Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Implications for Stock Market - Nadeem_Walayat
2.Odds of Winning Walkers Crisps Spell & Go olidays K, C and D Letters - Sami_Walayat
3.Massive Silver Price Rally During The Coming US Dollar Collapse - Hubert_Moolman
4.Pope Francis Calls For Worldwide Communist Government - Jeff_Berwick
5.EU Referendum Opinion Polls Neck and Neck Despite Operation Fear, Support BrExit Campaign - Nadeem_Walayat
6.David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - Mike Gleason
7.British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - Nadeem_Walayat
8.Gold Price Possible $200 Rally - Bob_Loukas
9.The Federal Reserve is Not Going To Raise Interest Rates and Destroy Gold - Michael_Swanson
10.Silver Miners’ Q1’ 2016 Fundamentals - Zeal_LLC
Free Silver
Last 7 days
EU REMAIN Population Forecasts - England 4.1 million Explosion, London Migration Crisis - 28th May 16
A Guide to the Trump-Sanders Debate - 28th May 16
Gold And Silver – At Significant Support. New “Story” Developing - 28th May 16
The Next Systemic Lehman Event - New Scheiss Dollar & Gold Trade Standard - 27th May 16
Energy and Debt Crisis Point to Much Higher Silver, Metals Prices - 27th May 16
Gold Junior Stocks Q1 2016 Fundamentals - 27th May 16
These Crisis Markets Are Primed to Deliver Big Gains, Platinum Never Cheaper! - 27th May 16
Operation Black Vote BrExit Warning for the Wrong EU Referendum - 27th May 16
UK Immigration Crisis Hits New Extreme, Catastrophic ONS Migration Stats Ahead of EU Referendum - 27th May 16
Many of the World’s Best Investors Made Their Fortunes This Way…And You Can Too - 27th May 16
The Ugly Truth About Stock Market Manipulation and Gold Prices - 27th May 16
Gold Price Looking Vulnerable While Gold Stocks Correct - 27th May 16
The 5 Fatal Flaws of Trading - 27th May 16
The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why - 27th May 16
A New Golden Bull or Has the Market Gone Too Far Too Fast? - 27th May 16
It Feels Like Inflation - 26th May 16
Negative Interest Rates Set to Propel the Dow Jones to the Stratosphere? - 26th May 16
S&P Significant Low has Occurred – Not Likely! - 26th May 16
Statistics for Funeral Planning in UK Grave - 26th May 16
Think Beyond Oil And Gold: Interview With Mike 'Mish' Shedlock - 26th May 16
Hard Times and False Mainstream Media Narratives - 26th May 16
Will The Swiss Guarantee 75,000 CHF For Every Family? - 26th May 16
Is There A Stocks Bear Market in Progress? - 26th May 16
Billionaires Are Wrong on Gold - 26th May 16
How NOT to Invest in the Gold Market - 26th May 16
The Black Swan Spotter...Which Saw the Oil-Crash coming; now says the “Invisible Hand” will push Brent to $85 by Christmas - 26th May 16
U.S. Household Debt Still Below 2008 Peak - 25th May 16
Brexit: Wrong Discussion, Wrong People, Wrong Arguments - 25th May 16
SPX is at Strong Resistance - 25th May 16
US Dollar, Back From the Grave? - 25th May 16
Gold : Just the Facts Ma’am - 25th May 16
The Worst Urban Crisis in History Could be Upon Us - 24th May 16
Death Crosses Across The Board Are IRREFUTABLE Stock Market Sell Signals - 24th May 16
Bitcoin Trading Alert: Bitcoin Price Stays below $450 - 24th May 16
Stock Market Crash Death Cross Doom Prevails - 23rd May 16
Did AMAT Chirp? Implications for the Economy and Gold - 23rd May 16
Stocks Extended Their Rebound On Friday - Will They Continue Higher? - 23rd May 16
UK Treasury Propaganda Warns of 3.6% Brexit Recession, the £64 Billion Question? - 23rd May 16
Stock Market Support Breached, But Not Broken! - 23rd May 16
George Osborne Warns of 18% Cheaper House Prices - BrExit for First Time Buyers - 22nd May 16
Gold Bull-Phase I Continues to Confound (The Trek to “Known Values”) - 22nd May 16 r
Avoiding a War in Space - 22nd May 16
Will Venezuela Be Forced to Embrace the US Dollar? - 21st May 16
Danish Central Bank Stumbles with Its Currency Peg to the Euro - 21st May 16
SPX Downtrend Underway - 21st May 16
George Osborne Warns of More Affordable UK Housing Market if BrExit Happens - 21st May 16
Gold And Silver 11th Hour: Globalists 10 v People 0 - 21st May 16
David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - 21st May 16
Gold Stocks Following Bull Analogs - 20th May 16
The Gold Chart That Has Central Banks Extremely Worried - 20th May 16
Silver Miners’ Q1’ 2016 Fundamentals - 20th May 16
Stock Market Rally At the End of the Road? - 20th May 16
British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - 20th May 16
NASDAQ 100, FTSE, and British Pound - When Rare Market Data Screams, Listen  - 20th May 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why 95% of Traders Fail

High Food Pricing Killing Benefits of Low Energy Prices

Commodities / Food Crisis Jan 24, 2016 - 04:09 AM GMT

By: Richard_Mills

Commodities

Lesson Learned

One of the places the decline in the Canadian dollar is most evident is in our grocery stores.

The University of Guelph's Food Institute estimates the average Canadian household spent an additional $325 on food in 2015 with meat rising 5% and fruit and vegetable prices rising between 9.1-10.1%.


Consumers should expect an additional annual increase of about $345 in 2016 with meat expected to increase up to 4.5%, fish/seafood rising up to 3% and dairy, eggs and grain rising 2%.

The Bank of Canada is playing its role in killing the Cdn$, talking about negative interest rates as if the two rate cuts in 2015 weren't enough. Budget deficits, possibly as high as $25B and American style QE are coming from Canada's Federal Liberal governing party. All this is a bid to strengthen our economy.

U.S. dollar strength is a major factor in a lower loonie...

Our dollar is certainly weaker then the US$, far from the parity it enjoyed so recently.

El-Nino caused flooding has contributed to supply shortages and price increases on produce from both California and Mexico.

But a weaker currency should be good news for us Canucks right? After all, when our currency is weak exports to our southern colossus neighbor, and others, should strengthen. At least that's current government think.

Yeaaahhhh...no. We never were strong on manufacturing and having lost 10,000 factories we're weaker than ever in that sector. We've even allowed food processing to be moved offshore. We produce the wheat, offshore our food processing, end up paying through the nose when our currency weakens.

We live in a northern climate, long winters and short growing seasons take their toll on our food costs - i.e. Canada imports over 80% of its fruit and vegetables. We don't manufacture much of what we want/need so a weak currency means all the things we import get more expensive. We do of course have a lot of oil and natural gas and precious and base metals. The companies who dig, saw and pump to find the world's resources have huge problems of their own.

Corporate Canada's resource sector is in the gun sights of Moody's Investors Service. The service is looking to downgrade a sizeable chunk of energy and mining company corporate debt worldwide. Below is their reasoning.

Moody's scaled back its projections for oil prices saying...

"Iran is poised to add more than 500,000 barrels per day to global supply while OPEC and many non-OPEC producers continue to produce without restraint as they battle for market share. Lower oil prices will further weaken cash flows for E&P companies and the upstream portion of integrated oil and gas companies. This will cause further deterioration in financial ratios, including deeper negative free cash flow. Most companies are unable to internally fund sustaining levels of capital spending at currency market prices."

Moody's senior analyst Jamie Koutsoukis says...

"Slowing growth in China, which consumes and produces at least half of base metals, and is a material player in the precious metals, iron ore and metallurgical coal markets is weakening demand for these commodities and driving prices to multiyear lows."

Many, many years ago during a lengthy argument with a friend he told me to 'give it a doubt' - he meant I was wrong.

Jamie needs to give it a big doubt regarding:

  • China's precious metal demand.
  • Precious/base metal historical pricing, at least in Cdn dollar's.

In China, physical delivery from the Shanghai Gold Exchange reached a record 2,596 tonnes, or 80% of total global gold mine output for 2015.

The People's Bank of China bought 19 more tonnes in December, bringing the total amount the bank purchased to over 1,762 tonnes in 2015.

Chinese love their gold and silver. They buy it to protect their wealth. They know fiat currency, paper money, can go to zero. They know gold can't.

As for precious metal pricing today in Canadian dollars let's check:

Gold - US$1,098.60 = CDN$1,564.74

Remember when the Canadian dollar was at par with the American dollar in the spring of 2013? Gold was US/Cdn$1,594.80. Since then the Loonie has lost 30%. Gold might be in a bear market in U.S. dollars but it's not in a bear market in Canada.

Conclusion

High food pricing is killing the benefits of low energy prices for Canadian consumers.

Owning gold would have saved Canadians a lot of financial destruction. The Chinese, Asians, have known this for thousands of years. We use to as well, maybe for not as long but oh yeah we knew. Today there's a whole generation who grew up thinking of gold as a relic from their grandfathers day. Was a lesson learned?

Is the Cdn$ set to drop further? I've got its future direction, lessons, and gold ownership, on my radar screen. Do you?

If not, maybe it should be.

By Richard (Rick) Mills

www.aheadoftheherd.com

rick@aheadoftheherd.com

If you're interested in learning more about the junior resource and bio-med sectors please come and visit us at www.aheadoftheherd.com
Site membership is free. No credit card or personal information is asked for.

Richard is host of Aheadoftheherd.com and invests in the junior resource sector.
His articles have been published on over 400 websites, including: Wall Street Journal, Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell, Pinnacledigest, Uranium Miner, Beforeitsnews, SeekingAlpha, MontrealGazette, Casey Research, 24hgold, Vancouver Sun, CBSnews, SilverBearCafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor, Mining.com, Forbes, FNArena, Uraniumseek, Financial Sense, Goldseek, Dallasnews, Vantagewire, Resourceclips and the Association of Mining Analysts.

Copyright © 2016 Richard (Rick) Mills - All Rights Reserved

Legal Notice / Disclaimer: This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.

Richard (Rick) Mills Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife