Investors are dumping the currency because the Canadian economy is widely perceived as commodity-based and export-oriented at a time when commodity prices are depressed and export markets are sluggish.
Cost pressures are increasing, thanks to higher commodity prices and tighter labour markets (American unemployment is at a six-year low).
Critics argued that most of that money would simply find its way into commodity markets, inflate prices and add inflationary pressures.
The maker of tractors and other heavy equipment said that higher oil and commodity prices and a sluggish recovery in developed markets will remain challenges in 2011.
FORBES: Caterpillar Posts Record Quarter As Global Demand Grows
Perhaps one of the most representative companies of the global economies, Caterpillar posted fourth quarter earnings before the bell on Thursday, more than quadrupling profits and forecasting a better 2011 on continued demand from emerging markets and continued upward momentum in commodity prices.
FORBES: Caterpillar More Than Quadruples Profits On Global Economic Recovery
"This is a perfect storm: banks failing, stock markets declining and commodity prices dropping, " Nelson says.
The case for buying now begins with knowing that, as the U.S. and the global economies recover, emerging markets like Mexico and Brazil will benefit because commodity prices rebound early in a recovery and these countries are commodity exporters (oil, coffee and iron).
Commodity prices are generally cyclical, and forecasts for emerging markets remain relatively positive.
Similarly, the strength in Latin America and other emerging markets has a lot to do with surging commodity--and especially energy--prices.
What the gold market and other commodity markets are more likely worried about at present is price deflation, amid falling commodity market prices and worries about worldwide recession.
FORBES: Comex Gold Ends Sharply Lower amid Firmer U.S. Dollar Index, Weaker Crude Oil
The lower oil prices weighed on the precious metals and many other commodity markets Monday.
FORBES: P.M. Kitco Metals Roundup: Comex Gold Ends Weaker On Consolidation, Lower Crude Oil
Meanwhile, the collapse in commodity prices was another example of what happens when markets become overbought, and investor sentiment reaches extremes of bullishness, as was the case with commodities.
It is still a delicate horse-race, as companies are facing rising commodity prices and marketing costs that will push against their abilities to break into new markets and expand.
FORBES: To Invest In Consumer Staples, Prepare For Slower Growth
Brazil, Chile and Mexico have all seen their economic prospects brighten during the past year as commodity prices rose, rich-country economic growth strengthened and private capital flows to emerging markets resumed.
In my view, even if demand for commodities from Developed Markets softens for the balance of the year, demand for commodities from Emerging Markets should help to compensate and prevent any material reductions in commodity prices.
Crude oil prices traded higher Monday and that also helped boost the precious metals as well as other commodity markets.
Crude oil prices are trading higher Wednesday morning, which is also bullish for the precious metals and other commodity markets.
FORBES: Comex Gold Gets Boost From Coordinated Central Bank Move to Boost Liquidity
All of these cleantech companies are building not geographic monopolies for which few alternatives exist, but commodity conversion businesses, whose economic viability is exquisitely sensitive to shifts in both feedstock prices and energy alternatives across global markets.
FORBES: Infrastructure Follies: Railroads, Cleantech And Crony Capitalism
That news pressured the U.S. stock indexes and the commodity markets, supported the U.S. dollar index and in turned pressured gold and silver prices.
FORBES: Comex Gold Ends Lower On Corrective Pullback, Consolidation
Crude oil prices are trading slightly higher Tuesday morning and that is also supporting the precious metals as well as other commodity markets.
Crude oil prices are trading sharply higher Monday morning and that is also boosting the precious metals as well as other commodity markets.
FORBES: Comex Gold Sharply Higher on Bargain Hunting, Short Covering, Lower U.S. Dollar Index
However, crude oil prices rebounded as the trading session wore on and provided a lift to gold as well as most other commodity markets.
FORBES: Comex Gold Ends Near Steady As Bargain Hunters Step In to Buy Weakness
The U.S. stock market and many commodity markets rebounded from weaker levels as the trading session progressed Thursday, which also allowed gold and silver prices to move well off their daily lows.
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