The TSX's Record Close and a Weakening Dollar: A Green Light for Global Equity and Commodity Investments

The S&P/TSX Composite Index closed at a record high of 27,993.43 in early 2025, a surge driven by a perfect storm of factors: U.S. Federal Reserve rate-cut expectations, a depreciating U.S. dollar, and surging commodity prices. This isn't just a Canadian story—it's a global signal. Investors who ignore the interplay between currency shifts and equity markets are missing a golden opportunity to capitalize on the next wave of growth.

The Weakening Dollar: A Tailwind for Emerging Markets

The U.S. dollar has depreciated nearly 10% year-to-date in 2025, a trend fueled by U.S. fiscal uncertainty and shifting global trade dynamics. A weaker dollar is a double-edged sword: it makes emerging market (EM) equities more attractive by improving capital flows, reducing debt servicing costs, and boosting commodity prices. Historically, EM equities, as represented by the MSCI Emerging Markets Index, have outperformed developed markets during periods of dollar weakness. For instance, from 2004 to 2011, EM stocks outperformed developed markets by a wide margin when the dollar stabilized or weakened.

In 2025, the MSCI Emerging Markets Index is trading at a 35% discount to developed markets on a price-to-earnings basis and a 48% discount on a price-to-book basis—levels near historical lows. This valuation gap, combined with the dollar's continued depreciation, creates a compelling case for EM equities. Countries like Brazil, India, and South Korea, whose currencies are undervalued relative to fair value, are poised to benefit.

Commodity Winners in a Weak Dollar Environment

Commodities priced in U.S. dollars gain when the greenback weakens, as it takes more dollars to buy the same amount of a given resource. While oil and gold dominate headlines, 2025 has seen undervalued commodities like silver, platinum, and copper shine.

• Silver: Up nearly 25% in H1 2025, silver is undervalued relative to gold. The gold-silver ratio has widened to over 80 (historically averaging 80), suggesting potential for a significant price correction. Silver's demand in green energy (solar panels, batteries) and industrial applications makes it a strategic play.
• Platinum: Surged 50% in H1 2025, driven by constrained supply and demand in hydrogen fuel cells and diesel catalytic converters. Unlike palladium, platinum's versatility in decarbonization technologies positions it as a long-term winner.
• Copper: Up 16.2% in H1 2025, copper is the backbone of the AI and EV revolutions. With data centers requiring 27 metric tons of copper per megawatt of capacity, its demand is set to explode.

Strategic Entry Points for Investors

The weakening dollar and TSX's record close signal a shift in global capital flows. Here's how to position your portfolio:

1. EM Equities: Allocate to ETFs like the iShares MSCI Emerging Markets ETF (EEM) or Vanguard FTSE Emerging Markets ETF (VWO). These funds capture the growth of markets like India and Brazil, which are benefiting from dollar depreciation.
2. Commodities: Silver and platinum ETFs like iShares Silver Trust (SLV) and Platinum Shares (PLTM) offer direct exposure to undervalued metals. For copper, consider Copper Miners ETF (COPX).
3. Currency Plays: Undervalued EM currencies like the Brazilian real (BRL) and South Korean won (KRW) can be accessed via currency ETFs such as WisdomTree Brazil Real Fund (BZRX) or iShares MSCI South Korea ETF (EWS).

The Bottom Line

The TSX's record close isn't an isolated event—it's a symptom of a broader global shift. A weaker dollar is unlocking value in EM equities and commodities, creating a rare alignment of macroeconomic forces. Investors who act now can ride this tailwind to outperform the S&P 500, which has become increasingly concentrated in tech stocks. Diversify, act decisively, and let the dollar's depreciation work for you.

This is the moment to rethink your portfolio. The markets are speaking—and they're saying it's time to go global.