Don Coxe
In a December Q&A interview with Report on Business Magazine last year, famed investor Don Coxe advised investors not to listen to all the bearish calls on Canadian assets - and suggested that "the Canadian dollar isn't going to go to 75 cents (U.S.)."
One of our readers wrote to us wanting to know why that prediction didn't pan out. So we posed that question to Don, who is the chairman of Coxe Advisors LLP and an adviser to several commodity funds.
What follows is his response:
"The Shah of Iran declared 'Oil and politics don't mix.' He didn't live long after making that pronouncement and his bloodthirsty successors have been proving him wrong ever since.
In December, 2014, I assumed:
1. That Stephen Harper would have no great problem getting re-elected against Justin Trudeau, at that time his most serious contender. I also assumed the NDP would continue to be admired primarily among the Canadian media and clerisy, as has been their experience for most of their existence. I also assumed that Obama's continued battle against Keystone would trigger an all-Canadian pipeline to the East.
2. That John Kerry would not be able to cut a deal with Iran on the conditions he accepted in his presentations to Congress. When the negotiations would collapse, the Saudis and the Emirates would almost immediately begin cutting their oil production. In my view, their primary motive was not to damage U.S. frackers, but to prevent Shia Iran from becoming the dominant power in the Mideast, thereby, for the first time since the establishment of Islam, putting Sunnis into second place in the seemingly endless struggle for supremacy.
So, Canada would continue to attract foreign capital and the Canadian dollar would thereby remain stronger than some of its fundamentals might suggest. Canada was, bar none, considered the most financially and politically prudent member of the G-7. (Germany's badly run banks prevented Germany from being ranked #1, and Wall Street and Washington politics were the U.S. problems.)
Bad Calls!
First shock: NDP sweeps Alberta.
Second shock: Problems in appointments to the Senate put Harper's survival at risk, with NDP the stronger opponent.
Third shock: Kerry gives Iran virtually all it demanded and yet the Senate doesn't look to have a two-thirds majority to override Obama's veto of its rejection.
So much for Canadian prudence.
Shortly after it became apparent that Kerry was going to give Iran virtually everything it demanded, oil prices broke down decisively. Shortly after it became apparent that Harper was in trouble politically, Ontario and Quebec announced serious reservations about permitting oil sands crude to flow through a mostly unused gas pipeline to Eastern refineries. Global warmists like Al Gore applaud vigorously.
So why should the rest of the world love the Canadian dollar? The loon is becoming distinctly loony."