It’s a bird…it’s a plane…no, it’s the Canadian dollar taking flight! This past week, the Canadian dollar hit parity with the U.S. dollar and, as I write this column, the Canadian dollar is trading above the U.S. dollar. The last time the Canadian dollar was worth more than the U.S. dollar was 31 years ago, in 1976.
Over the last three years I have practically begged my American readers to buy quality stocks on the Toronto Stock Exchange because not only were Canadian stocks undervalued, but also so that Americans could take advantage of the rising value of the Canadian dollar-a double profit whammy so to speak.
Yes, Canada is rich in oil, resources like timber and precious metals, but the real story here is not that of a strong Canadian dollar. Rather, the story is that of a weakening U.S. dollar.
A few years ago, I co-authored a report about Greenspan’s secret plan to put America back on top. That secret plan was simply to devalue the American greenback against other world currencies so Americans would stop buying cheap Chinese imports and start buying made-in-America goods again. A weaker currency also makes a country’s deficit and trade gap easier to manage.
Canada is a strong political and economic country (with some provinces actually running a surplus as opposed to a deficit). But Canada’s currency has only fared well against its neighbor to the South. The Canadian dollar has not performed well against the euro and other European currencies like the pound.
How will this story unfold?
I see the Canadian dollar continuing to move higher. No, it will not be a straight run-up. Nothing ever does move straight up or down. There will be ups and downs, but in the long term the Canadian dollar will continue to appreciate against the U.S. currency because I believe the U.S. is focused on lowering the value of its currency against major world currencies.
The opportunity for Americans to get into quality Canadian stocks, especially the big, well-known gold producers, and to profit from the escalation of the Canadian dollar against the U.S. dollar continues.