Because Canada holds the second largest oil reserves in the world, foreign capital inflows into and out of TSX energy companies are key drivers moving the Canadian Petro-dollar. Output from Alberta’s oil sands region, the largest crude reserves outside the Middle East, will rise to 3-million barrels per day (bpd) by 2018, more than double over the next nine years, from about 1.3-million bpd last year.
Canada has roughly 180-billion barrels of oil reserves, with all but six billion barrels locked in Alberta’s oil sands, a mixture of sand, water, clay and bitumen that’s too heavy to use without being heated. Oil must be priced at $65 a barrel for new oil sands projects to be viable, according to the Canadian Assoc of Petroleum Producers. Petro-Canada and Suncor Energy have joined forces to create Canada’s biggest oil company, a merger expected to save C$1-billion a year in capital costs and C$300 million annually in operating expenses.
But Canada also controls huge resources in iron ore, nickel, copper, zinc, gold, lead, silver, timber, fish, coal, petroleum, natural gas, and diamonds. Ironically, Canada’s minerals industry, including smelting and refining, only contributes about 4% to Canada’s GDP, yet lately, it’s the direction of base metals, especially copper, that’s increasingly influencing the direction of the Canadian dollar, subtlety dethroning crude oil, as the Loonie’s key lynchpin.
Canada is the third largest copper producer in the world, after Chile and the USA. It is also the world’s largest zinc and second largest nickel and lead producer. A small number of producers, including Noranda, Inco, Falconbridge, Teck Cominco, Boliden and Hudson Bay Mining, dominate base metal mining in Canada. Inco, owned by Brazil’s Vale, supplies a quarter of the world’s nickel, and also produces copper, gold and cobalt. Falconbridge and Noranda, owned by Xstrata Mining, mine nickel and copper at the world class deposits at Sudbury, Raglan and Kidds Creek.
Over the past decade, Canada has also emerged as one of the leading nations in the high-tech and computer industry, mostly located in Ontario and Quebec. There is also a large industrial base which includes companies that produce pharmaceuticals, aerospace products, and telecommunications equipment. About half of all Canadian manufactured goods are produced in Ontario, second only to Michigan, as the largest producer of automobiles and car parts in North America.
So while capital flows into base metal miners and oil company shares, lifted the Canadian dollar 20% higher, the larger population of Canadian exporters, the backbone of the economy, are hard hit by a stronger Loonie, since they receive most of their sales revenue in US-dollars. Canadian exports rebounded only slightly to C$29.3-billion in June, standing -36% lower than a year earlier. The Canadian central bank thinks the Loonie has run ahead of the trade weighted fundamentals.
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Gary Dorsch, editor of the Global Money Trends newsletter worked on the trading floor of the Chicago Mercantile Exchange for nine years as the chief Financial Futures Analyst for three clearing firms, Oppenheimer Rouse Futures Inc, GH Miller and Company, and a commodity fund at the LNS Financial Group, members of the CME and CBOT. Gathered news and information from trading pits and newswire sources on the Chicago Mercantile Exchange, and telexed daily and weekly analysis of foreign exchange, global interest rates, gold and other commodities to clients in Hong Kong, London, the Middle East, and dozens of commodity trading advisers across the United States. After the closing bell, Mr Dorsch broadcasted a half-hour talk show on the financial markets to 40 customer branch offices around the United States via live hook-up from the trading pits of the Chicago Merc.
From 1981 through 1988, Mr Dorsch was widely quoted in more than 400 newspaper articles, including the Wall Street Journal, the New York Times, Investor’s Business Daily, the Chicago Tribune, Barrons’, Newsweek, and the American Banker magazine. He was interviewed on dozens of occasions on the Financial News Network with Sue Herrera, discussing trends in foreign currencies and interest rates, and spoke on local Chicago radio stations. He was also tape-interviewed for CNN’s MoneyLine with Lou Dobbs on several occasions, discussing foreign currencies and S&P 500 stock index futures.
Worked on the domestic and foreign equities trading desk for Charles Schwab and Company, the largest discount broker in the United States, for almost eleven years. Gained extensive knowledge in computerized trading systems, and servicing a wide array of retail customers in the US and overseas. As a transactional broker for Charles Schwab’s Global Investment Services department, he handled thousands of customer trades in 45 stock exchanges around the world, including Australia, Canada, Japan, Hong Kong, the Euro zone, London, Toronto, South Africa, Mexico, and New Zealand. Extensive experience in trading Canadian oil trusts, ADR’s and Exchange Traded Funds.
Wrote a weekly newsletter from 2000 thru September 2005 called, “Foreign Currency Trends” for Charles Schwab’s Global Investment department, featuring inter-market technical analysis, to understand the dynamic inter-relationships between the foreign exchange, global bond and stock markets, and commodities. Particular attention was paid to central bank jawboning and intervention, and government sponsored statistics on the economy designed to influence trader psychology. Mr Dorsch has a collection of thousands of charts, displaying the chronological history and inter-relationships of the global money markets from 2000 until the present time.
Mr. Dorsch has been an active trader in foreign exchange, US high grade and corporate junk bonds, foreign government bonds, gold stocks, ADR’s, and a wide range of US equities and options over the past 25 years, and in Canadian oil trusts for the past 5 years. He holds a Bachelor of Science degree in Finance from Arizona State University, as a Sun-Devil from Tempe, Arizona. He is married to his wife Beth, (his infotech expert), both raising two children Rachel and Joshua. He left Charles Schwab and Company in September 2005, to work full-time for the SirChartsalot.com web site, to trade markets, and to write a book.