Canadian Dollar Hits $1.07 U.S. & U.S. Economy Is In Financial Trouble

November 5th, 2007

About a month ago we were just hitting $1.02 U.S. and everyone was expecting the USD to rally and once again be worth more than the Canadian dollar. I on the other hand thought we had a pretty good chance of getting to the $1.05 to $1.07 U.S. range by the end of the year. I was right. I wrote the article “Canadian Dollar Could Hit $1.05 to $1.07 U.S. By Years End” on October 16th, 2007. Interesting how quickly things change and it didn’t take very long at all for us to hit $1.07 (In fact, we hit it several days ago and so in reality it only took a couple of weeks!).

Obviously I think the next test is the $1.10 U.S. range. I think that we will continue to trade in the $1.05 to $1.07 range for the most part (’till year end) but we may start peeking up and testing that $1.10 level. I guess time will tell but it wouldn’t be that surprising if we hit $1.10 given the tremendous strength at the moment.

I’ll say it again, we may have moved a bit fast, but the same fundamentals are in place that are pushing the Canadian dollar higher… whether its the strong commodity prices (oil, minerals, gold, etc) or the absolutely strong and fiscally sound Canadian economy, things seem to be going much better for us than our American counterparts and friends.

It doesn’t take much for our currency to rise quickly in the financial world and the big boys can make it rise very fast. Also, when you think about the rise in the price of oil or gold (or many other commodities), they haven’t risen by very much in Canadian dollar terms… if you start thinking about things in terms of Canadian dollars, the prices really haven’t increased much at all year over year! Remember, five years ago the Canadian dollar was worth $0.64 U.S… today its worth $1.07… that’s a 67% rise in value. I’d actually argue that it isn’t so much the Canadian dollar getting stronger (though it is), but its more the USD getting weaker.

It is sad though, to see their empire (our close friends in the south) beginning to crumble financially. I hope they decide that their finances are a DIRE EMERGENCY and begin to make SWEEPING changes… Unfortunately, politicians in democracies only worry about their 4 to 8 year term and push the problems to be dealt with to a later date. You think I’m talking a bit extreme or being a bit negative towards the U.S. outlook? Read Peter Grandich’s “Man Your Battle Stations” and his “Follow Up Report” (pdf file). Then go see what the TOP government accounting official in the U.S. is saying publicly in this 11 minute video! Then do your own homework and math and tell me there isn’t a SEVERE problem. This needs to be dealt with and it will only happen if the citizens wake up and demand it ’cause there ain’t no politician (republican or democrat) that wants to be the bearer of bad news and big sweeping changes. Either way, we are all in store for one hell of a bumpy ride. Buckle up your financial seat belts or you may get hurt!

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