The relationship between the United States and Canada has always been complex and characterized by cooperation and contention. A lesser-known chapter in this relationship is the historical U.S. interest in annexing Canada. This notion, which seems almost fantastical today, was fueled by various geopolitical strategies and economic benefits perceived by the U.S. during different periods. While the U.S. has become the world’s financial powerhouse, with debt in both countries spiraling out of control, investors are looking to gold in these unprecedented times to protect their purchasing power.
Today, while direct annexation is likely off the table, economic dependencies and partnerships dominate discussions. Canada’s financial struggles, such as those experienced during commodity price fluctuations and external trade pressures, could increase vulnerability to economic dominance by the U.S. during this period. However, such a scenario remains unlikely due to strong national sovereignty and mutual economic benefits from peaceful coexistence and cooperation. Still, we live in unprecedented times, and as the below video highlights, the U.S. has attempted to annex Canada in the past.
The Rise of the U.S. as a Financial Powerhouse
On a recent trip to New York, Alex reminds us that the foundation of the United States as a financial leader can be traced back to the ingenious strategies of Alexander Hamilton. His decision to hold the first U.S. government bond auction in the late 18th century was pivotal, enabling the nascent republic to manage debts from the Revolutionary War. This bold move did not just resolve immediate fiscal woes but laid the groundwork for the development of the U.S. Treasury securities market.
Today, U.S. Treasury securities are a cornerstone of the global financial system, with about $27 trillion in outstanding debts and $878 billion traded daily. These figures underscore the U.S.’s unparalleled influence and role in global economic policies.
Persistent Inflation and the Era of Endless Money Printing
In recent times, the U.S. economy has been grappling with persistent inflation, exacerbated by policies that include significant money printing. The Federal Reserve’s strategies, particularly during administrations like that of Donald Trump, have focused on managing rising deficits and stubborn inflation through various means, including interest rate cuts.
While these policies aim at controlling unemployment and spurring economic growth, they also raise concerns about the long-term impacts of rising national debt and the sustainability of such fiscal policies.
Trump ran on cutting government spending, which will be hard, if not impossible, to achieve. The mounting cost of servicing this debt suggests a precarious balancing act between stimulating growth and maintaining fiscal prudence. Despite the US economy’s resilience and the markets continuing to trade to near-record highs, the foundation is built on a mountain of debt. Aaron and Adrian discuss the pickel America finds itself in today.
Val-d’Or and the Global Gold Rush
In times of economic uncertainty, gold typically regains its luster as a safe haven asset. This phenomenon is mirrored in the rising gold prices, which recently reached new all-time highs. For investors seeking leverage to gold, gold stocks are the obvious answer. Such economic climates often spotlight regions like Val-d’Or in Quebec, a legendary global gold mining industry hub. Nestled within the Abitibi Greenstone Belt, Val-d’Or has been a significant player since the Great Depression, providing critical economic boosts through gold mining. The region’s rich deposits remain a key area of interest during global financial instabilities as investors and governments turn to gold as a secure asset.
The U.S.’s ascension as a financial powerhouse, colliding with debt and persistent economic inflation, highlights the strategic importance of gold mining regions like Val-d’Or, Quebec. A compelling narrative of economic and political maneuvering is emerging. As the world grapples with these dynamic forces, investors must lean on historical contexts to ascertain the potential modern implications of these elements. Like in the 1970s, the U.S. dollar may continue on its devaluation path. In an era marked by financial volatility and geopolitical shifts, understanding these factors becomes crucial for policymakers, investors, and the public alike.
