Barrick Gold Corporation (USA) (ABX), Toronto-Dominion Bank (USA) (TD): How to Play the End of the Commodity Super Cycle

With the prices of Australia’s mining-related exports falling, demand for the country’s currency should likewise decline. Although investors could play the country’s currency directly, there are ETFs that allow for investors to basically trade the currency without getting into the forex market directly.

Canada’s housing market

Like Australia, Canada should struggle in an environment of falling commodities. In addition to mining, Canada’s economy has tremendous exposure to other commodities such as oil and lumber.

Although fund manager Steve Eisman is bullish on US housing, he’s notably bearish on the Canadian housing market. In particular, he believes Canadian banks will get hit hard when the Canadian housing market cracks.

Since March 2009, shares of Canadian mega bank Toronto-Dominion Bank (USA) (NYSE:TD) are up nearly 180%. That’s roughly double the performance of Goldman Sachs Group, Inc. (NYSE:GS) over the same period of time.

On a recent earnings call, Toronto-Dominion Bank (USA) (NYSE:TD) admitted that the Canadian housing market was “cooling.” If Canada soon faces its own housing crisis, the Canadian financials — like Toronto-Dominion Bank (USA) (NYSE:TD) — should be expected to perform poorly.

The end of the commodities super cycle?

Commodities have been rewarding investors in recent years, but have disappointed as of late. If, as some have alleged, the great commodity super cycle is finally over, investors should position themselves appropriately.

Obviously, reducing direct exposure to commodities makes sense, but secondary plays like commodity producing companies and countries should also be expected to perform poorly.

The article How to Play the End of the Commodity Super Cycle originally appeared on Fool.com is written by Salvatore “Sam” Mattera.

Joe Kurtz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.