Issue link: http://resourceworld.uberflip.com/i/937377
96 www.resourceworld.com F E B R U A R Y / M A R C H 2 0 1 8 Epilogue by David Duval G overnment policies impact every- one in society from individuals to corporations – and sometimes well-meaning policies have the opposite impact from what was initially intended. Those with a somewhat more jaundiced view see money (i.e. tax revenue) as a driving force behind controversial initia- tives such as carbon taxes (see Epilogue in December issue) which are destined to increase costs for individuals and corpora- tions alike. Not that large revenue-focused corpora- tions are squeaky clean, given their ability to syphon money from consumers' pock- ets in multiple ways. Just recently Apple admitted to slowing down older iPhones – via an iOS update – in order to offset bat- tery degradation. In many phones, batteries are simply not replaceable by the owner. In Apple's case the only option for a dead battery is its in-house replacement service – at a price of course. With new iPhone models selling for over $1,000, one can understand the incentive for Apple to have consumers replace their devices every few years – perhaps with a little help from them. Computer manufacturers almost cer- tainly welcome upgrades to operating systems and other device driving software from companies like Microsoft which gen- erally slow down computers, creating the need for faster microprocessors and acces- sory devices. In the case of Apple – and media giant Google for that matter – most of their earnings are booked offshore and are not taxed in their host country. So the societal gains are at best tenuous, the exception perhaps being the high paid employment opportunities created by tech companies. Based on revenue generated per employee, there is no manufacturing industry that anywhere compares to these tech giants. However, their relative employment levels are nowhere near what you would see in manufacturing. In any event, the level of corporate malfeasance in today's society pales in com- parison to that imposed by government at all levels. At no time in my experience have I ever seen government policies being implemented that are so detrimental to national and regional economies. Housing in Vancouver and Toronto is among the highest in the world, largely due to low interest rates, permitting costs, shortages of trades people and offshore buyers. Canadians in general are heavily indebted and the recent trend higher in interest rates suggests problems ahead for leveraged home owners in particular. Early signs of a housing pullback in Toronto, which in some areas are 20% off their record highs, could be an early indication that the housing bubble is about to burst. With 2018 just beginning, it's hard not to wonder what the year ahead holds for everyone – especially for long suffering investors in traditional areas such as natu- ral resources. In some ways, today reminds me of the last few months of the tech bub- ble which burst in 2001. At the peak of that market, hundreds of Vancouver-listed mineral explorers were rushing to join the parade, promoting businesses such as online art sales and other bizarre market- ing concepts that were completely foreign to them. In one of the great ironies of my life, three of my long suffering mining stocks made the switch to tech and I man- aged to sell them right at the top of their trading ranges, a practice I never came close to mastering with an industry I actu- ally know something about. Go figure. Just recently, I noted one cashed up TSX listing, which had been searching for a project for over two years, announced plans to "become a merchant banking and financial advisory company focused on the small-cap market, with investments in the cryptocurrency and Blockchain sectors." Being a veteran of the minerals business, I can't help but think that the proposal might well coincide with a turnaround in the gold market which has performed admirably since the beginning of the year. In any event, I wish them luck. Compared to some of the wildest days in previous gold bull markets, the volatil- ity in cryptocurrencies is nothing short of mind boggling as are the risks going forward. It's easy to imagine that govern- ments at some point will choose to regulate this sector since it can provide a medium for criminal activity such as money laun- dering, etc. Just recently, South Korea's justice minister announced that his government is preparing a bill to ban the trading of cryptocurrencies. A more likely reason for countries to regulate cryptocurren- cies, however, would be the potential tax revenues. US Treasury Secretary Steven Mnuchin said he will work with the Group of 20 Nations to prevent cryptocurrencies such as Bitcoin from becoming the digital equivalent of an anonymous Swiss bank account. We are headed into unchartered waters in 2018, so put on your hardhats – the one with the light and battery pack. n Litany of issues outside investor control point to volatile markets in 2018