Montreal Investment Conference, Afternoon Update

Montreal, Quebec – Well, maybe the a.m. doomsday report has a silver lining or two, at least according to John Kaiser of Kaiser Research. Yeah, the charts look bad and the numbers are scary. Savers are being slaughtered by low interest rates which no Western nation dares raise; a boat-load of baby boomers are hitting the entitlement rolls, and home equities in the U.S. have been slashed by $7 trillion, or some 55 percent of the total.

In fact, said Kaiser, the real estate market is frozen except in some very high-end neighbourhoods in tony places like San Francisco and Vancouver. The rest of we mortgage-holders are, well, fill in the appropriate scatological gerund. The whole U.S. sinking like the ship the front fell off, accounting for a trickily 22 percent of global GDP nowadays, compared to 35 percent back in 1984. Ah, them were the days.

Oh, did we say there was cheery news? Yes, there certainly is. Gold and silver have stabilized as a percentage of world GDP, not so much out of fears for fiat currencies as due to a more general “anxiety factor,” he said. But mining equities haven't priced in this new reality, with resulting P:E ratios being a heckuva bargain. Plus, China is showing a decreasing inclination to be the world's dumping ground for costs; i.e. health care, labour and environmental costs. That could bring manufacturing back to this side of the Pacific, if the folks sitting on $8 trillion in their bank accounts decide to pay what it's really worth to make and buy something . . .

Article by David Bond