Canary in a Gold Mine

November 25, 2014 - Some truths are difficult to point out, especially when your love of something complicates it more. In this case, my love of the north and wanting it to succeed is being undermined by the rest of the world falling out of love with our resources.

First it was the lumber, pulp and paper industries, then the more recent downturn of industrial metals but now our northern heart of gold is being broken. Gold prices are dropping significantly. In 2011, gold was hitting a high of 1,900 USD an ounce. As I write this in early November of 2014, it’s selling at 1,165 USD an ounce. At those earlier prices, the North benefited from a boom of new gold mining exploration along with new mines opening and older mines re-opening. With these new prices, the risk of job losses and closures in the gold industry are mounting as we hit the critical price point that makes it unprofitable for many gold mines to operate.

Is it time to warn of an impending storm? Do we batten down the hatches and dig out our survival plan? Unfortunately, I believe the answer is yes. In some ways it is the perfect storm that may be coming. Historically, we’ve had these cycles but we’ve been lucky with one resource like gold being up while other resources like forestry were down. This time it looks like forestry, industrial minerals and gold are all taking a hit at the same time.

There is hope that the surging U.S. economy will re-invigorate the demand for our resources but they are available elsewhere and transport across the oceans is now cheap, as many ships sit empty in ports around the world and fuel prices drop. Our strength may instead come from our dollar, which is also falling rapidly and will make our exports more attractive. Those idle ships sail both ways.

It’s career-limiting to work as a canary in a mine. Messengers of all kinds tend to get shot or die in other unpleasant ways. Before my fellow northerners wish something loathsome for me, I want to say that I was born and raised here. With that comes the belief that we will continue to move forward in future up-cycles. But for the time being, I think our survival plan needs to include a heavy dose of economic stimulus. This brings me to the subject of a transportation link to the Ring of Fire. That link (or links) will require a long time to build, so let’s start now.

One of my favourite quotes is from a president who was also shot for being a messenger: “The time to repair the roof is when the sun is shining.” Likewise, an overland route to the Ring of Fire needs to be in place and ready for the next up-cycle. The time to build is before it’s needed.

Authored by Rick Millette, the Senior Executive Director for the Ring of Fire at Northern Policy Institute.

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