Briefly:

(September 29, 2008) On January 2, Canadians will be able to deposit up to $5,000 in their tax-free savings accounts, but there’s no reason to wait until then to open the new account.

Scotiabank is letting its clients register for TFSAs now, though they won’t be able to put money into the accounts until the start of 2009.

“The TFSA gives Canadians another way to save and round out their financial portfolio,” said Barb Mason, executive vice-president, wealth management, Scotiabank. “We know that this investment tool is going to be a popular choice for Canadians next year, so we wanted to give them the option to open their account now and be ready to start using it come the beginning of 2009.”

Commodity Price Index falls for first time in months

The Scotiabank Commodity Price Index, which measures price trends in 32 of Canada’s major exports, fell by 8.9% in August, the first time it’s fallen in seven months.

Still, the All Items Index was 33.9% above where it was a year ago.

The main reason for the decline was a 20% month-over-month drop in the Oil & Gas Index. “The recent sharp decline in commodity prices, as well as the extreme day-to-day volatility, reflects as much the impact of U.S. and global financial market developments as it does actual world supply/demand fundamentals for commodities,” says Patricia Mohr, vice-president of economics at Scotiabank.

Mohr adds that a failure of U.S. investment banks and a widening credit squeeze in September increased concerns about American economic growth and, as a result, drove many exchange-traded commodity prices lower.

The Metals & Mineral Index also lost steam in August, despite reaching a record high in July. Broad-based declines in base and precious metals offset gains in uranium and molybdenum.

“Base metal prices, especially zinc and nickel, have lost considerable ground in recent months and will likely move irregularly lower over the next several years alongside slower global growth and new mine development,” says Mohr. “However, the decline will be more limited than in past business cycles, underpinned by stronger emerging market demand and double-digit capital cost escalation. Copper prices remain exceptionally lucrative, still yielding a 67% profit margin over average world break-even costs, and should outperform.

Potash also remains strong, as spot potash prices advanced from $763 per tonne in July to a new record of $802.50 in August and will likely rise to about $900 in the fourth quarter of 2008.

(09/29/08)

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.