Is The Canadian Dollar Quietly Collapsing?

Added: 2026-05-11

[00:00:00]The Canadian dollar is among the worst G10 currencies this year.

[00:00:04]>> Is the Canadian dollar crashing as interest rates are rising? There's a silent collapse that is going on that you need to know about and you might not even be seeing. And that's because this is really a hidden crash that is going on. So first of all, let's talk about the Canadian dollar and the US dollar.

[00:00:24]If you take a look at a chart of CAD USD, you can basically see that it's kind of operating in this range. I mean, the price action hasn't been good. It has gone down in value a lot, but believe me, this is just the start. If I go over and take a look at the Canadian dollar over the past 5 years versus the G7 currencies, you can see what's happened here. And essentially, for a lot of people, this is just quietly reversing their retirement plans because a lot of people rely on exchanging their dollars to other currencies, which we're going to get into, that are now tanking as well in emerging markets. So you take a look at the Canadian dollar in the past 5 years, it's down 10.91% against the US dollar. It's down 7.91% against the euro and it's off 8.38% against the pound. And if you look at the Japanese yen, that's the only currency in the G7 where the Canadian dollar has gained. And for obvious reasons, I mean, Japan is having massive economic woes as well. But now we get into some of these emerging markets. And for people who retired and went to places like Costa Rica and Mexico, they're looking at this plus inflation as a decline in their purchasing power.

[00:01:45]So if you take a look at CAD USD again, down 10.91%, it's down 22.91% against the Mexican peso. Against the Colombian peso it's even down 11.54% absolutely insane I know if you look at the Costa Rican colon you can see it's down 32.27% so just imagine for a second that you were somebody who retired on fixed income back in 2021 and you were getting 20% more in just the currency exchange than you get today plus all the inflation that happened over that period as well. Ah who cares? And what's happening is a lot of retirement plans are just being completely put on hold and you have to take a look at this as well 40-year retirement could spell disaster for early retirees who borrow against their home and this is what's happening in Canada now because people just don't have the money a lot of these people who go with fixed income to other countries it's because it's more cost effective to do that it's cheaper to live there but if a lot of retirees are staying in Canada then that's going to mean a lot more home equity loans. Oh no. And that's exactly what's happening take a look at this the potential of a 40-year retirement puts an extra financial strain on the millions of retirees who borrow from the equity in their homes according to statistics Canada home owners owed over a hundred seventy billion dollars in home equity lines of credit with an average balance of around seventy thousand dollars so you're not talking about small amounts of money and people are paying a lot of interest on this as well and as we're going to get into in fact let's quickly go over to that now the odds of rate hikes coming in just the July meeting has substantially increased.

[00:03:42]>> It'll be painful. And obviously this is always subject to change the data is changing all the time but if you take a look at it now it's a 47% chance that they're going to hike rates July 15th.

[00:03:54]If you take a look at September 2nd now, it's 90% that rates are going to be at 2.5% increase in 25 basis points. And then they're saying at the October meeting, it's going to be 2.75% another rate hike. So, if you think about all these people with home equity lines of credit, I mean, that's a lot of interest that they're going to be paying and the Bank of Canada doesn't even control it. You can see here, despite recent interest rate cuts by the Bank of Canada, the posted 5-year fixed reverse mortgage rate from Home Equity Bank, the primary provider of reverse mortgages in Canada, is 6.5% compared with just under 4% for conventional mortgages. And you can see Canadians have over 8.5 billion dollars in reverse mortgages.

[00:04:44]>> [laughter] >> It It said there's a contingency A lot of people, what they're doing is they're going to retirement. They've got a lot of home equity that has built up over this golden period for the housing market, and then they're using home equity lines of credit, reverse mortgages to gain access to that credit.

[00:05:02]The only other option, if you don't have much money, is to basically sell the house and move to another country. And as we've just discussed, like the people who've done that, I mean, they've been obliterated by a falling currency that most people in the mainstream media aren't even covering because if you look at CAD USD, it looks kind of stable. But we've been talking about this on this channel for such a long time about how it's been falling against the Mexican peso. I mean, this really started in 2022. This article here, I want to show you this part here. In fact, 50% of survey participants believe an inheritance is an important part of retirement income and 45% report an expectation to receive one. So, I mean, you can see where this is going wrong. A lot of people are going into home equity lines of credit when they retire because they're retiring for longer and you're also seeing reverse mortgage use, which is going up as well because the cost of living is absolutely crazy. But, also the expectations that people are going to get an inheritance is also rising, which might not be the case because it's being sold away. The boomer generation is having to finance all their assets to basically live their life because the cost of living is so insane. The government pensions, they don't cut it and even if you have a private pension, it doesn't cut it either.

[00:06:34]>> [laughter] >> It said there's a contingency. And this is why you've seen inflation that has spiked massively and you know, this is a lie. It's actually going to be more than double what you see here when you're actually talking about real inflation.

[00:06:48]And that's the thing that people don't realize is inflation has been much higher than they said it was in June 2022 when it peaked there at 8.1%. It's been a lot higher than that. And you can see the 5-year bond has been ticking up.

[00:07:05]It's been going up and it's been anticipating more inflation. And basically, the Bank of Canada follows this and they also follow all the government bonds. It's not the government bonds follow them. They're always moving before these central banks. We discussed it even before they hiked back in 2021 that the bond markets were already moving, so hikes were becoming more and more likely. It's just a question of how much. If you look at the 20-year government bond as well, this is where, you know, they're lying to you essentially. Um um um Cuz they're saying, "Oh, this is all about the Strait of Hormuz, this inflation problem. It's not a structural inflation problem because of massive deficits I who cares? and demographic shifting. And you can see here the 20-year bond, I mean, if you go back to when inflation was spiking over the period of 2021 and 2022, and interest rates obviously started rising substantially in 2022, you can see that really it was actually in 2020 when the bond curve started to tick up. But since it got to the highs during that inflationary spike, the 20-year bond hasn't gone down. So, what that's telling you is the smart money, the banks, are basically saying that inflation is going to be a lot higher in the future. And it's not just Canada, the US is seeing it, the UK is seeing it, but the US has massive bond market depth that the Canadian market just doesn't have. So, this is more a liquid, and as it gets more and more a liquid, the rate could go up and up and up, which is unfortunate if you own a house because obviously interest rates rising and a combination of a bad economy is not good either. Oh.

[00:08:59]And basically central banks don't really have any idea on how they're actually going to deal with this moving forward.

[00:09:06]And a lot of retirees are obviously dependent on the value of their home as well. So, even the people who stayed, they've seen a substantial chunk of their home equity that has gone over the past four or five years. So, it becomes a question of like, how do you avoid this? And I've been talking about this for a long, long time. Silver, gold are the perfect things for hedging yourself against government stupidity. And at the end of the day, the crux of this video is it's all about government stupidity because the government is printing massive amounts of money and basically the consumer needs to borrow money in order to keep going. Eventually you see a problem with that, don't you? Because the consumer, they can't print money like the government can.

[00:09:54]>> [laughter] >> It It said there was a contingency And it's absolutely crazy. I mean you've even got QE in the US right now. But if you were to measure how much silver rose and I mean it's come down substantially since then as well. But since around 2021, it's up 278% and then my favorite which is gold here is up 184%.

[00:10:18]So they've gone up substantially and these are the real things that people need to watch because in my opinion, this isn't financial advice. This is a great hedge against government stupidity. And whichever way you look in the future, government stupidity just seems to be rising and rising and rising. Elbows up. Elbows up. And if you look at oil, this will create a lot of inflation if oil prices hold at like $100 a barrel for the next year, then that is going to start to feed into the cost of everything that you buy which is exactly what the bond market knows. And the bond market also knows that the government will just print money. At the end of the day, it's exactly what we're seeing right now with Mark Carney's policies. And when Canadians can't even afford food at the grocery store, you begin to really realize that yeah, the consumer is absolutely screwed right now. Because take a look at this.

[00:11:19]Canadian retailer Loblaw's misses revenue estimate amid cautious consumer spending. And you know, their sales actually grew, but I doubt they even grew with inflation and that's telling you something about what's going on at the consumer level because the retailers are really struggling to pass on those price increases, which means it's going to hurt their margins, which means it's likely going to mean more layoffs or a decrease in service quality. So, with household budgets squeezed by higher inflation, rising crude oil prices from the Iran war, and steeper grocery prices, lower-income Canadian consumers are pulling back on non-essential spending, which is weighing on retail sales. And you're also seeing more and more people going to the discount stores because Loblaws is a huge grocery store chain in Canada, so it's definitely something you've got to pay attention to. And basically, you're seeing that people don't have the money to just splurge on groceries. And when you consider how much food inflation has actually risen, I mean, January of this year, it was at 7.3%, and I mean, when food inflation is 7.3% and they can only grow their sales by 4%, especially in terms of their revenue, it's showing you how weak that consumer really is. And another thing I want to quickly show you here is the wealthy are actually dumping debt and dumping mortgages, which is something that you've got to look at as well. You can see, while the rich racked up stocks and pumped the brakes on mortgage debt, 40% hit the gas for mortgage debt. The result is a widening gap between the haves and have debt. And if you see these quintiles here of different income groups, you can see like the bottom 80% essentially has not seen their net worth really grow at all, whereas it's only actually the top 20% that is seeing their net worth grow. And a lot of that has to do with falling house prices as well. But obviously, if they're pivoting away from housing investments and into stock market investments, then guess what? Their net worth has gone up a lot because you got markets that are all-time highs right now. And that means you've got to ask that question, like is buying a house really a debt trap?

[00:13:42]Because the smart money is telling you that rates in the future are not going to be low like they were during the pandemic, but you've got a lot of consumers which is just frozen and they're thinking that we're going to return at some point to the way it was from like 2000 all the way to 2020. The global economy has changed completely since then, and all that means is higher price goods. At the end of the day, everything costs money. Are you a person living in Mexico or Costa Rica? And have you seen the Canadian dollar collapse that a lot of people haven't seen? Let me know in the comments below. If you've enjoyed this video, please check out this video here. If you want to help support my work, please check out the affiliate links in the description below, and I will see you in the next one. Take care.