Bank of America analysts have identified several North American precious metals companies set to benefit from the recent weakening of the Canadian dollar (CAD) against the US dollar (USD). These companies are particularly well-placed as a weaker CAD reduces their operating and capital costs when converted to USD. BofA explains that a 10% depreciation in the CAD could drive projected NAV increases of 11% for AEM, 15% for AGI and IAG, and 13% for NGD.
Centerra Gold is also expected to gain from these dynamics. The CAD has declined 16% since its peak in June 2021 and is now trading near levels last seen during the early days of the COVID-19 pandemic in March 2020. Year-to-date, the CAD has fallen 8%, with a 6% decline in the current quarter alone. BofA attributes this weakness to factors such as fiscal deterioration in Canada, high private debt levels, and the Bank of Canada’s faster pace of interest rate cuts compared to the U.S. Federal Reserve. They also state that the potential for 25% tariffs on Canadian exports to the U.S. could exacerbate downward pressure on the currency. The environment is also said to create opportunities for companies like Triple Flag Precious Metals, which recently expanded into the lithium market. BofA considers the timing favorable, as lithium prices are expected to recover by 2026. Although the move modestly impacts TFPM’s NAV, the firm maintains a Buy rating on TFPM, citing its undervaluation compared to senior peers. As the CAD continues its decline, companies with strong Canadian exposure remain positioned for gains