In praise of cash


Depositors storm failing UK bank, 2008.

Much digital ink has been spilled here on the issue of money. Where’s it safe? More profoundly, what is it?

Some say gold is the only true currency, since it’s rare, cannot be created, is limited in supply and expensive to find, with a history of human covet bestowing a special worth. Others say money is whatever we call it, and state-produced paper is as good as anything else. It has value because of the economy which is measured in it while providing a way of exchanging labour for goods and services.

Still others ask what’s the difference? Why’s a piece of metal worth more than a piece of paper? And why are we debating such stuff when the things we really need – food, shelter, fuel – are the commodities of indisputable value? Why don’t we covet and hoard that stuff?

Well, actually, a lot of people are – as I have learned in spades with one of my recent ventures.

The fact is, the economy will worsen considerably before it gets better. Unemployment levels will remain sky-high years after the GDP has started to expand again. Real estate is in a long-term, multi-year decline despite the current faux market caused by the unsuspecting being led to slaughter by the uncaring. The US is still falling off a cliff, and current government spending in most countries will lead to the triple wealth-busters of higher rates, higher inflation and higher taxes.

Time, then, to re-evaluate both risk, and where to put what you’ve got. Whatever the bullion bunnies say, the metal will not become the currency of daily life. That will remain dollars. So where are they safe?

Julie writes:

In your book, “After the Crash”, you suggest spreading cash around to various banks if you exceed the CDIC limits.  But you also mention that 2 banks are in trouble (one being the CIBC).  How can one tell which banks are the safer bet?  Are credit unions a safe, viable option?  In Ontario, deposits in credit unions are insured by the provincial government.  What about keeping some savings in on-line banks like ING Direct or PC Financial?  Your comments would be greatly appreciated.

Well, Julie, CDIC insurance covers $100,000 per person per account, roughly speaking. Some provinces have stepped up and declared every dollar of every account in a credit union is protected. Sounds good, of course. But let’s remember that two days before it failed, so did Lehman Brothers.

Each of the Big Five banks has about $15 billion in savings and personal chequing accounts on deposit – money which is supposed to be 100% liquid. You walk in and you have the right to take it out. But those same banks have on average less than $2 billion in cash, which means if there were a run on a bank, nine out of ten people would be SOL.

It also means there isn’t enough money lying around Ottawa (something north of $60 billion) to pay out the difference. And this does not take into account GICs, term deposits or eligible investments in RRSPs. So, the problem is not so much a bank failing (that will not happen, at least in Canada), but rather worried people realizing the insurance is only workable in certain isolated circumstances. It will not protect a nation of bank customers. Ditto for the credit union guarantee.

As for online banks, CDIC insurance applies in the same order of magnitude. But let’s get a grip here. In the event of an emergency, like a terrorist attack, there’s a good chance the electrical grid might be a target. So, no juice, no Internet, no web-based savings account, no withdrawals, no money.

Having said this, you need to keep your money somewhere. Investing it is a good idea in securities which are stable, predictable and generate decent income (believe it or not, there are many). It’s also good to have a reserve on deposit with your neighbourhood bank, along with a credit card and a line of credit equal to that amount. So, if the bank is closed one dark morning, you can still go and buy that Hummer with the gun rack.

Finally, Julie, reread the part of the book that talks about a cash reserve and a home safe. There is a smart way to get cash out of the bank, and a dangerous way. There are things you need to know about safes, and big pitfalls to avoid.

And there’s a great measure of satisfaction knowing, should the times grow more troubled, you have money, not a rock collection.


‘Garth who?’ – click here



#1 lgre on 04.24.09 at 10:09 pm

I use online banks, and have for years..if they’s insured and I’m not going to worry about it..if any brick and mortar bank collapsed it would be no different, doors would be shut until they figure out how to long as the CDIC guidelines are followed..need not to worry as it’s out of your control..there is no way of knowing when they will know when they announce it.

As for gold, most pro investors recommend about 5% in your portfolio..some people here believe that we are going back in the cave man days..if that’s your belief, then you may want more and a club to go with it.

#2 James Pike on 04.24.09 at 10:25 pm

When things aren’t clear it is best to use multiple strategies so that you have options if things get tough. Personally I think terrorists are the least of our worries. If things get bad there will be plenty of desperate local people to go around.

#3 Glenn on 04.24.09 at 10:39 pm

Ok, realty break here. Gold is not the only noble metal, if anyone wanted to know.

If the price of gold or the coveteous nature of humanity gets stuck in your craw, chew on this.

Silver was the original basis of the American dollar, not gold. Silver is also an industrial metal AND functions as a disinfectant. Yes, hospitals used to use SILVER to disinfect their facilities before World War II came along and soaked up all the silver for weapons of war. Thus, ushering in the age of synthetic anti-biotics and of course mutated pathogens such as MRSA. Keep in mind silver colloid suffocates all single-celled metabolism, thus bugs cant evolve to overcome.

Lastly, silver is cheap and (for the moment) plentiful. There are some that say silver is a better buy then gold because buying a loaf of bread with gold is overkill, and silver has shown far greater gains then even gold, percentage wise.

*ducks to avoid the gold bug stamp*

#4 canadian citizen on 04.24.09 at 10:42 pm

Seems like the chinese have been secretly accumulating gold and are now the 5th largest holder of gold. It would not be beyond the stretch of imagination if china were diversifying out of the US dollar and ultimately preparing for a gold backed yuan.

One thing is for sure, the chinese are not stupid and they understand gold’s purpose in the financial system.

#5 JET on 04.24.09 at 10:48 pm

Regarding gold, China begs to differ (was secretly buying gold):

#6 Charles on 04.24.09 at 10:50 pm

A Housing Crash Update

#7 TUT on 04.24.09 at 11:14 pm

Don’t worry, there are not enough caves for all of us! :)

#8 Marc on 04.24.09 at 11:20 pm

I use ING for the bulk of my cash savings. I keep a workable level in a big 5 bank for living costs, and maintain a balence high enough to not have to pay any bank fees. People actually pay upwards of $17 per month, for the luxury of being able to purchase cheques to spend ones own money? In the event of a terrorist attack, it will be as difficult to access my self traded investing account, as it would ING, so why worry about that?

#9 Garthlover on 04.24.09 at 11:26 pm

Garth, You have a responsibility to divulge more than just this:

“…Having said this, you need to keep your money somewhere. Investing it is a good idea in securities which are stable, predictable and generate decent income (believe it or not, there are many)….”

More info please, and thank you

#10 Munch on 04.24.09 at 11:32 pm

Buy gold (South African Kruger Rands)

Oh, and check this out –



#11 Munch on 04.24.09 at 11:33 pm


This is REALLY weird!

#12 Terry on 04.25.09 at 12:58 am

Here is the Mormon food amount storage calculator … minus the canned squirrel stew

#13 $fromA$ia on 04.25.09 at 1:08 am

TD offers 4 seperately underwritten accounts. so your good with 4 $100k accounts.

Unfortunatley at 30 days for .8% it looks like they don’t want your money unless your willing to invest in their stock which is really looking like a dividend trap!!!

#14 . . . fried eggs and spam . . . on 04.25.09 at 1:29 am

“. . . the economy will worsen considerably before it gets better. Unemployment levels will remain sky-high years after the GDP has started to expand again. . . current government spending in most countries will lead to the triple wealth-busters of higher rates, higher inflation and higher taxes.”

Chances are I’m a weirdo-conspiracy / lunatic fringe theorist, but re: the links below, about a planned pandemic of swine flu being used to decrease the population, thereby decreasing govts.’ responsibility to pay CPP / OAS / OAP, along with Social Security in the US?

After all, the US and Canada are effectively broke, so why are taxpayers paying to keep troops fighting illegal wars in unnecessary places?

Don’t forget, there are multitudes of people who are retiring in the middle of the next decade, either planned or forced to because companies have gone belly-up, can’t sell their McMansions to fund their retirement, etc.

Having a pandemic would be a very easy way out for govts. to deal with people who have lost almost everything, and have nothing left to lose.
In keeping with what I posted about the Telegraph saying that maybe it was time to move on, go to a different part of space as the UK has gone into hibernation for the time being, more evidence! —

The Fed closed the doors on American Southern Bank in Georgia, boosting the number of failures this year to 26 — more bank closures than in all of last year. The banking system in The Imploding States looks marvellous, wot?!

Today class, for your test you ask then answer the question! A clue to help y’all with the whodunit and how we got here. —
One way to significantly reduce the population of any country is to have a planned major pandemic, especially if there is not enough vaccine to go around (how convenient).

What’s more, there are no jets flying into buildings, no suspects to chase after, no false flag ops. done prior and sheeple end up getting caught with their knickers in a knot. So, cue the latest.

Third link is from “Given the reports of the possibility of a swine flu epidemic, it is interesting to note that last time there was a significant outbreak of a new form of swine flu in the U.S. it originated at the army base at Fort Dix, New Jersey.”

Webmaster’s Commentary: “That is interesting, because the misnamed “Spanish Flu” first appeared at Fort Riley in Kansas.”

“It is the function of the CIA to keep the world unstable, and to propagandize and teach the American people to hate, so we will let the Establishment spend any amount of money on arms.” — John Stockwell, former CIA official and author

#15 Lance on 04.25.09 at 1:53 am

“It also means there isn’t enough money lying around Ottawa (something north of $60 billion) to pay out the difference.”

Sure there is. Fire up the printing presses.

#16 rory on 04.25.09 at 1:55 am

“CAW agrees to major cuts in deal with Chrysler…
the union’s concessions include; reduction in paid relief time, cuts to supplementary unemployment benefits and prescription drug fees, removing semi-private hospital coverage, the employee car purchase benefits, tuition rebate programs, among other cuts.”

What the !!!! …Am I nuts or is this just vanilla coating …I don’t see a number here (-$19) or the CAW giving in…is just smoke & mirrors…goodbye Chrysler.

Bottom line ….I really don’t care as long as my tax $$$ are not at risk ….yeah I know I am a dreamer.

#17 Two-thirds on 04.25.09 at 2:24 am

A bit of humour for the weekend.

Check out a web legend responding to emails from visitors to his site:

#18 dd on 04.25.09 at 3:55 am

Jim Rogers quote:

Is Gold a Good Store of Value?

Gold has been one of the great mystical elements of finance for hundreds if not thousands of years.

Back in the seventies its price went through the roof. Investors were sure all paper money was going to lose its value. However if they had done their homework and tracked the price of gold back through the centuries, they would have seen long periods when its price went down and stayed there, or did not move up with other prices.

Later on gold would catch up, but then so would wheat, so would lumber.

For centuries gold`s true believers have said that gold alone is a good store of value. On the other hand, over the centuries a lot of things have been a good store of value, including wheat, lumber and iron ore.

#19 Sean in E-Town on 04.25.09 at 5:50 am

I for one would rather put my money into companies that sell me things I actually buy instead of gold: Food, Electronics, Energy, and, yes, eventually, when the time is right, housing.

#20 kc on 04.25.09 at 7:16 am

Can anyone comment on this article about Toronto’s crashing condo market? pure propganda? fluff, or is there truth to the booming renters that are gobbling up these places?


The New Rental Frontier
Condo owners who can’t sell their units are morphing into landlords to ride out the storm. The good news? The rental market is hopping

#21 lgre on 04.25.09 at 9:22 am

kc – this is the only paragraph that matters in this article.

“For the better part of the boom, the fever to buy was like a pandemic. Renting was something we did until we could afford to buy—or (as was often the case) until we bought something we couldn’t afford. Now it’s not only a viable alternative to buying; it’s where the smart money seems to be going. This may be the beginning of the end of the homeowner imperative”

#22 Travis on 04.25.09 at 9:37 am

FDIC Bank Failures – 29 and counting…

#23 eddy on 04.25.09 at 10:21 am

general interest tax court article about gold, gst, definition of a ‘financial instrument’, scroll down to

Bombay Jewellers Ltd v Canada;

#24 Kash is King? on 04.25.09 at 11:01 am

I still think a balanced approach is prudent, ie: a mix that includes a set percentage of gold & silver…. just like a central bank.
I’ve elected to go with the physical in-your-hands approach, and am contemplating upping my percentage a bit.
Also important, is some paper money at home, so like Garth says if the power is out, you have some actual money on hand, and money that the majority understands ($bills).
Here’s a couple of good reads on gold:

Gold – The Yuan Goes Global – Consequences!
By: Julian D. W. Phillips, Gold/Silver Forecaster – Global Watch –

GATA’s Credibility Soars On China Gold Buying News

By: Bill Murphy, Le Metropole Cafe, Inc

#25 dd on 04.25.09 at 11:10 am

#20 kc

“Can anyone comment on this article about Toronto’s crashing condo market?”

Most of the time it is the industry spin on the positive. Really, who wants to be a landlord.

#26 dd on 04.25.09 at 11:15 am

#4 canadian citizen

“Seems like the chinese have been secretly accumulating gold and are now the 5th largest holder of gold.”

They are buying a lot of things. Gold is one. How about coal? Copper? Tin? Wheat? Zinc?

#27 Sun Yat-sen suit on 04.25.09 at 11:59 am

The death ratio in Mexico is currently something like 68 to 1080 infected < 10%.

#28 Just a Carpenter on 04.25.09 at 12:09 pm

#20 KC
True or not the speculators caught in the crisis and now trying to rent out their units are going to be faced with GST and Tax issues relating to the “change in use” of their units. I hope they discussed this with their accountants.
While the numbers don’t work to buy rental properties at today’s market value, (banks require 1.25x expenses =income) only those who have been in the game forever will survive. Other than those using their assets to leverage other investments most owners are not affected by the value of their asset, inflation and vacancy rates are the factors.
All the newer buildings the article speaks of were designed as “owner occupied” buildings. Rental units are generally subject to an increased rate wear and tear creating a situation where the building could eventually become a less desirable place to live and the strata fees and special levies increase to the point where any net income becomes a net loss. So for the time being we will see an increase in vacancy rates, possibly lower rents, and a decrease in maintenance levels culminating in these units being foreclosed on and dumped onto the market for the vultures to feast on.

The interesting scenario is that while in crunching numbers renting may win over owning, what happens when you factor in quality of life? I do not desire a life locked in a rental bunker polishing my gold bars. I much prefer owning a nice home in a nice neighborhood spending my weekends in my garden or walking the dog stopping every few minutes to chat with my neighbors. Judging by this picture ( I am not the only one!

#29 CM on 04.25.09 at 12:26 pm

Since I can’t comment on, I’ll do it here.

Bravo! Bravo! Bravo!

(That picture of Stevie from the “Sheeple” link above will haunt my nightmares.)
Ex-MP Turner casts Harper as bully in new book

#30 CM on 04.25.09 at 12:51 pm

Re the CTV link above about “Sheeple”:

Korn Kob Kory’s reply “Garth who?” when asked about the book shows remarkable ignorance.

Imagine the HarpoCons pouring all that money, time, influence and all those dirty tricks into defeating Garth in the last election and then forgetting who it was they were trying to get rid of.

Remarkable lack of fiscal responsibility (and brain cells).

I’m shocked. Shocked.

#31 EcoInsurgent on 04.25.09 at 12:54 pm

So the death rate is currently around three times greater than the 1918 Spanish flu that killed about 50 million people?

#32 Some Guy. on 04.25.09 at 1:02 pm

“…Having said this, you need to keep your money somewhere. Investing it is a good idea in securities which are stable, predictable and generate decent income (believe it or not, there are many)….”

More info please, and thank you


#33 null on 04.25.09 at 1:05 pm

According to the 2007 Annual Report, CDIC has $1.6 billion CAD in assets to meet insurance claims on failures. This amount represents 0.34% of total eligible deposits at member institutions.

“The CDIC’s assets are insufficient to pay for the failure of any of the 14 biggest banks in Canada (CDIC annual report 2007, p 23), where Canadians have most of their money. In this eventually, CDIC would have to tap the financial markets for additional funds or receive the required additional funds from the Government of Canada. It is not clear whether the Government of Canada is legally bound and obliged to rescue a crown corporation such as CDIC, but there is a tacit assumption that failure to do so would be unfeasible politically.

The CDIC member institutions with the most insured deposits are the Big Five. The 2007 Annual Reports for these banks indicate the following total deposit liabilities, although not all deposits are CDIC insured.

* Royal Bank of Canada with $365 billion in deposits
* Bank of Nova Scotia with $288 billion in deposits
* Toronto-Dominion Bank with $276 billion in deposits
* Bank of Montreal with $232 billion in deposits
* Canadian Imperial Bank of Commerce with $232 billion in deposits”

#34 Gord In Vancouver on 04.25.09 at 1:25 pm

Garth – your blog is turning into a daily habit.

Too bad we can’t identify the Canadian financial institutions that issued most of the mortgages to Calgary, Fort McMurray, Kelowna, and Vancouver homeowners during the 2004 to 2008 housing bubble.

#35 Ken on 04.25.09 at 2:03 pm

Keep your assets in canadian currency for the next number of years. Safe and secure.

#36 Canned Goods and Buckshot on 04.25.09 at 2:12 pm

Good article by former IMF chief economist Simon Johnson on the American banking system and why it needs to be radically changed:

#37 Nostradamus jr on 04.25.09 at 2:56 pm

(This is a friends post, after interviewing me of course)…

>>>Economy: Don’t Look Now, But The Worst Is Over<<<

…to dd, his six other monikers on this site, who, like a dummy, sold his bachelor condo for a 50%, $150K loss and is now renting the penthouse of a sub, sub basement apartment in Calgary….this post is for you.

#38 john m on 04.25.09 at 4:38 pm

Off the topic of this blog ………BUT your the MAN Garth….i laughed my ass off over the comments about “sheeple” :-) ..You walked where no politician walked before and you make me proud to be a Canadian…Your simply the BEST!

#39 Too Old Bob$ on 04.25.09 at 5:22 pm

“Each of the Big Five banks has about $15 billion in savings and personal chequing accounts on deposit – money But those same banks have on average less than $2 billion in cash, which means if there were a run on a bank, nine out of ten people would be SOL.
It also means there isn’t enough money lying around Ottawa (something north of $60 billion) to pay out the difference.”

This may be true, but the solution to remedy the problem is simple. If a “run on the bank” ever happened, they would just do what the Mexicans did and continue to do….devalue the dollar. Lets say 10 -1 or whatever would work to try and keep order. Of course there would be riots, chaos and out come all the unregistered guns, but hey! maybe you won’t get your $100 bucks, but $10 is better than nothing.

BTW! that picture of you at is awesome. It’s like: “OK! you bastards, (use arnold voice here) I’ll be back” :o

#40 Glenn on 04.25.09 at 5:33 pm

#4 canadian citizen on 04.24.09 at 10:42 pm –

“One thing is for sure, the chinese are not stupid and they understand gold’s purpose in the financial system.”

No no no…China is clearly a pack of gibbering, delusional gold bugs that need to take their meds and seek psychological help immediately!

Thus is the gospel of Saint Garth!

#41 Kash is King on 04.25.09 at 6:05 pm

#33 null, that’s a really good question. Who would bail out the CDIC…. “The Crown” or the Canadian Gov’t?

#42 RJ on 04.25.09 at 6:11 pm

Provocative language. Rock, scissors, paper, and all that. I like gold scissors.

Having zero debt will really change one’s perspective. I mean, if all one’s spending is discretionary, who cares? All I really want in a currency is to trust the people in charge of it. The rest, including money being a store of value, will take care of itself.

That being said, I had forgotten this is a loyalist (Canadian) blog, and you’re probably referring to the loonie, in which case I am more inclined to concur.

#43 David Bakody on 04.25.09 at 7:20 pm

May sound like a broken record but I will continue to do as I did before the crash …. pay down debt, sit pat and save wisely. As Garth has wrote and mentioned there are many ways. My primary bank is CIBC …. hello if Chrysler and GM can get cash I think the big banks are safe, my secondary is TD to which I plan to try and save more there, every little bit helps. Keep it simple.

#44 WakeUp on 04.25.09 at 7:55 pm

#14 . . . fried eggs and spam

At least you know what you are…

#45 Jeff Smith on 04.25.09 at 7:55 pm

#31 EcoInsurgent on 04.25.09 at 12:54 pm

So the death rate is currently around three times greater than the 1918 Spanish flu that killed about 50 million people?

Weird, Mexico is also a Spanish speaking country. I wonder if there are any connections between the two pandemics. If it spreads to Canada, I think I will flee up to Nunavut, population is sparse, good place to ride out the plague.

#46 . . . fried eggs and spam . . . on 04.25.09 at 10:00 pm

#44 WakeUp at 7:55 pm — “At least you know what you are…”

Indeed I do. Bear in mind that I’m continually off my rocker, and it’s taken a long time for me to find myself, but that’s fine as time, like ‘most everything else here, is completely irrelevant.

A few links pour vous . . .

First is from Oct. 2005 — — Second is also interesting —

#47 VFC on 04.25.09 at 10:00 pm


A colleague at work is currently renting in a part of Toronto that you talk about frequently (and used to reside in). The lease will come up in several months and he is considering buying or extending the lease if possible. His complaint is that there are not too many homes (for sale) in the area to choose from. He has read your book and tends to agree with you.
Any nuggets of wisdom to share on this situation?

#48 Please.Use.Other.Door on 04.25.09 at 10:33 pm

#45 Jeff Smith –

#49 Charles on 04.25.09 at 11:16 pm

The following is from the web page of CBC radio’s Cross Country Checkup talk show program:

“On Cross Country Checkup …pension protection

Anyone who has ever dreamed of an old age secured by a comfortable pension, has to be worried nowadays. The recession has delivered a hit to many pension hopes. The question is …should governments backup those pensions in trouble?

What do you think?

Do you depend on a company pension that might be in trouble? Have your RRSPS lost value? Do you have no pension? Are you a young working person who doesn’t relish the thought of paying more for people who perhaps should have put more aside for their own future? Can the government afford to backup all pensions?

Join host Rex Murphy, Sunday on Cross Country Checkup”

This program runs on CBC Radio One from 4:05 – 6:00 PM Sunday April 26. It should be interesting to hear the views of Canadians on this topic.

Cross Country Checkup

#50 Fearing on 04.26.09 at 12:09 am

Nice advertorial Garth. When is the book signing?

#51 gold bugger on 04.26.09 at 2:26 am

I can’t speak for other gold proponents, but I look at it as a storehouse of value. I assume – and history backs me up 100% – that the people in charge of printing paper dollars will do so relentlessly, until those paper dollars are completely worthless.

If others feel silver or oil or wheat or real estate or fine art are a better storehouse of value, fine. But if you can’t tell the difference between gold/silver and the others, you need to read more.

As a workaday currency of exchange, of course gold has its drawbacks. Silver has a distinct advantage in that regard. But the premium you pay to buy silver vs the premium on gold at the Bank of NS is outrageous (anywhere from $10-25 on a thousand-dollar gold coin vs $2 on a $10 chunk of silver). It’s cost-prohibitive to accumulate silver under that circumstance.

The more likely scenario in the case of an extended bank holiday or a complete breakdown of the financial system would be a return to local currency or a barter system. In that scenario, the guy who can fix a car is the most valuable member of your community. And your backyard vegetable patch is your food AND your currency.

#52 squidly77 on 04.26.09 at 2:29 am

#53 David Bakody on 04.26.09 at 6:26 am

Off to a Tim’s outpost …. it’s Sunday eh. Well Garth all is well in Ottawa ….Carney just found religion in Washington ….. for now appears all will be well once again by the fall of 2009! OMG are we deeper in debt than load of 16 Tons of Coal.

#54 Nostradamus jr on 04.26.09 at 8:06 am

$1.5 million = A room with a view

Home .ca/Toronto Star

Toronto (Centre of the Earth) is more expensive than Vancouver…

#55 Nostradamus jr on 04.26.09 at 8:40 am

the Next Great Bubble…

>China is suffering from Late Stage Growth Obesity.<

#56 Kash is King on 04.26.09 at 8:42 am

#51 gold bugger, yes silver has a high mark-up relative to spot, but it’s jmho that spot has been held artificially low.
Here’s some real live price discovery, and silver always seems to have that same high premium relative to spot:

#57 OttawaMike on 04.26.09 at 11:06 am

I’m glad to see the news of the Oliphant/ “Karlheinz Scheise” inquiry is being relegated to a small section of the inner pages of the nation’s newspapers.

We all get it: Mulroney took lobby money under questionable circumstances and bad judgement.
Can’t we all just leave the guy to a peaceful retirement?
From what I have heard his health is still not 100% either.
The Harperites are all in a tizzy as well, not knowing whether to burn the former PM at the stake or embrace him.

#58 josh on 04.26.09 at 11:32 am

Silver is hard to get your hands on if buying large amounts,you can buy large amounts just plan on waiting 3 to 4 months,

#59 Grumpydawgs on 04.26.09 at 2:33 pm

I have found that my large cap gold mutual funds have held up and bounced back better than most other equity fund types. I used this strategy for the RESP that I manage for my kids UNI RESP’s. I was also fortunate to put a large portion into cash that of course hasn’t been hit in the extreme downturn. That porfolio resembles one that a person of eighty would have, but it has worked well in this down turn.

#60 Too Old Bob$ on 04.26.09 at 3:14 pm

Who says there is no money in Detroit!

The Detroit Lions signed a “21” year old Matthew Stafford to a 6 year $72 million contract. Guaranteed $41.7 million with a possibility of incentives that could lift it to $78 million dollars. Wow! no recession here. I guess there’s more money out there then we thought. Think of how many $300-$400K houses this could buy.
So where does a guy like this put his money. Which Bank would he use, what Squirrel hole in a tree is safe?

BTW! if you were in a life threatening car accident and a Doctor or a NFL player arrived on the scene. Which one would you want to talk to or help you. Makes you shake your head, well at least mine. :(

#61 Live Within Your Means on 04.26.09 at 3:39 pm

Swine flu outbreak – 4 cases, IIRC, confirmed in NS. Those kids are from Kingshill Edgehill in the valley where parents pay big bucks to have their kids attend. I know 2 families who sent their sons there – to straighten them out. Also 2 confirmed cases in BC, in addition to Mexico, US & NZ. Scary.

#62 jess on 04.26.09 at 4:20 pm

birds of a feather

Perot –
preaching fiscal responsibility and warning the public meanwhile what was his fund in Bermuda up to?

Peter Peterson, a Republican financier who made a fortune doing corporate takeover deals at Wall Street’s Blackstone Group, is the Daddy Warbucks of the “fiscal responsibility” crusade. He has campaigned for decades against the dangers that old folks pose to the Republic. Now 82 and retired, Peterson claims he will spend nearly one-third of his $2.8 billion in wealth–he ranks 147 on the Forbes 400 list of richest Americans–alerting the public to this threat (leave aside the fact that old people have already paid for their retirement or that Social Security’s modest benefits are equivalent to minimum-wage income). The major media treat him adoringly. Most reporters are too lazy (or dim) to check out the facts for themselves, so they simply repeat what Peterson tells them about Social Security.

#63 Jeff Smith on 04.26.09 at 4:47 pm

OK everyone, since the financial crisis ain’t enough, we are officially gifted with another Spanish(mexican) flu.
Time to stop eating pork.

#64 Got A Watch on 04.26.09 at 5:26 pm

Two-thirds – It all depends on your risk tolerance, and how bad you think this crisis is, and how long it may last. There are so many variables that it is hard to give investment advice without knowing more about your situation.

If general terms, if you are not a trader or investment pro, it makes sense to have 5%-25% of your investment capital in precious metals related sectors. Whether that is physical coins, bars, or an ETF or a paper certificate, or mining company shares…you have to decide based on what your goals are, and how much you want to risk.

If you just want to “forget about it”, then the coins, and hiding them somewhere safe (not under the mattress, or in a Bank safety deposti, more like buried in the backyard) is the best option. But coins have a premium cost, so pick the coin carefully. Canadian Maple Leafs are a world standard 1 oz gold coin, just don’t take them out of the plastic protectors, they are 99.99% gold and you can damage the surface just by handling them, which hurts the resale value.

If you are in or near a big city, check out local coin shops and bullion dealers. Or go to Scotia Bank, they own Scotai Mocatta, a metals dealer, and they can deliver product to alocal Bank branch for you to pick up.

If you want to invest in spot priced metals, I use the Royal Bank, where their Direct Investing brokerage sells gold and silver certificates for low commission. I trade in and out though, not for a long term hold. The ETF’s GLD and SLV are paper metals as well, for trading. You can buy options on them (put and call) to hedge your other metals holdings, if you need to hedge. Trading futures contracts is for sophisticated traders only, I don’t recommend it for anyone else.

Now when I say risk, gold and silver are not going to zero, unlike shares in a bankrupt company, but they may fall 25% or more before they rise, they are always volatile and not for the faint of heart who agonize over each small price movement. If you are like that, just buy Canada Savings Bonds.

As to stocks, I own none right now. I day-trade them, or short-term trends, usually with options, but I do not hold. One day, when I see what seems to be a real bottom, but not yet. We have more bad news ahead, earnings will fall, so will valuations.

In a longer term perspective, precious metals like gold, silver and platinum, are known as the monetary metals for good reason. They are just another currency, in effect, in which to hold stored value. They do well in times of crisis, and inflation, and even in deflation they will hold their value better than most paper assets. In a time of prosperity and/or high interest rates, people lose interest in precious metals.

There will be a time to buy stocks again, and even real estate, looking forward to some sort of economic recovery. The pendulum always swings back. When we resolve this crisis, which will happen over enough time, probably 5-10 years.

This is just all my opinion, do not invest on what I say, do your own research. If you need websites, I can recommend some. For the best investment advice, consult an astrologer, try Madame Rosa.

#65 Got A Watch on 04.26.09 at 5:43 pm

“TD offers 4 seperately underwritten accounts. so your good with 4 $100k accounts.”

Yes, but Canada has 6 big Banks. Why put all your eggs in one basket,unless you have north of $600,00K cash to spread around. Remember “Investment Accounts” are guaranteed by a private insurer, not the Government, it’s only ca$h in Bank accounts that is “Deposit Insured” by CDIC to $100K:

” A Accounts that are eligible—for example, savings, chequing and GICs of 5 years or less.
Held at…
B Banks and other financial institutions—insured deposits must be held at a CDIC member.
And held in…
C Canadian dollars—U.S. dollar and other foreign currency deposits are not eligible.”

Now if things go really bad, I believe the Government would have no choice but to print the money to bail out personal depositors, but that would hammer the currency value. But they would have to have some limit, I would think over 250k you would lose it all. And they give you back $, which would be probably worth less.

Cdn Investor Protection Fund up to $1M for investment accounts, but it is not explicitly Government backed AFAIK.

Burying the gold in the backyard, now that’s insurance. Just don’t tell anybody, or be seen doing it.

#66 Rob in Onterrible on 04.26.09 at 5:48 pm

Well, money is just paper with pictures of dead people on it. As such, the printer can add zeros as inflation rises. Gold can’t be created that easily and that is why it is used as money.

Here’s why I like gold: Only two people that I know of predicted the big Autumn stock market crash of 2008 and these are: Gerald Celente and Bob Hoye. Both of these people are gold bugs and see a DEPRESSION coming so you can ignore them more or pay attention.

#67 Lorraine on 04.26.09 at 6:10 pm

Dear Garth,

I was watching Sunday CBC news on Sunday, April 26, 2009 and you were on the show.

FINALLY, someone who speaks up and tells it like it is!

I strongly believe that there is something like the “good old boys club” in Parliament.

I can’t help feel that the new President of the United States is dealing with some of that to.


Finance Minister Jim Flaherty and also Bank of Canada Governor Mark Carney must have been told to tone their forecasts down by Mr. Harper as they were all saying things that weren’t so about the economy. We are GLOBAL or didn’t they hear of that?

We have televisions and the economists weren’t saying the same thing as those fellows.

They were later on TV changing their tunes, all three.

You’re one of the good guys, you really care about the rest of us, and I say THANK YOU!

#68 Two-thirds on 04.27.09 at 12:01 am

# 39 Too Old Bob$

“they would just do what the Mexicans did and continue to do….devalue the dollar.”

You must be truly old, as even the oldest folks I know cannot tell me how the heck Mexicans can possibly devalue the (US?) dollar!

I thought it was the other way around, Dollar vs. Peso…

#69 Davinci on 04.27.09 at 12:27 am

If you don’t understand gold and gold bugs, that’s fine. Just get 10% of you net worth in gold and keep it on you. Then thank me later.

With that said, thanks Garth for providing me with more proof as to why it’s good to be 100% in gold and silver, safe and away from the banks.

Also you may want to check your facts, in 1996 both the United States and Canada went to a ZERO reserve requirement for banks. This info is not widely known for obvious reasons, but you can look it up.

I am glad to be a new gold bug, why? Because what bothered me was I wondered why did I need to gamble my money away on the market for my retirement? I just did not get it, why can’t I just save my money? This was the question I asked my self over and over again and did not find the answer.

Then gold came along and explained it to me, I was not holding money.

So eggs can be $100 or $1 when I retire I don’t care because I have gold and it will be worth $55,000 or $500 as prices are always relative to everything else in a paper money system. Also if the government screws up and prints to much taking us into hyperinflation, oh well, to flipping bad for you if you don’t have gold as insurance.

#70 Future Expatriate on 04.27.09 at 12:43 am

#4 and #5… thanks for posting those links about China increasing its gold reserves. I tried posting them four times and finally gave up.

#71 Slice on 04.27.09 at 11:39 am

re: the Toronto Life condo landlord article – You have got to be kidding, right? Go out and pay $250,000 to $400,000 for a condo and get back $1300 a month rent. Monthly maintenance costs range from $300-500 so you are only getting maybe $800-1000 monthly rental income before other expenses (like tenants not paying you rent).

All this for an asset that is going to drop in value over the next two years, and then flatline for the next five years.

There are over 30,000 condos in Toronto alone under construction and many were bought by speculators that never planned to complete the deal – they were going to flip them to you for a higher price. These condos are going to flood the market in the next year so sit back and watch the prices drop like a stone.

Like so much in the media these days, this article appears to have been written to support the earnings of the real estate industry and does not reflect current market conditions.

This is what is driving young people away from the media we were used to sourcing for our news. Far too much of the incumbent media have become real estate industry shills and now they are paying the price.


#72 smwhite on 04.28.09 at 10:59 am

What a great way to implement “protectionist” measures, pandemic…