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Tuesday, March 5, 2013

INVESTORS' INSIGHTS - Eric Sprott Canada has no Gold


Oh Canada!


When my boss gets up on his stump and expouses his reasonings on matters, he reminds me of Teddy Kenedy's concession speech at the 1980 Democratic National Convention. Brings a tear to the eye, a lump to the throat and a pocket full of dreams with unyeiding inspirations. Here's the full text, from today's Investors' Insights.

For good measure, I have linked in Ted's speech so you can catch the tone and cadence here. What's amazing about the content of the speech too, is how little has changed over the past thirty plus years. That's sad.

Passing the torch...

Dr Peter G Kinesa
March 5, 2013

One Great Speech - Who Listened?

Eric Sprott discussing the complete lack of gold reserves that the Canadian government has. Start stacking Canada! End of the Road: H...

That's a good thing. Eric clearly needs a few lessons in Meta and Macro Economics, including an understanding of the Nauru Paradigm Cycle. First, what type of countries require large Gold reserves? Well, of course, countries on the verge of physical bankruptcy - meaning they have virtually exhausted all their non-renewable and renewable resources - hence, they are entering the last stages of the Nauru Paradigm. Gold is the last stand for these desperate countries, providing one remaining lifeline to deferring the inevitable collapse of their economic, political and social complexes. But, Gold can only relieves such symptoms temporarily - it does not fix or cure the underlying economic malady. 

By the way, most countries entering this final phase of the Nauru Cycle can expect two outcomes: increasing social unrest and growing external hostilities. This is a historical fact, but it is also reflected on today's geo-political stage. Consider Syria, Egypt, Iran, Greece, France, Japan and many others (China?) - all are nations entering the final stages of the Nauru cycle - where physical resources per capita are in rapid decline.  Expect More Wars.

Canada, on the other hand,  is invariably the richest country in the world given the vastness of its resources and infrastructure complexes. Its per capita resource/currency ratio is second to none, given its relatively low population.The last thing Canada needs is more Gold - it has enough in the ground in the event of need. Yet, there's more...

More reasons why Canada doesn't need Gold reserves? 

First; in a few short years, Canadians will be able to pick it up tonnes of Gold on the cheap, as last stage countries in the Nauru survival mode are dumping their reserves to finance wars; stay social unrest or ensure departing dictators have their retirement assets available in the right places, after political life. (Dictator's Survival Guide: Zurich Gnomes 101) .

Second, for the reasons mentioned, Canada's currency is trending upwards under immense long-term pressures, so the last thing it needs are measures that could be perceived to strengthen this sleeping giant of global currencies. It would not surprise us to see the Canadian dollar rise to $1.50 US in five years, and climb further to $2.00 in ten or less years - particularly when the FED's exponential, on-going debasement of the greenback is taken into account. This the price to be paid by the US for running its fiat currency presses 24/ 7. Meanwhile, these fiat currency presses, allow the US  o tpay debts with paper IOU's, knowing that any debt repayment in physical currency forms is impossible (not enough OIL in the world?) - this paper chase cannot; however, last forever.  People figure it out, sooner or later.

A patient Canada is sure to be a BIG Winner in the Gold game down the road; albeit, a meaningless win when critical global resources are practically depleted or unusable. Mr Sprott needs to revisit his Meta-Economic books and refresh his understanding of the deep implications of the "Nauru Paradigm Cycle."

It goes without saying, that the Canadian dollar is a great surrogate  play on hard and soft commodities (including fresh water), both of which have more real upside in the coming years. Rogers, Soros and Faber think these commodities are too. Gold is a more speculative strategy - we prefer the elements offering real economic utilities - not golden abstractions from OZ. 

From Behind the Wizard's Curtain,

First Financial Insights
March 5, 2013 

Nauru Paradigm - when there is nothing left!

"Hey guys, that's not Nauru ??? Oh, I see?"

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