Key Takeaways
- The global rules-based order is giving way to an era of economic sovereignty, forcing countries to compete through power blocs and industrial policy.
- Canada’s market leadership in gold and materials reflects geopolitical stress rather than a strong domestic growth engine.
- Public-sector job growth continues to crowd out private-sector employment, weighing on productivity and long-term potential.
- Gold and silver remain core long-term holdings, but parabolic moves suggest near-term volatility and consolidation.
- Canada’s economic fortunes remain tied to U.S. data, underscoring the absence of a credible, independent growth strategy.
Introduction to the Current Market Situation
The current market situation is complex, with Europe shares dropping due to tensions over Greenland. Canada’s main stock index is hovering near record highs, driven largely by gains in gold and materials. However, this growth is not necessarily a reflection of a strong domestic economy, but rather a result of global politics and trade norms being reshaped by a growing focus on economic sovereignty. Jim Thorne, chief market strategist at Wellington-Altus Private Wealth, joined BNN Bloomberg to discuss the implications of the TSX’s sector leadership and Ottawa’s response to U.S. pressure under the Trump doctrine.
The Trump Doctrine and Its Implications
Thorne believes that the Trump doctrine is a significant factor in the current market situation. He notes that President Trump has been transparent about his intentions to prioritize national security and economic interests, and that this approach is a departure from the post-Second World War rules-based order. Thorne suggests that Canada should not get involved in the dispute over Greenland, as it is a matter for the people of Greenland to decide, not Brussels or other European countries. He also notes that there is precedent for the U.S. acquiring territory, citing the Louisiana Purchase and Alaska.
The TSX and Gold Fever
Thorne is bullish on gold and silver, citing the generational trade in these metals that he and Andrew have discussed for years. He notes that about 20% of the TSX is materials, with roughly 16% being gold and 1% being silver. Thorne believes that portfolios should have significant exposure to gold, silver, and materials, and suggests a minimum weighting of 10%. However, he also notes that the parabolic move in gold and silver may lead to sharp drawdowns and consolidation in the near term.
Canada’s Economic Challenges
Thorne is critical of the Canadian government’s approach to the economy, suggesting that Prime Minister Trudeau is engaging in performative politics domestically while being pragmatic globally. He believes that the government should take a more forceful approach to building ports, pipelines, and lifting the tanker ban on the West Coast, rather than relying on consultations and regulatory inertia. Thorne also notes that public-sector employment is crowding out private-sector employment, weighing on productivity and long-term potential.
Conclusion and Future Outlook
In conclusion, the current market situation is complex and influenced by a range of factors, including the Trump doctrine, geopolitical tensions, and economic sovereignty. Thorne believes that Canada should focus on developing a credible, independent growth strategy, rather than relying on the U.S. or other countries. He also suggests that investors should maintain a significant exposure to gold, silver, and materials, while being prepared for potential volatility and consolidation in the near term. Ultimately, Thorne believes that Canada needs to take a more proactive approach to addressing its economic challenges and developing a strong domestic growth engine.