A Comment -- General Comments From an Expert (A Commentary)

Market. The PDAC is one of the two great mining conferences in Canada. The other the Cambridge House International Mining Investment Conference, which is May 15-16 this year. That is good for small mining companies. PDAC is a great barometer for the market. When the big crowds are coming to the conference, the cycle is probably near its end. This show is busy but not overcrowded. The US tax changes are increasing disparity rather than putting more money into the hands of the consumer. Short term, it sounds good for the economy but the deficit will bring a day of reckoning. The fall of the US dollar will probably be good for gold. Gold moves in a opposite direction to many asset classes, but it is not a safe store of value. It moves widely, from $250 to $1800 per ounce. Similarly, real estate doesn’t store value. It can go up, but it also goes down. One of the best ways to guarantee a good future is to pay off your debts.

Market. Is this just an aggressive tactic that Trump is taking or is it the beginning of what people feared when it look like Trump would be president. Maybe it is a negotiating tactic. Trade anxiety is going to filter into the market and he does not think it is priced in yet. It would be hard for the markets to make new highs right now.

Educational Segment. Volatility and uncertainty in political events around the world. The commentary on the Italian elections was all about uncertainty. The key test is whether the market can make a new high in the next few months. We still have the risk of more volatility and of retesting the recent lows. There is not a strong reason to price in a recession right now.

Floating rate notes will do far better in a recession than high yield. FRN-N and HFR-T are good examples.

Market. There are two types of gold owners. (a) a hedge and (b) investors looking at risk/return tradeoffs. US debt is still increasing and gold is a hedge against the failure of the currency. In 20% draw downs in the markets, gold goes up. Equity markets continue to rise and this distracts people from gold.

There is more interest in base metals than gold right now. Copper, zinc and nickel are all up this year. A lot of the interest is coming in from two longer term demand factors: Electrification of Asia and electric vehicles, which will increase demand for all kinds of metals. He has a lot of exposure to lithium as a way to play electric vehicles. Demand is going to double.

PDAC (Prospectors and Developers Association of Canada's annual mining convention in Toronto): the mood here reflects an industry in rebound after being on life support for a couple of years. There isn't ubiquitous capital like the good, old days, but the current market is not too hot, not too cold but just right. The so-called battery metals--cobalt and lithium--are the hot story this year because of strong demand for electronic components including electric cars. Also, lithium is a new, hot investment, so there is no past disappointing history of lithium for investors. Toronto also is the epicenter of precious metals financing, which encourages gold equities. Cobalt can command higher prices if there was more supply, but most cobalt is produced in the Congo which unfortunately boasts human rights abuses such as child labour. Companies in consumer goods are afraid of tainted cobalt and want to control the production chain.

Copper. He's cautiously optimistic on copper which has had a very good year. The price probably continues to rise during this tepid global economic recovery which hasn't translated into wage increases. He's also concerned about Trump's threats to derail global trade.

Gold. The disconnect between gold and gold stocks this year will resolve in the equities' favour. Why? Expecations of the gold industry are so low, they can only be exceeded. Forthcoming quarters should surprise investors to the upside.

Tonight was a special Talking Tax show. No opinions were recorded.

Market. He thinks Asian markets (ex-Japan) and Emerging markets offer growth at a discount. There is still considerable upside there. GDP per capita is the real upside in these markets. The developed world has its growth behind it. In the developing world GDP per capita averages less than $10,000 US, whereas the Developing World averages over $47,000 US. India is sub-$2000 US per capita. You can park your money in these areas.

Piplines Comment. There is an oil export pipeline shortage, but we are trying to get into a market that is already filled. The best thing Alberta could do is build refinery capacity. We are a small country and must think tactically.

Emerging Market ETFs. He likes the emerging markets and if you are in, stay in. He prefers to be in an emerging market ETF than the S&P. There are better individual stocks to purchase however, in his opinion.

Marijuana Market Comment – The marijuana market in Canada is not going to see the growth others believe, he thinks. The black market already meets current demand. In reality the capacity to produce in the legalized world will outstrip demand by 2x and will create a glut in supply. The Colorado market, as a proxy, suggests an annual Canadian market of 600,000 kilograms, while the market is projecting demand of 1 million kilograms and building capacity to that level. He does not expect a new wave of users to develop – only gradual increases. The black market will not go away, based on the Colorado and Washington State example. Prices in Washington State for marijuana have fallen from over $20 US/gram in 2014 to less than $5 US/gram today. He thinks it is all hype.

Market. It seems like a step back for free markets with the announcements on NAFTA today. It will hurt Canadian companies’ bottom lines but in a couple of quarters companies will figure out how to adjust. Companies should build contingency plans into their plans.