It’s good to be a Canadian these days. I still remember a few years back one of my old clients south of the border, asking me, in the middle of August, if he should bring a parka when he comes for a meeting in Toronto. I was this close to telling him “Sure, parka’s good, just give me a few days so I can fix my igloo to fit your guestroom in!” I bet igloo, Mounties, and blubber jokes are a history now, especially considering that foreigners simply cannot get enough of investing in Canadian companies.
I don’t need Statistics Canada to tell me that foreign investment in Canadian companies is reaching record highs. All I have to do is look at my portfolios, and see Canadian stocks post triple percentage returns, particularly in commodities, such as precious metals and oil and gas.
And, while our portfolios may not be the best gauge of foreign interest in Canada, this should be. Namely, according to Stats Canada, international investors have dumped some serious money into Canadian equities during the first two months of 2006, to a tune of $4.7 billion. Still going by Stats Canada’s information, most of the purchasers resided south of the border. (I wonder if my former client still thinks his parka joke was funny.)
It looks like Canada has finally disassociated itself from the usual stereotypes, and gained an unusual amount of confidence in the process. That confidence is further bolstered by the strength of the country’s currency, which, by default, reflects the state of the country’s economy as well.
Aside from investing in exploration companies, if you recall one of my earlier commentaries, I also mentioned soaring investment in machinery and equipment manufacturers. And, in yesterday’s note, I talked about what is attracting skilled labor to Alberta and B.C. in droves. This is why there is little doubt in my mind that my country is flourishing!
Here’s one more example. At Albern Coins & Foreign Exchange Ltd. in Calgary, people are driving off with carts full of silver bars and gold coins. I have a feeling many of them are taking words of the (in)famous Hunt brothers, who tried to corner the silver market in 1980s, very close to heart. While visiting New York’s commodities exchange some thirty odd years ago, Bunker Hunt said “Just about anything you buy, rather than paper, is better. You’re bound to come out ahead, in the long pull. If you don’t like gold, buy silver, because any damn fool can run a printing press!”
Obviously, investors around the globe are tired of economical, social, and geopolitical uncertainties. They want to sleep at night. In order to reach that simple goal, they need something real, something tangible, and something powerful enough to drive the fear away. My suggestion is to go northbound. Check out the Toronto Stock Exchange and its junior version, the TSX Venture Exchange. Both marketplaces are cramped with potentially huge gold, silver, and oil stocks that could solve your kids’ tuition problems, and still leave plenty of profits for a nice little retirement fund as well.