TFSA/RSP

Canada offers a great opportunity to take advantage of investments that can increase in value as a result of the dense populations in the BRIC nations, Brazil, Russia, India and China that collectively represent about half the worlds population.

In order for these large populations to make the transition from rural living to the more modern Western way of life they would like, there are key ingredients they will need – that fortunately Canada is lucky enough to have an abundance of.

What are these required ingredients? Water, food stuffs, oil, copper and electricity would be the most obvious choices. The key to this investing opportunity is that there are limited supplies of those strategic resources in the world. When faced with increasing demand from growing populations, we can see that strategic commodities are in an excellent position to increase in value over time – resulting in potentially large gains for the relatively small groups of companies that produce those assets.

Inflation plays a very important role in the potential future increase in the prices of strategic assets. Inflation is a direct result of an increasing money supply. The last bout of harsh inflation that we saw here in North America was in the late 1970’s. Once the gold standard was removed the need to create more money to fund things like the Vietnam war grew dramatically resulting in a higher rate of new US dollar money creation.

When you have more money chasing the same amount of goods, with oil being one of the best examples from that time, you get an increase in the price of the goods.

Given the financial challenges the global economy has gone through in just the last couple of years, we are now seeing all major industrialized countries around the world creating new money at alarming rates – not just in the United States. It is therefore conceivable that we could see a form of hyper-inflation in the future as vast amounts of new money chase even few strategic assets.

Precious metals such as gold, silver and platinum would also benefit from a highly inflationary benefit as a store of wealth – an asset that should hold its value well in the face of inflation.

Since the technology bubble popped early this decade, governments around the world have been increasing their money supplies in an effort to kickstart economies. Since the beginning of the decade we have seen gold go from the low $200/ounce to over $1000/ounce proving that precious metals are an excellent store of value.

Your $1 dollar bill or Loonie just won’t buy you what it used to nine years ago. Conversely, an ounce of gold will buy you the same amount of goods that an ounce of gold would have bought you nine years ago. Inflation protection!

All in all, Canada has the assets the world needs and wants. Invest in Canada, invest in your future.

Investing for the Future