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Strategies & Market Trends : Winter in the Great White North -- Ignore unavailable to you. Want to Upgrade?

To: tyc:> who wrote (4730)	6/16/2003 3:40:55 PM
From: marcos	Read Replies (1) \| Respond to of 8273

'I don't think the strength of the Canadian dollar can be maintained.' Against what, though? .... against gold, against the euro and yen, yes i would agree, the loonie has been strong lately .... but against the US dollar, it's not so much a matter of the loonie showing 'strength' recently, it's been a matter of the seigneurage air coming out of USD ..... all those blank cheques represented by greenbacks being used as currency all over the planet, folks are starting to wonder if they might start to get cashed This has been a huge benefit to the US, passing bits of green paper in exchange for goods and commodities .... and it will continue, but clearly the flow rate has been reduced, possibly below debt servicing requirements? ... it's average net flow that counts, and its trends The loonie never had any of this, nobody holds canadian money in their reserves in quantities above those useful for trade ...... so while we never got any benefit from seigneurage, we also needn't worry about a hangover from it .... the loonie hasn't been 'weak' over the last few years, imho, it was all about the USD getting pumped ... we think too much in terms of valuation in USD, a more realistic and enduring way to put it is, today the loonie is worth 0.0020746 fine ounces of gold