The Case For Investing With Canadian Silver Maple Coins

 

Recently I picked up a few Canadian Silver Maples on a whim.    Nice looking coins.   I don’t have much for or against Queen Elizabeth but I guess her “entrance” into the Olympics opening ceremony was endearing.   The maple leaf on the back looks cool though.   The simplicity of the design and the silver makes me think of ice and crisp weather, which Canada is known for.

Many silver investors prefer government minted coins, particularly US silver eagles.   There tends to be a slightly higher markup on silver eagles than some privately minted bullion.   Eagles can be put in an IRA (I don’t know why you would want to do that, but yeah, they can) and one of the other selling points of US eagles is that they have a face value of one US dollar so as long as the dollar exists and let’s say a large meteor made of pure silver makes a soft landing on Earth and brings the market done to nothing, the silver eagle will still maintain some value.  Many people say the same thing with pre-64 US silver coins (aka “junk silver”) for the same reason – they’ll always have their face value at the very least.

I didn’t realize it until I held the Maple Leaf in my hand, but the coin has a face value of five Canadian dollars.  The markup on Maples is sometimes slightly lower than US Eagles, which only offer a one US dollar face value.   That means that if you bought a silver maple today for approximately $30, your investment would be backed by five Canadian dollars, which is worth about five US dollars today.   That’s 18% backed up by currency, which isn’t a bad little “safety net” should the silver market completely fall through.     The Canadian dollar is a currency that many investors like as well, being as their economy is heavily based on commodities.

Most of us that invest in silver do so because we believe that it’s a hedge against inflation, government mismanagement of economies and/or believe that there’s a genuine upside potential due to supply and demand.   I don’t believe that the silver market will drop to a point where you would rather have the face value of silver coins, but going with Canadian Maples provides a notable amount of “insurance” in the way of face value over Eagles for a similar, if not lower price.    It’s just something to consider when making silver purchases…

See also Investing in Silver 101


 

Iceland Discussing Adopting the Canadian Dollar?

 

This isn’t exactly a new story, or even one with a lot of substance at face value, but the idea of Iceland adopting the Canadian dollar as their currency has been openly discussed

http://online.wsj.com/article/BT-CO-20120302-710764.html

The significant thing here is that Iceland geographically sits (approximately) halfway between the United States and mainland Europe – home of the dollar and Euro – the world’s two largest reserve currencies.   Iceland isn’t a member of the EU, but still has  economic ties with the EU as a member of the European Economic Area.   It would seem as if Euroization or even dollarization of their economy would be the most likely choice.   Hell, even the British pound (the world’s 3rd largest reserve currency – but far behind the Euro) or even giving a nod to Iceland’s former colonial masters Denmark and adopting the Danish Krone would make sense, but the Canadian dollar?

Right now the Eurozone is certainly in trouble and many people around the world are beginning to have doubts about the long-term prospects of the US Dollar.   Iceland has been burnt before (as I briefly mention in this post) and would be prone to seeking stability.

Like every other country in the world, Canada isn’t perfect, although sometimes it’s romanticized as such by doe-eyed Americans and even some of her own citizens.   Canada does however have a pretty decent economy based on commodities.   There’s lots of oil, natural gas, metals, minerals, wheat, cattle, timber and fish up there.   Canada has a lot of intrinsic worth due to the abundance of resources and it’s likely that their currency will hold value as the dollar and euro decline.    Personally, I own stock in Calgary-based Encana Energy (natural gas – ECA on the exchange) and Iamgold (IAG) as my plays into Canada’s resources.

Although this story at this point isn’t a true issue, it does raise some questions about the future of the dollar (and the euro) and whether or not smaller nations will seek out other currencies or precious metals as reserve currencies.   This would affect us in the United States by decreasing demand for our currency and possibly seeing a flood of dollars return home and thus cause inflation.    At this point it’s not out of the realm of possibility to expect to see the Chinese yuan begin to dominate Asia and perhaps part of the Middle East and Africa.   I wouldn’t be surprised to see the Brazilian Real have a little more pull in Latin America as their economy takes off.   We should start making preparations to deal with the decline in value of the dollar that would happen should competition among currencies increase.