Tony Lepage

UBS shareholders approved a $12 billion bailout from Singapore and the Middle East today. The bailout comes as UBS has stacked up over $13 billion in losses. The CEO, Marcel Ospel, described the current financial crisis as possibly the most difficult since the stock market crash of 1929.

It's becoming clearer to the public that we're entering a recession but I wonder how many will realize that a depression is likely on its way as well. It's time that preparations for a depression are made by us all.

Canada's finance minister, Jim Flaherty, might also see the writing on the wall. Canada is the only country in the G8 nations with a surplus and in 2007 we posted a trade surplus of over $11 billion. In October, Mr. Flaherty estimated that surplus would drop to $4.4 billion. The Harper government must see problems because this number was revised to $3 billion during the past week. Flaherty stated that we need to be careful to protect our surplus from turing into a deficit--the first time in a decade.

Our surplus isn't the only thing to start dropping either. The Canadian housing market is starting to slow and will likely mirror that of our southern neighbor. Prices have begun to decelerate in Calgary and I'm betting the over abundance of housing, as well as rising property taxes, will do the same to Toronto and other cities across the country. It's funny how experts are saying the housing market will cool, when there is a great chance we'll go the same way as the USA, England and other countries with a housing market crash of our own.

Inflation is quickly gaining speed. After years of Bush tax cuts and record breaking federal budgets, the excessive amounts of money around the globe are starting to come back into the US causing quick rising inflation. This inflation was hidden for the past years partly because of the outsourcing of cheap labour around the globe. On Tuesday, the government announced that the producer price index, or PPI, rose 1% and core inflation, as fudged as those numbers are was up 0.4%. Remember that the core inflation numbers do not include food or energy costs (both of which are rising much faster).

Gold has hit another all time high today of $967.70 per ounce. With inflation gaining speed we should see gold continue to rise more over the next couple years. In the short term, the IMF is planning to sell off some of its 3,000 tons of gold reserves. They have not set a date but it looks like they'll sell some 400 tons of gold onto the market. This should give an opportunity to buy some more gold at cheaper prices, but again, no date has been set and demand is obviously high.

It's best to avoid trying to time this gold bull market and just buy on dips. I know of many people who were waiting for gold to drop to lower prices only to see it continue to rise (now they wait for the price it was at).

The most important thing is to start preparing, stop spending and preserve any capital you have against the heavy inflation that could very well destroy your savings.