iShares S&P/TSX Gb Base Metals (XBM.TO)

We are right at the inflection point. You get a lot of good names. The risk reward is really good. He would buy this for clients coming in.

(Past Top Pick on Sept 21, 2017, Up 6%) We're currently at the trend line, and it's getting hit now with U.S. trade issues. So, if there's positive news about U.S. trade, this will shoot up. He bought this at $11.

(A Top Pick July 20/17 Up 21%). It has been losing some value lately, but thinks the risk-reward near $13.50 looks good and this is a previous area of resistance back late last year. He expects to see a test again of $15.50 and would still suggest this as a buy at these levels on a technical basis.

Late cycle, so want deep cyclicals, which are going to react the best. Global base metals are probably the #1 sector to play late cycle. Dominated by all the great base metals companies like BHP and Rio Tinto. Good exposure to copper and zinc. Zinc is part of the theme of electric cars, and batteries are moving from cobalt to zinc especially in China. New money hasn’t gone into this area, and continuing global growth needs these metals.

(A Top Pick September 21 / 2017, Up 16%) Nice trend up and to the right. If it can’t hold the trend, would be a bit concerning. At heart of pro-growth theme, but if see erosion, probably would book some profit, and put money in the defensives. If the theme is changing from pro-growth from the last year, you’ll see it in the base metals first.

Global demand for resources is high, so this will do well. There's been no reinvestment in the base metals sector, so as consumption picks up the prices of metals will rise. This sector's been totally overlooked.

(A Top Pick July 20/17, Up 23.01%) It is at the core of the cyclical theme. This is a name you want to own. It is treading water right now. If we get above $16 it will mean that the pro-growth rally has got room to go.

Pretty volatile. Should continue higher after the correction. It could really accelerate if it moves over 16 dollars.

Hasn't dealt with this, but has used the BMO product, ZMT-T. He doesn't see demand for base metals being very strong. Usually, he uses this for a sector trade, go in and pick up 20%, and then move on. As a long-termer, he basically doesn't look at the sector.

A nice way to play the global base metals theme. Thinks this is one of the best upsides in the next 6 months. There has been a lot of infrastructure activity. There are dwindling stockpiles. China is now sort of giving cues that is not going to quite deleverage just yet.

This is a way to play the whole base metal space without trying to pick any one individual base metal stock. Base metals are notoriously volatile. Chart shows a good long base with an uptrend running below it. It has broken out of this. This has one of the best upsides in the next 6 months. There haven't been a lot of production increases and not a lot of new mines coming on board. There is a dwindling supply, plus there is the infrastructure push. New bridges and new roads could get a 2nd leg, and that should be a tailwind. China has indicated they are not going to tamp down on the debt is much as they had, which will probably give a bid to commodity prices. Good place to be.

Base metals is part of this pro-growth theme. There are some big drivers behind it. There is infrastructure spending, dwindling stockpiles and low new mine builds. Chart shows a nice up trend from the beginning of 2016. It got above the $12.85 level, he would probably add to it.

For a longer-term hold? Hasn’t been looking at base metals for a while. He was buying about 1.5 years ago when it looked like they had bottomed out. He’s usually looking at something like this as a sector trade, meaning he wants to get 20% and then get out. For a longer-term hold, he doesn’t see a problem. Wouldn’t want to see more than 10% concentration in base metals though.

If we see rising interest rates, this is going to participate. What strikes him as a technician is that there is a nice bottoming process. If it gets above $13.80, that is pretty substantive. If there was a sustained move above that amount that encapsulates all the action in 2015-2017, he would be looking well into the $20 as a target. There are dwindling supplies, no new mines and all these infrastructure plays. Has a really good tailwind.

The run on this started a bit sooner than everything else. If it gets through the top of $14.20, it will run. The chart shows a huge head and shoulders formation. Some of the bigger components are things like Lundin Mining (LUN-T), Teck Resources, BHP Billiton, etc. It will be very volatile, so if you get some profit, then maybe piece off some of it. Come the spring, you are probably not going to want to own this.