Loonie Under Pressure
Huntclubhero.eth@huntclubhero
+1.8%
since Sep 29
The idea
I think Canada's economy is in for a rough stretch, with housing, household debt, capital flight, and trade pressure all weighing on the loonie, a slide already showing up in the Australian dollar reaching parity against it. Rather than bet against Canadian mortgages or consumers directly, I own the winners of a weaker currency: Canadian gold and energy producers who earn in US dollars, US financial firms catching the capital that leaves, and US steel and lumber producers picking up share from Canadian rivals, with gold held as ballast.
What it owns
- These miners pay wages and costs in Canadian dollars but sell gold in US dollars, so a falling loonie widens their profit margins on each ounce. · Agnico Eagle MinesIt mines gold in Canada with loonie-denominated costs but sells all production in US dollars, so a falling loonie expands its margins., Kinross GoldIt operates Canadian gold mines with loonie costs and receives revenue in US dollars, earning more per ounce as the currency gap widens., Wheaton Precious MetalsIt collects US-dollar streaming payments on precious metals with minimal operating costs, offering exposure to gold and silver prices without the cost risk., Alamos GoldIt mines gold in Ontario with Canadian wage and supply costs but sells every ounce in US dollars, gaining from a weaker loonie., Franco-NevadaIt earns royalties in US dollars from mines it does not operate, capturing upside from gold prices driven higher by capital fleeing weaker currencies.27%
- Oil, gas and uranium producers based in Canada have expenses in the weakening loonie but receive payment in US dollars, creating a currency tailwind on margins. · CamecoIt mines uranium in Saskatchewan with Canadian-dollar costs and sells globally in US dollars, benefiting from a falling loonie as long as uranium demand stays steady., Canadian Natural ResourcesIt produces oil from the Canadian oil sands at some of the lowest costs globally, with expenses in loonies and revenue in US dollars., Suncor EnergyIt sells oil in US dollars while paying Canadian wages and supply costs in loonies, so a falling loonie fattens its margins., Cenovus EnergyIt pays operating costs in Canadian dollars but receives oil revenue in US dollars, so a falling loonie strengthens its margins.24%
- These companies handle, manage and hold money flowing from Canada into US assets, earning fees and deposit revenue as capital relocates. · JPMorgan ChaseIt is the largest US bank and a destination for deposits, wealth management and corporate deals as money flows out of Canada into American assets., BlackRockIt manages the funds and ETFs that money flows into when investors shift from Canadian assets to US investments and markets., Intercontinental ExchangeIt owns the New York Stock Exchange and the trading infrastructure that money moves through when fleeing to US assets, earning fees on volume., Interactive BrokersIt is where individual Canadians open accounts to access US markets and convert out of loonie-denominated assets, earning on trades and currency conversions.20%
- US steel and lumber producers gain market share and pricing power when trade pressure and tariffs make Canadian competitors less attractive to American buyers. · NucorIt is the largest US steelmaker positioned to gain market share from Canadian competitors as trade pressure and tariffs reduce Canadian exports to America., WeyerhaeuserIt owns US timberland and mills that gain market share when tariffs push Canadian lumber out of the American market., Steel DynamicsIt sells US steel into markets where Canadian competitors are losing ground to trade barriers, capturing share and pricing power.11%
- Gold is the asset investors buy when they lose confidence in a currency and its government's finances. · SPDR Gold SharesThis fund holds physical gold, the asset money moves into when it flees a weakening currency and troubled government finances.10%
- This bucket holds positions that diversify the take beyond its core themes. · It provides direct exposure to bitcoin as an alternative to holding cash.8%