Posted by: mystressm | March 17, 2008

Who’s got the biggest coins?

As a Canadian, I was shocked to discover the answer to that question was us! Canada is the winner of the “honkin’ big coin” award. In May 2007, the Royal Canadian Mint unveiled a gold coin that’s as big as a car wheel and as thick as a hardcover novel.

Our giant coin
At 100 kilograms (220-pound), the coin which is 99.999 percent pure gold, is the largest and purest piece ever made by any government. It is available to cram in your purse for a measly $1 Million. (Incidentally, that’s Canadian dollars for all you American readers out there.)

Gold coins as a value investment
Canada and South Africa until recently have been known for their quality gold coins for both collectors and value hoarders, but competition for the lucrative market has heated up.

It has been an excellent investment. In 2000, gold was worth US $263 @ ounce. Seven years on, it is now worth US $653.

Compare that to your bank account. I’ll bet that you don’t have 40% more cash even with the advantage of compounding interest.

Gold coins are not the only contender for your attention.

The other metals are also sky rocketing in value.

Other coins
Pennies, for instance are made out of copper. According to, any Canadian minted before 1981 is actually worth about 2 cents in copper. If you can find a quarter minted before 1967 – it’s metal value is actually $1.85

It is, of course, illegal to melt them down for their intrinsic value.

Pennies, along with their cousins nickels, dimes and paper money are only meant to be “representative” value. But with soaring commodity prices – coins are now starting to have intrinsic value.

The temptation to melt down coins and exchange it for an instant double-your-money at a scrap dealer by certain people must be overwhelming.

Metal has become so valuable, that Vancouver city is being forced to look into replacing all their manhole covers with special locking ones to prevent them from being stolen. In Seattle, when all the copper wiring in a public park was stolen recently, they elected to replace it with lower-value aluminum wiring in an attempt to forestall another future theft.

The Canadian government is steeling our coins
The Canadian government has been aware of this problem for a while. To combat it, they have been cutting our coins with steel.

They also have an alloy recovery scheme where they rake out all the old coins whenever they circulate back through the banks.

So now our coins only have a thin coating of the metal around a much cheaper blank. But even that plan is starting to run into problems as zinc and nickel – the metals of choice – have soared even more than gold!

So take a good look at that dusty jar that you throw all your coins into. It’s worth a lot more than you think!

Posted by: mystressm | March 14, 2008

How accessible is college education?

I have been enrolled at the British Columbia Institute of Technology for three months now.

So far, it has been a fun and challenging experience.

But as I have gotten to know some of my classmates, I can see that it is very financially challenging for some of them to be there.

The program that we are taking is a two-year program condensed into one year. This makes our course load staggering. Despite this, some of the students are trying to work as well. Why is this?

A discrimatory loan system
It turns out that not everyone is eligible for a student loan.

Canada still works on the archaic paternal system that presumes that all financially capable parents are willing to put their children through school.

This is not true.

If a parent doesn’t want to finance their child through university or college, they don’t have to. That seems fair enough.

The universal accesibility myth

But what if that child wants to go to school?

Unlike all their other high-school graduating classmates, this child can’t get a government sponsored student loan/grant. They are denied this opportunity because the accessibility is based on means testing the parents’ prior year’s income.

How many left behind?
The government satisfies itself that there is no way that the parents will participate in their child’s educational costs by forcing aspiring student to wait a few years for a qualifying period to expire. Once that period is up then they can access the student loan/grant program.

It’s not just the children of wealthy parents that are caught in the red-tape trap. If you are unfortunate enough to be the child of parents that work in a boom-and-bust industry – you can also be excluded – based on the parents prior years income. It doesn’t matter if a financial disaster has recently befallen them. Their child too, will be excluded from the publicly available pot of money.

An aspiring child who doesn’t want to be left behind his compatriots and wants to get on with his tertiary education – has only two routs. Work and credit cards.

Banks loans are not an option. Young people that have just left home don’t have credit history to get one. And to add insult to injury, because these kids can’t get the subsidized interest-free student loan, they also don’t get the government grant.

Sounds fair to me!

Posted by: mystressm | March 14, 2008

A Honey of an Investment

Deal Shopper

Yesterday while I was trotting up and down the aisles of my local grocery store doing my weekly shopping, I ran across and astonishing sale.

Local honey was on sale for a smoking good price. I couldn’t believe my eyes.

Obviously news of the impending international collapse of the honey industry has not yet penetrated as far as the wholesale purchasers for the major grocery chains. Otherwise, there is no way that they would be firing this particular commodity out the door at a loss-leader price.

The Alert

This is interesting, I thought. They must be clearing out the last of the previous year’s production out of their warehouses. Normally they would just replace it during the traditional honey harvest period during the summer and fall.

But not this year I thought.

I loaded my cart up with a couple of years worth of honey supply in preparation to hoard it. I am about to be the envy of tea-drinkers for years to come.

Market Timing

My interest is clearly well ahead of the market reaction – which makes it a good buying opportunity.

Bee Colony Collapse hasn’t even rated page 14 of the mass media yet.

The phenomenon is recent. Beekeepers started reporting that their colonies were dying in significant numbers just this last fall.

Market background

Bee Colony Collapse is swift. Within the course of a week, the bees from an afflicted colony vanish, deserting the Queen and unhatched brood.

Dr. Cox-Foster who is in the faculty of Entomology at the University of Pennsylvania recently testified before the US House of Representatives. She says in part “This disease shows a completely new set of symptoms, which does not seem to match anything in the literature”.

Bee Research

“Bees are leaving the hives to fly away to die. The few bees left inside the hive are carrying ‘a tremendous number of pathogens’ – virtually every known bee virus can be detected in the insects. Some bees are carrying five or six viruses at a time, as well as fungal infections.

Another unusual symptom is that normally when a bee colony gets weak, other neighboring bees will come and steal the honey & pollen. Other opportunistic insects or animals like to take advantage too. But none of this is happening. These opportunistic predators are not coming in – or if they do – it’s weeks later.

Normally beekeepers lose around 10% to an extreme maximum of 18% of their hives during a rough winter.

Apiarists are reporting loses of up to 90% of their colonies. The phenomenon is not restricted to the United States. Europe is also reporting similar frightening loses. Colony Collapse is just starting to appear in Canada. Wild bees are affected as well. Current estimates put the wild colony losses at over 95% in many parts of North America.

No one knows why.

Pending Disaster

Bee pollination is required for over 90 varieties of crops in North America. All our tastiest foods require bee attention – most of our fruits, squashes and almonds for example. Agricultural growers rent out about 1.5 million mobile hives a year for the purposes of pollination.

This year they are not available.

The farmers are getting desperate. Some of them are making the decision not to plant. Almond & apple crops, which are almost 100% reliant on bees, are blooming right now. Farmers are being forced to import valuable pollinator hives from Australia as a stopgap measure.

How can the investor take advantage?

This is a phenomenal opportunity to put money into agricultural products.

Food is not an optional extra. As a result the price of agricultural commodities will shortly reflect the decreased supply. Demand for agricultural commodities is fairly inelastic. There will clearly be consumer demand erosion when the prices of flowering crops start to rise significantly, but consumption will merely switch to non-pollinated plants such as wheat, soybeans & corn.

Increasing Demand

These alternative cereal food crops are already facing significant increase in export demand due to rising populations & standards of living in China & India as well as further pressures from the alternative fuel industry.

In fact many acres of corn & sugar which used to be devoted to food production have been diverted to the more profitable bio-fuel production. In 2007 – this represented 25% of the total (US) corn crop. In 2008 – it is predicted to take as much as 90% of the available crop.

Other Factors

It is expensive and time consuming for farmers to switch from the production of one crop to another. There is significant lead-time before the switch in commodity production can take place in reaction to market forces. It takes years for instance to grow a tree to production stage or before planted asparagus is at the harvestable. Additionally all the farm machinery & infrastructure has to be revised to accommodate the new crop.

Two Ways to Play the Market

Agriculture is, I have found, very difficult to space to place an investment in. This is because most of the access is through the FOREX futures exchange and is not an appropriate venue for the small or inexperienced investor.

The two places that I have found that hold significant promise is the exchange-traded fund DBA (PowerShares) which is traded on the AMEX. This ET fund is a basket of agricultural products.

Another way of playing the scenario is investing in the required farming infrastructure. Aging farming infrastructure in Canada and the US has suffered from a significant under investment – caused by recent low commodity prices that farmers are still recovering from. A very high percentage of it needs to be replaced or upgraded now.

But I’ve already made my investment. My supply of honey is assured for many years to come.

Posted by: mystressm | February 18, 2008

Citizen Journalism

Citizen Journalism is the democratization of information dispersal. For a long time, traditional media has been a gatekeeper – selecting the ‘newsworthy’ items from the entire world body of events – then choosing the few that were deemed important enough for mass exposure.

Traditional media – TV, Radio & newspapers – controlled until recently the only viable means for really mass information dispersal. This real-world physical limitation created a conveniently located physical funnel that left news and information vulnerable to massage, pressure and manipulation by various interest groups.

Governments, lobby groups and advertisers are only the start of a very long list of self-interested entities that have the power and desire to pander influence by pre-filtering information and view point expressions in a news ‘bite’ before the general public gets to see it.

Citizen Journalism has turned this model on its head. Without the physical constraints of printing presses and expensive television equipment, it is now possible for anyone to report on any event. The policeman can report on his robbery capture; the robber can report on his capture experience.

These many points of view – along with the affordable means to substantiate and document these events – have allowed the potentially mass-exposure of long marginalized points of view, ideas and events.

Groups such as companies or government who have long acted to silence or slant news to create public support for their view points are finding the preferential treatment of their vantage point increasingly disenfranchised and challenged by the Citizen Journalists.

A real-world example of this dichotomy is taking place right now in the United States Republican Presidential races. The line between those who get most of their information pre-filtered and manipulated through the major news outlet funnels and those who can actively seek their information through the Internet from any source or viewpoint has never been clearer.

Ron Paul is a presidential candidate who has a strong libertarian slant to his platform. He advocates not only getting out of Iraq, but also closing the approximately 700 US army bases in 130 countries around the world. He advocates a complete dismantling of the current taxation model in favour of a Libertarian model. The list of entrenched cabals that would be up heaved by this proposed revision of the political landscape is almost too numerous to enumerate.

Ron Paul was one in a field of 11 candidates.

On the Internet he is a rock star. He has more blogs and Internet news outlets focusing on his candidacy than all the other candidates combined. He has won all the straw polls in every state and has the most friends in social networking sites such as Facebook. He is so popular that Googling the word “Ron” by itself will net you Ron Paul’s home page as the first hit. Ron Paul raised the most money of all the Republican candidates – and not via the traditional large corporate sponsorships, but by tiny (average donation $90) amounts. A first in US history.

Traditional media described this fundraising phenomena as due the efforts of fringe element fanatics – even though the fundraising phenomena itself would normally be deemed a highly reportable newsworthy event. Historically, fundraising has been considered a barometer of public support and dollars raised a bellweather vote support indicator.

But not this time.

In traditional US media – Ron Paul is invisible. During various CNN sponsored Presidential Debates, Ron Paul got only an extremely tiny amount of debate time, further marginalized by the moderator’s attitude and “conspiracy-theory” entertainment-type questions designed to nominalize the answers. His rallies aren’t broadcast. The media “Talking Heads” avoid mention of him. His candidacy is often omitted from newspaper published candidate “list of choices”.

The soviet-style discrimination is so blatant that the discrimination itself has become newsworthy with major media outlets from Germany to New Zealand to Russia; who because of location had no vested interest in the outcome of the presidential race, and began reporting on it.

Despite this, Ron Paul won all the CNN online popularity polls. In fact he won all the news outlet polls everywhere.

CNN responded by removing an entire poll on one occasion, and after another debate it declared Ron Paul’s winning poll results as “tainted” and deleted them, leaving the runners-up candidates’ poll results standing. But not before numerous Citizen Reporters had taken screen shots and uploaded records of the discriminatory treatment to YouTube and various other social networking devices.

Not satisfied with that outcome, CNN’s affiliate, Fox News then refused to admit Ron Paul to the all-important final Presidential debate ahead of Super Tuesday elections. This, despite fact that the Republican Party itself withdrew its support of the debate in protest of this blatant exclusion of a viable candidate. The Fox News excuse? The table in their chosen venue could only seat 3. By now the field of candidates had narrowed from 11 to 4.

Citizen reporters responded by posting pictures of prior debates/interviews showing 4 people comfortably seated around the very same table in the very same venue in other broadcasts produced by Fox.

I believe that this campaign is a fine example of the defining line between the interests of producers and consumers of content. I also think that it demonstrates the current evolution of power of Citizen Journalism. Although Ron Paul will not win this presidency, it is interesting to note how some of the statistics are breaking out.

People who have greater access and facility on the Internet are heavily in favour of Ron Paul. Those who rely on public television and newspapers for their news sources are heavily in favour of the media-anointed favourites. As the population ages, the size and influence of the Internet savvy demographic will enlarge.

The tagline of Fox News – “We report and you decide” is changing to the unofficial mantra of Citizen Journalism – “We report and we decide”.


Posted by: mystressm | July 1, 2007

Who likes public transit? (Hint – not you)

When it comes to public transit, every level of government agrees on one thing. They want YOU to use it.

All three levels of Canadian governments, Federal, Provincial and Municipal have an ongoing public media campaign to encourage people to use it. Between them they employ a variety of carrots and sticks to get people on those buses.

Here’s a list some of the things that they are doing that I am aware of:

• Eliminating parking slots across the city
• Significantly increasing the number of parking meters, their charges and hours of operation
• Introducing parking lot taxes
• Subsidizing the cost for certain segments of society to utilize the public transit system – i.e. college students or certain business
• Reducing the efficiency of traffic flow by deliberately not coordinating streetlights and introducing traffic calming measures.
• Introducing new priorities that favor pedestrians & bikes over buses, and buses over private vehicles
• Taxes that transfer the costs from one type of transit to another i.e. the gasoline tax which is used to transfer money from vehicle owners to the Vancouver Transit Authority.

In short, Public Transit has every possible advantage to make it work. Any free enterprise business would be wild with envy if they could get that type of leverage to fast track customers into their business.

Monopoly. Strong media advocacy. Government backing. Subsidies. Your competition penalized. What more could a company ask for?

So why isn’t it working?

The lowliest corner store with a marginal fraction of the advertising budget and no other assistance performs like a customer vacuum system on steroids compared to the public transit system.

What’s in it for me?
That’s an important question. People have choices and they will always pick the one that will give them the biggest bang.

That’s how they pick their toothpaste. It will give them the whitest teeth.

That’s how rock concerts get people thronging in wild overnight queues for their outrageously priced tickets. They offer entertainment and cache.

What advantage does the public transit system give me?

I find that’s a difficult question to answer. I find it much easier to answer a different one. What are the disadvantages?

Now the question becomes easy. Let me list them.

1. It’s slow. According to the Vancouver Transit Authority they are doing a great job if they can get you to your destination only 1.5 to 3 times the amount time that it would take you by a car.
2. It’s inconvenient. If you want to take a bus, you have to make sure you have the exact right change. You can’t use a debit card. The fare box can’t make change. The official line is that they can’t afford them. Yeah right. Take a close look at the mechanism that makes change in one of those vending machines. How come the chocolate bar people can afford them?
3. It’s uncomfortable. And getting worse. The new buses have even fewer seats in them so that they can ram more people in. That vastly increases the probability that you will have to stand all the way to your destination. The government hasn’t yet managed to figure out how to massage the concept of being rammed into a bus like a sardine, standing shoulder to shoulder with your fellow commuter into a selling point.
4. It’s unpleasant. Central transfer points are magnets for thieves, gangs and beggars. To get utilize a major transit point, you have to run a gauntlet of unsavory characters that congregate there. I have personally had to get off the skytrain and transfer buses because of meth-heads in the same car as me. I’ve seen gang fights break out on the sea bus where there was no way to exit and escape the mêlée. There is extremely limited security. If you run into problems. You are on your own.
5. It’s unsafe. Transfer points and bus stops are often in out-of-the-way places. It is especially of concern to women who are dropped off in the middle of nowhere and are forced to wait for the next bus in their route or walk several blocks with nothing but street lamps for security.
6. It’s limited. Buses don’t go everywhere. Even in the city. If you want to get to some out-of-the way place, you get as close as you can, then you walk. Want to get somewhere further afeild? No service.
7. No storage. Want to transport your groceries? Your suitcases? Your skis? What about your kids and support gear? Want to have a beach b-b-q? Sound daunting? It is. There is no way to transport any other items except yourself unless you want to endure and inflict extreme inconvenience upon yourself and your fellow passengers.
8. Limited hours. The public transit effectively shuts down at midnight. Want to go out partying? Need to work night shift? The public transit Cinderella’s have to go home early.
9. Reliability. If a bus breaks down, too bad. You have to wait for the next one on the schedual. They don’t have enough back-up buses to cover for that predictable disaster. Public Tansit Strike? You’re on your own for that one too.
10.They don’t use it. The last time there was a big meeting on public transit by the transit officials – most of them used their own cars to get there. Our public transit system wasn’t ‘good’ enough for them.

The last time I took a bus, I got the opportunity to see their “customer service award” plastered all over their window. Yeah, right. Since they are the only fish in town, they must have given it to themselves. I’m impressed.

I wonder what free enterprise could do?

Posted by: mystressm | July 1, 2007

The value of time

I live in the West End.

Yesterday the monthly Critical Mass bike ride took place.

I watched it for go by for an hour from my 12th story apartment. The Critical Mass bikers completely took over every single lane going both in and out of downtown Vancouver. They went down Georgia Street, and then turned up Denman. I don’t know where they went after that, because I couldn’t see them.

But I could see what havoc they were making.

Barriered in downtown
The city streets were completely gridlocked. Nobody was moving an inch.

The Cambie Street Bridge is virtually unusable because of the Canada Line construction.

The Critical Mass website states that they “are a grass roots movement to take back the public space.”

Their ride statement keeps all the downtown citizens captive while they made their point.

Yesterday, their ride took an hour. They timed it perfectly. It started at 6:00 pm on Friday; just as a huge mass of office workers were trying to get home for the weekend. It took an hour. No one got home in time for dinner that night.

Besides the thousands of people stuck in traffic being forced to waste their time while Critical Mass airs their personal beef, hundreds of thousands of people who live in the West End who can’t get in or out. Everyone who lives or works downtown gets to either plan around Critical Mass or worse, doesn’t know about it and their plans get screwed.

For a whole hour, people can’t get home, can’t get to the airport to catch their plane, can’t do anything. The buses don’t move. Emergency services can’t get through. Critical Mass is making their statement. They think everyone should get out there and ride a bike. Or take the bus.

The cost of time
So why aren’t people using bikes as a main form of transit? Why aren’t more people using the public transit?


Both those forms of transit place a very low value on peoples’ time.

Businesses calculate the value of time all the time. It is one of the most important value calculations that a business does. For instance everyone is familiar with the concept of having a dollar value placed on employment. Wages for hours worked. Time value costs are calculated for virtually everything we do.

An unvalued commodity
People in general don’t think of time as a commodity, but it is. For instance, if it takes you an hour to get to work, that is two hours of your personal time that you don’t get to use. With only twenty-four hours in the day that means that 8% of your daily allotment is used up just commuting. You never get recompensed for that time.

Two hours covers a lot of stuff. Time with the kids. Shopping for groceries. You can do a weeks worth of laundry in that time.

Time is insidious. Time isn’t officially calculated as “valuable” unless you are physically on the payroll – governments, companies and people like the Critical Ride feel free to waste it.

Why  your time is wasted
There is no compensation to the victims from the agencies that feel free to casually help themselves to your time – because officially there is no value placed on it and there is no way to seek recompense for someone else stealing it.

Notice that ‘they’ are quite particular about looking after their own time. Everyone is quite careful to husband their own time and whenever possible shove the “wasted” moments onto the helpless ‘other’.

Ever gone to the grocery store and had to stand in the line to pay while noticing that there are lots other tills available? There is a reason for this.

The time of the cashier is valuable. She can’t have any “down time” because that costs the store. But as the customer – your time costs nothing to the store. That’s why all the “waiting” time gets shoved onto you.

It’s the same reason why you regularly get to listen to the highly irritating recording on the phone “We are currently experiencing high call volume – your time is valuable to us….please continue to wait”

It doesn’t really matter when you call. You will always continue to wait.

Who is the greatest fritterer of all?
The biggest waster of time is the government. As a monopoly entity, the citizens can’t take their business elsewhere.  There is absolutely no upper limit to how much of the publics time that the government can throw away.

Ever tried to get anything done with the government? Wait times to get anything processed are enormous.

Business permits, unemployment insurance, income tax, access to courts. Anything to do with the government requires that you stand in line or wait on hold. Ever heard of waiting lists?

But in my opinion, one of the biggest mass wasters of time is the public transit system.

I live in the West End and go to school in Burnaby at BCIT. It sounds like a pretty easy and direct commute. But it’s not.

Even with everything on my side – walking distance to the Sky Train, and commuting against rush hour traffic, it would take me twice as long by public transit as by vehicle.

Time wasted. Time I don’t have. Time I don’t choose to spend.

Posted by: mystressm | June 18, 2007

Two minutes of Terror

We had our web communications class today.

It turns out that web communications isn’t just writing. It’s also about speaking.

In public.

In front of tons of eyes.

Our designated topic was: The Website.

Duck and Hide
Around the room we went. Each student was required to give a brief two minute description of the website that they were working on.

Two minutes? Two minutes? That’s an eternity! How can I possibly survive that long?

I delayed as long as humanly possible. I employed every trick in the book.

I avoided eye contact. Shrank in my seat.

But inviso-girl was spotted.

Clutching my design papers in my hand I managed to speak a few words. I managed to stammer out a brief 2 second description…..something like “It’s a financial newsletter website that people subscribe to.” Then I leapt eagerly to the impromptu reprieve that I had tacked on to end of my speech.

“Are there any questions?” I asked.


Then a miracle happened! There were questions!  People were interested.

In fact the teacher had to move us along. I had taken up more than two minutes! And better yet, once people started talking to me the dreaded panic feeling vanished!

The teacher even spoke up and suggested that perhaps instead of creating a fictitious website that I would pull down at the end of the course, I should actually make a real one. She thinks my concept has potential!

Hmmmmmm. I’ll have to think about it.

Move over Suzie Orman!

Posted by: mystressm | June 9, 2007

How do you retire on $50,000?

My girlfriend, Jane, approached me the other day with that question.

I’m known as a bit of a financial nut so people like to ask me to cast an opinion.

In the private sector only about 20% of Canadians have a company pension plan at retirement. Eighty percent of the lucky retirees that think they are pension rich – those that work for the government or in unions and have defined benefit plans, will discover that they won’t be able to access the money they were counting on because their plans are under funded.

Retire at 99?
Jane had been to her financial planner, and the news was not good.

If she worked until she was 99, she would have enough to retire.

Given that dismal outlook, Jane wanted to know if I had any better ideas.

It turns out that Jane had been using the same money manager for years. The little bit of money that she had been squirreling away from her secretarial job hadn’t seemed to have grown much.

On the advice of her financial advisor the money had been put into various mutual funds.

How good was the investment planner’s advice?
What kind of interest/capital gains had these funds been making a year? Jane didn’t know. She had never been told, and had no idea how to figure it out.

Had her money manager ever offered her other types of investment instruments? The answer to that question was yes! More mutual funds!

Mutual funds are an excellent source of income for financial planners. Fees on mutual funds are called MERs. They average about 2.6% in Canada and are the highest in the industrial world. Part of that MER is the trailer fee which goes to the financial planner.

These fees vary between mutual funds.

This led me to wonder – were these mutual funds that the financial planner chose in the best interest of Jane or the planner?

Jane’s situation isn’t unusual.

It seems to me that there are a lot of people out there that don’t know how to figure out how much money they are making (or losing) nor do they know how their planners get paid. (An important question – after all who works for free?)

How much profit is 8%?
After applying my calculator to her statements, the answer appeared to be “not much”. We have been in a boom market in Canada for quite a while. The average rate of return on the TSX has been 11% for the last twenty years.

Jane’s rate of return had been less than 5%.

Jane pretty well could have thrown darts blindfolded at the TSX index and done better than her mutual fund.

A 3% MER expense subtracted from Jane’s conservative 8% mutual fund leaves 5% profit. Another way of looking at that is that the fees ate up 37% of her profit. Every year.

It is important to note that the amount Jane paid to “manage” her fund went up as the overall value of her mutual fund went up because the MER is a percentage.

But to find Jane’s actual profit you have to do some more calculating. You have to subtract the RRSP expense fee of $125 per year. Then you have to minus an average inflation rate of about 2.5% a year – which is the amount of purchasing power that your money loses every year.

It’s a long hard way to make money grow.

So what to do with this crisis?

Asking the Right Questions
It turns out that the financial planner hadn’t calculated all of Jane’s future potential income when they were doing the “financial planning”.

She hadn’t accounted for the fact that Jane had worked all of her life and was entitled to Canadian Pension Plan and the Old Age Security.

Additionally, Jane will likely get an inheritance from her parents who are very elderly.

Things were looking better and better.

Here were my two suggestions:

1. Sell her mutual funds and put the money into Exchange Traded Funds (ETFs). ETF’s are a basket of securities which track an underlying index. They are similar to mutual funds in as much as they are diversified, but they don’t have the expensive management fees attached and therefore can earn more money and trade far more easily like stocks.
2. Sign up for co-op housing. It takes a couple of years to get in, but once Jane gets in, the cost of her accommodation will be a percentage of her income. Once Jane retires, this will control a significant expense.

If Jane follows my advice I estimated that she would get about $416 a month from her investments. Plus she would have income from her Canadian pensions of about $1200 a month. Additionally her rent would be held in check at no more than $400 a month.

A very tight budget, but retirement is do-able well before 99.

It pays to have friends with calculators!

Posted by: mystressm | May 13, 2007

The Government’s Secret Tax

Paying tax makes me mad. There is income tax, property tax, sales tax and services tax. There’s duty tax, estate tax, and tax on tax.

But what really makes me annoyed is the secret “extra” tax that the government squeezes out of us.

The Official Tax
Sometime in June Canadians will celebrate “Tax Freedom Day”. Every dime that Canadian citizens earn up until that day is given to the government in the form of taxes. This day, which is recalculated yearly, is the first day that hard-working Canadians get to keep all of the money in their paychecks.

Each year, the finish line is quietly pushed back a few days.

This year, it will arrive sometime in the last week of June – just about at the halfway mark of the year.

With half of every citizen’s salary pouring into the government’s coffers – you would think that they have enough.

They don’t.

How do they do it?

Most people have the misconception that currency has value. It doesn’t.

Currency is a convenient form of representation of value. This representation is utilized in our society as a convenient storage of value that we use as a measure for exchanging like-value for all our goods and services.

For instance – it would be difficult for a strawberry picker to trade directly with their landlord for accommodation. There are few landlords that would like hundreds of pounds of strawberries delivered to their doorstep every month. It is much easier to use money to exchange “value”.

The setup

Money needs five characteristics. It needs to be durable (which is why wheat isn’t good money – it can rot), divisible (why paintings aren’t good money), convenient (so much for lead), consistent (why real estate doesn’t work), and is difficult to obtain (which is why paper doesn’t make the cut – too easy to counterfeit).

Originally our currency was based on gold. Every dollar that the government printed was backed by gold in a vault.

This meant that you could legally take each piece of currency paper to the bank and exchange it for a piece of gold.

All citizens are trained to view each piece of currency paper like a piece of gold.

This represented a startling opportunistic prospect for the government. Why not just print the paper? Why be constrained by the gold?

In the 1970’s, our government went off the gold standard. Our government gave itself the liberty to print as much currency paper as it wanted.

The Scam
By printing money – the government reduces our purchasing power.

And raises its own purchasing power.

It takes a while for the economy to react to the magical appearance of newly printed money. This new money to “flows” like a wave through the country’s population. Not all people are affected equally.

Entities closest to the source of the “flow” get the advantage – the government being the obvious winner.

The biggest losers? Savers. Pensioners. People on fixed income. Anyone in a long-term contract. They are the ones that are furthest ones out from the flow source. They are the payees.

The tax tip
The throttle is not quite firmly pressed to the floor on those printing presses. Yet.

But the government is getting desperate. It needs more stuff. Votes. Handouts. It needs to deflate some of its debt (our government bonds).

So put on your seatbelts. We are about to enter a period of exceptionally high inflation. The purchasing value of those dollars in our bank accounts is about to shrink.

The government wants more tips.

Posted by: mystressm | May 6, 2007

Platinum and Air Care

I have an 18-year old car.

Not a beater, but the kind that second-hand teen aged car shoppers dream of getting their hands on – a one owner, immaculately maintained, low-mileage car.

Every year, all the car owners that live in the lower mainland region of Vancouver, BC are forced to undergo a government mandated emissions test. The official purpose of the test is to reduce air pollution by refusing to license vehicles that fail the designated emissions benchmarks.

This year my baby failed.

So I took it to a hand-dandy mechanic right next to the AirCare center to get it fixed. It is there that I learned some little known facts about AirCare.

AirCare has been changing the goal posts. At random intervals it raises the passing criteria. In fact, I was told, it has halved the emission requirements not once, but twice. So it is getting harder and harder, if not impossible, for older cars that met the previous government emissions standards to actually pass. Even if they are in perfect running order and meet the previously mandated specs.


I went all over AirCare’s web site. It is definitely silent on this political strategy. What a convenient way for the politicians to avoid alienating the unwitting owners of perfectly healthy older cars and gain kudos for themselves with the popular anti air-pollution cause.

And even better, apparently there are never any warnings on the web site that these new standards are about to be slipped into place. Interesting. Then they get to really rake the older cars off the road and “improve” their pollution stats. I’m all for that!

But does it really have that net effect?

My car is worth far more than the measly $1,000 that I would get from the government’s “Scrap-it” program. So if I can’t drive my car here, what do you think that I am going to do? — Sell it outside of the Lower Mainland. Just move the pollution to someone else’s jurisdiction.

And two seconds later what do you think that I am going to do?

Well, buy a new car.

Hmmm…… let’s see. To make a new car, that means that the ore has to be mined. It has to be shipped to a smelter. Then the ingots are shipped to a manufacturer in Japan or the States or somewhere else. Then it is turned into a low-polluting car and shipped back to Vancouver where I will buy it. All this time, workers are commuting back & forth to the mine & factory to make my new car. Trains, ships and ore trucks are humming along daily to facilitate the creation.

I know that the politicians must be following the advice of scientific studies that indicate that it would create a net benefit to get rid of an old polluting car rather than keep on driving it. So I guess that it’s much cheaper to pollution-wise to get rid of my car early and start fresh with a new one rather than to keep running it for a few more years. I’m glad that I could help our politicians achieve the NYMBY carbon shuffle award.

I just hope their math improves.

Which brings me to platinum. It is an absolute necessity in catalytic converters for pollution control on all new vehicles. As of May 5 it was trading at a spot price $1,329 US @ oz. This represents an increase of 254% on investment in 10 years.

Platinum gained roughly 15% in the last year based on the 25% increase in car sales in China alone.

Platinum is among the world’s rarest metals. Most of it comes from South Africa (approx 76%) and most of the rest of it comes from Russia. For the purposes of investment, these localities are not politically and legally secure for investment purposes.

It’s sister metal palladium can also be used. But there is a catch.

Car manufacturers must retool their production lines – an extremely costly and time consuming undertaking to accommodate the less costly metal so there is extreme resistance to casually switching back and forth between the metals. The other feature is that the cost of the metal is a relatively small part of the total price of the vehicle, so the price of both metals can soar significantly further before demand erosion will start to occur. The other feature is that both metals are nearly equally as scarce so switching from one to the other would simply make cause the price of the less costly metal to rapidly soar in the near future.

Besides being a necessary component of pollution control in all new vehicles, it is soaring in popularity as high-end jewelry and increasing numbers of uses are being found for it in electronics and high-demand drugs like cancer drugs.

Like gold and silver – platinum has all the essential harbingers of money. It is valuable, portable, storable and exchangeable. And as a result, several countries have started minting this metal as a store of value in their country’s coins. Canada and the US being two of them.

How to invest?

Exchange Traded Funds are starting to crop up. Currently there are two available – one in Europe which is restricted to traders in one country and one in London. As of May 4, the London ETF Securities Ltd. announced that it had accumulated over 6,000 ounces of the metal. This is a very significant amount of metal to be taken off the market. Another ETF is likely to become available in the next few weeks on the New York Exchange.

The accumulation of metal in these ETF’s is likely to push the price of platinum even higher. A recent example of this type of price push recently occurred with the appearance of Uranium Participation & Molybdenum Participation by Sprott Asset Management. These funds in and of themselves escalated the demand for their respective metals and have caused the spot price to soar.

I believe that Platinum is a metal to watch in the future.

PS: Watch your car. Catalytic converters are become an appealing target for thieves who know their way around under the hood.

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