- Dugald Malcolm, Montreal, Canada.
Conventional wisdom in the energy markets has long discounted a gusher of future natural gas supplies from the fracking process, or hydraulic fracturing, sending gas prices to the basement since 2008.
Despite ruining the environment in the process, including contaminating the water supply for those living nearby, companies have embraced this technology and continue to find mountains of gas. Natural gas prices peaked back in 2005 when Hurricane Katrina ransacked the Gulf of Mexico; prices have since crashed a cumulative 73%.
The Alberta provincial government is borrowing a page from Bolivia, Venezuela and other countries that have a bad habit of changing the rules in accordance with their own domestic policies.
But this time, pandering on behalf of the greens was just too much.
One of the biggest bear markets remains in U.S. wages. And with the real inflation rate probably closer to 8% or more and not the phony 2.1% reported by the government, real incomes are stagnating across the United States. Worse, add whopping commodity inflation to the picture and the situation for wage earners is growing desperate.
By September 16, 1992, the grand experiment was over. The British pound and the Italian lira devalued and exited the European Exchange Rate Mechanism (ERM), resulting in the effective collapse of the single currency grid.
George Soros would walk away making a few billion dollars that day after betting the British pound would face a humiliating exit and subsequent devaluation. He was right.
-Dugald Malcolm, Montreal, Canada
The current big question within the financial world right now is whether or not Federal Reserve Chairman, Ben Bernanke, will unveil plans for QE3 once the current round of quantitative easing expires. Quantitative easing is a rather unorthodox monetary policy by which the central bank injects money into the financial system via purchasing of government bond. Through this action, bond prices are driven up and interest rates kept low.
The Globe and Mail, Canada’s leading daily financial newspaper and my personal favorite, reported a useful tax tool for American investors in today’s Report on Business.
When most investors are bearish about an asset, the opposite performance usually occurs.
Last week, Barclays Capital conducted an institutional survey in Europe and discovered that none of the 100 money-managers were particularly enthusiastic about gold in 2011. The metal received the second-highest share of votes for worst-performer; only natural gas fared worse.
Over the last 18 months or so, I’ve received many inquiries from U.S. investors looking to open an account in Canada. Barely a week goes by where I don’t get an email or phone call on the subject.
Evidently, our American neighbors have gone Loonie for our banking system, the relative safety of our capital markets and the Loonie – better known as the Canadian dollar. And who can blame them?
Blame it on high oil prices. No one feels bad for Big Oil these days.
The United Kingdom is the first major economy government to impose a tax on oil company profits since the onset of this secular bull market in 2002. The Cameron government is expected to reap about $3.2 billion dollars from the tax, designed to reduce the nation’s gas price by one penny per liter.