food courts are packed with kids every day buying lunch, they seem to spend about $20 each. Their parents are doing ok I would say.
As you say that could change, but there are still a heck of a lot of help wanted signs.

The whole country is credit addicted, bb. I have a sister carrying 30k on cards that she recycles to make payments. That is insane. Meanwhile over here we don’t use them. Like zero. Unless I went into a high end hotel for lunch I would not even see a card reader to slip mine into.

Bird is right to dislike Alberta. Oil patch is way over paid IMHO

Not at all Lawrence, I love Alberta. I spent a lot of years living there. Its good country.

Thanks. I love it here. I used to like cold weather but I start to get back pains. It would be great we move 1 degree south every year.

Alberta is like golf… you’ve got to love the struggle to stay in.

Tough times don’t last, tough people do. Nothing wrong with leaning out the industry a bit.

Touche, Shad!

In a devaluing currency, gold not only maintains purchasing power but actually enhance it since most of the services and goods tend to drop in value in line the currency. Even though some imported goods will go up in price, but not as much as gold since exporters want to stay competitive. Gold is one form of money which does not have country attached to it. Therefore, no country will want to devalue it to stay competitive, except the country with reserve currency, who does not want competition.

I can’t disagree with some of your comments Shad except to say it does matter where you live as to how you respond and that gold is not always the answer. If it merely defends against losses in purchasing power that’s not really good enough for me because that suggests no upside in real terms. So from that perspective I remain unimpressed. A good example is how much gold has appreciated in Rubles. The gold bugs were ooh and ahh over the change but the reality was not a rise in gold at all but just a drop in rubles and in any case nobody could take advantage of the change unless they were trapped in Russia. So I don’t call that an investment when it is really more like a defense. You still have to convert back to local currency to spend it and naturally you will get hit with the usual costs that offset a percentage of the gains. Look…..I have been following gold a long, long time. It does pay to speculate. But for us in the West it has rarely paid to hold physical for an extended period of time (obvious exceptions aside). Maybe I just don’t care anymore. I am not expecting Armageddon. Even if I were I would not think of gold as my first defense.

Shad. An increase of American purchasing power over Canadian purchasing power applies to the Americans buying Canadian PM stocks too, IMHO.

Good points everyone!
– Thanks Al!

– Lawrence – agreed, in addition to maintaining purchasing power, storing wealth in PMs during time of currency debasement can even enhance purchasing power if the local goods are lowered in price due in line with a falling currency.

-Birdman, I appreciate your thoughts, but somehow you aren’t understanding the point of how valuable preserving purchasing power is versus interest made in a savings deposit product.
1) You wrote: “If it merely defends against losses in purchasing power that’s not really good enough for me because that suggests no upside in real terms.”
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There absolutely is an upside in that something purchased for X units of currency is now worth X units +20%, 30%, or 40% more in that country’s local currency. That outstrips most investment returns fairly quickly, when a currency makes a big move down. Let me think….do I want to make .003 (3/tenths of a percent) to .01 (1 percent) interest in a savings deposit product, or 38% in the “Ole Relic”, only because the currency crashed (as you pointed out). I’ll take the 38% and concede that gold didn’t do anything other than be what it is, and everything else went to hell and a hand-basket.

In contrast, when a currency grows in strength like the dollar or now the Swiss Franc has, then Gold is less expensive in that currency. That is why it has been rather bullish lately that Gold was going up with the strong dollar, because obviously there are other factors than just currency. However, since there is a race to the bottom in currencies, most of the planet would do well to hold SOME of their wealth in PMs, for exactly what has happened in Canada, Australia, Russia, Europe, and many Asian and South American countries.

I am still a fan of equities, real estate, and even fixed interest investments (as long as they generate more interest that price inflation). There is no point to parking money in deposit products in zero interest or even negative interest rate environment, because you are just flushing money down the drain to the ravages of inflation (even it inflation is just 2-5 %). 100 is now worth 98 to95, and next year even less. That is not saving and is not having your money work for you.

Again, in the Canadian analogy above, you bought an ounce of gold at 1200 Loonies, and then a short time later it is worth near 1600. That is a wealth increase of 400 loonies, because it guarded against the falling currency, and this was likely a larger gain that one would have experienced in a savings account, CD, money market, or fixed annuity. In many cases the increase in PMs will outpace even riskier asset classes like real estate appreciation or equities. This is a commodity that acts as a hedge against other currencies, and while you don’t like the word “money” we can at least agree Gold/Silver are stores of value.

The truth is that something that cost 1200 Loonies in Canada is now going to cost close to 1600 Loonies because it will take more units of currency to buy the same item. Lawrence mentioned that pricing of many local goods may rise slightly less than the devaluation to stay competitive (so maybe that item is now 1500 Loonies), but imported items will be more expensive. Your 1200 Lonies at 1% interest is only worth 1212 now, so items previously 1200 but now 1500-1600 are more expensive because your interest in the bank did not outpace the devaluation of the currency.

The illustration works the same in each currency that is being devalued, be it Dollars, or Yen, or Euro, (Look at how Gold Euro terms has absolutely gone parabolic up lately) It doesn’t matter if you use those actual currencies to understand how gold is acting as a Safe Haven and is preserving purchasing power, so when it happens to the currency you finally do care about, you will have properly positioned yourself for a 20-40% gain inversely related to the currencies fall.

2) Next you wrote: “So I don’t call that an investment when it is really more like a defense. You still have to convert back to local currency to spend it and naturally you will get hit with the usual costs that offset a percentage of the gains.”
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Yes, you’re finally starting to get it….Gold is a defensive play against decisions of countries, bankers, and politicians. It isn’t really an investment as much as it is an insurance policy, but it does pay the claim when there is a currency fire burning a currency to the ground or political storm of sanctions, wars, natural disasters, and the unforeseen market surprises.

As for the gains and applicable taxes, I never mind making a profit and people have to pay the taxes on the gains on savings interest earned on bank products, or the sale of securities, or sale of real estate, so I don’t understand why your putting your foot down on huge gains in an asset just because of taxes. We can also put gold in IRAs here in the US and there may be tax advantage to other retirement savings accounts in your country that you can inquire about.

– DAN – great point about how a strong currency can allow big gains when investing in companies that operate in weaker currency. It has a compounding affect on PM miners because you are getting the leverage of the underlying asset in that local currency, the leverage of a miner, and you are buying shares with a stronger unit of exchange.

Scorpio Mining is SMNPF in the OTC markets, and yes I just bought more when this merger was announced, because I like small producers with an income stream, with a diversity of assets for exploration upside, and that has been beaten down because it was thrown out with the rest of the sector. That is the same reason I like Claude Resources in the gold mining space. Good luck to all.

Thanks for your response, Shad, There is more shares outstanding but not really any dilution because of the combined values work out quite well. Maybe they will consolidate this year sometime.

I am hoping that the many billions in fines thrown out might make a half honest market out of this mess yet.

Funny LPG!

Stock up on Russian Vodka while the going is good. Have you noticed the price has already started to drop in the liquor stores? Now that is a good investment. Maybe better than gold and of course it never goes bad so just store it cool and dry and don’t let the labels get tattered. A few years from now when trade between us and them has come to a standstill you will earn yourself a very sweet premium. In fact, now that I have written all that I am going to go out and buy a few cases and set them aside. Think of it as a carry trade!

Hello Birdman,

Interesting views on the vodka carry trade.

Where I live, I’ve always found liquor to be priced reasonably, esp. compared to other countries I’ve lived in or visited.
Interestingly, I can’t say – despite several articles I had read on the topic – that the price has gone down. But it might just mean retailers are making higher margins (maybe the producers are indeed lowering their prices).

As far as the price drop you are witnessing, it might just be due to the decline in value of the rubble – vodka producer can lower their prices in USD terms to wholesalers, which in turn might lower prices too for the end consumer.

Best to you, and enjoy the drinks while they are not so expensive.

LPG