A planned gold spinoff has renewed attention on the mining sector, but investors are increasingly focused on signals coming from bank earnings and economic data. With parts of Canada’s economy under pressure, upcoming results and labour market reports are expected to offer clearer insight into consumer health and financial stability.
BNN Bloomberg spoke with BeiChen Lin, senior investment strategist and head of Canadian strategy at Russell Investments, about what elevated gold prices mean for mining stocks, how bank earnings could shape investor sentiment, and why Canada’s equity market can diverge from the underlying economy.
Key Takeaways
- Strong gold prices have lifted mining shares, but higher valuations increase the need for careful stock selection.
- Mining stocks do not always track commodity prices directly, making costs, balance sheets and geography critical factors.
- Canadian bank earnings will be closely watched for signs of consumer stress, especially provisions for credit losses and charge-offs.
- Tighter lending standards have improved bank credit quality and may help limit downside risks in a slowing economy.
- Labour market data and interest rate expectations remain key drivers, with softer employment trends increasing the likelihood of further rate cuts.
Read the full transcript below:
LINDSAY: Barrick Mining is going ahead with plans to spin off its North American gold assets into a separate unit. The world’s second-biggest gold producer plans to include interests in Nevada and the Dominican Republic in the spinoff, with assets worth as much as $62 billion. Let’s get more on what this means for the broader mining sector with BeiChen Lin, senior investment strategist and head of Canadian strategy at Russell Investments. It’s good to have you join us. Thanks so much.
BEICHEN: Thanks for inviting me, Lindsay. It’s a pleasure to be here.
LINDSAY: Let’s start with this announcement of the spinoff from Barrick Mining. What does it tell you, if anything, about the broader industry?
BEICHEN: When you look at the metals and mining industry, you really have to understand the macro environment we’re in. Over the past year, the market capitalization of many companies in the sector has roughly doubled, and a large part of that has been driven by gold prices. We’ve seen a significant surge in gold prices over the past 12 months, although they’ve taken a bit of a breather in recent days.
That surge has been driven in part by investors responding to heightened geopolitical tensions, as well as central bank buying. When commodity prices move higher, it tends to incentivize companies to take a closer look at their operations and consider strategic moves.
Another important factor in Canada is interest rates. The Bank of Canada has been one of the most aggressive central banks among the G7 in terms of rate cuts, moving from a peak of around five per cent to about 2.25 per cent. A lower-rate environment can encourage more evaluations of spinoffs, divestitures and potential mergers and acquisitions. As a result, we could see more activity in this space going forward.
LINDSAY: You’ve said there are other sectors you’d rather focus on right now than precious metals like gold and silver.
BEICHEN: Our active managers are constantly evaluating the opportunity set, and within our portfolios we generally have a modest underweight to the metals and mining sector. Over the long term, we do see tailwinds for parts of the sector. Base metals such as copper could benefit from the energy transition and increased electric vehicle adoption, and critical minerals could see long-term support as countries place more emphasis on industrial capacity and national security.
In the short term, however, we’ve seen price momentum run up significantly. As a result, our active managers see better value elsewhere in the Canadian market, including industrials, financials and utilities.
LINDSAY: We’re in the middle of earnings season, with reports coming out today from companies such as BCE and Canada Goose. What’s your overall read on earnings so far, particularly in Canada?
BEICHEN: One of the most important things for investors to remember is that the Canadian economy looks very different from the Canadian equity market. For example, the financial sector represents less than 10 per cent of Canada’s economy but makes up roughly 30 per cent of the Canadian stock market.
That helps explain why, even though the Canadian economy has been under pressure and GDP may have contracted in the fourth quarter, the TSX outperformed the S&P 500 last year. Many large Canadian companies also derive a significant portion of their revenue from outside Canada.
Looking ahead, our baseline expectation is that the Canadian economy could remain under pressure, while the U.S. economy shifts from resilience toward potential reacceleration. In that environment, even if Canada experiences a more country-specific slowdown, Canadian companies could still hold up relatively well.
LINDSAY: Bank earnings are coming later this month. What will you be watching most closely?
BEICHEN: Bank earnings are a key barometer for Canada, given how large a share of the stock market the banks represent. We’ll be paying close attention to provisions for credit losses and charge-offs, which provide insight into the health of the consumer.
One trend we’ve seen over recent quarters is that banks have been tightening non-price lending conditions, such as minimum credit scores or required down payments. That tends to improve the credit quality of loan books and has helped banks weather the economic slowdown so far.
We’re also watching capital adequacy. Large Canadian banks remain well capitalized, with capital ratios comfortably above regulatory minimums, which should help them navigate a potential slowdown.
LINDSAY: We also get Canada’s jobs report on Friday. What are you expecting?
BEICHEN: Consensus is calling for relatively flat job growth, reflecting ongoing pressure in the Canadian labour market. Business surveys suggest many firms are holding back on hiring until there’s more clarity around Canada-U.S.-Mexico trade negotiations.
It will be important to look beyond the headline number and focus on the composition of job creation. For example, if gains are driven by part-time or non-cyclical roles, that would signal more underlying weakness than if growth comes from full-time, core-age and cyclical employment.
Canada’s unemployment rate is currently closer to seven per cent, above estimates of the long-term natural rate of around six per cent. We’re also likely operating with a negative output gap, meaning the economy is running below potential. While the Bank of Canada has recently held rates steady, ongoing fragility in the labour market and broader economy increases the likelihood of further rate cuts this year. That’s one reason we see good value in Canadian government bonds.
LINDSAY: We’ll have to leave it there. BeiChen Lin, senior investment strategist and head of Canadian strategy at Russell Investments. Thanks very much for joining us.
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This BNN Bloomberg summary and transcript of the Feb. 5, 2026 interview with Beichen Lin are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
