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

Precious metals should be in every portfolio as an insurance policy. It's a diversifier. He uses bullion as that play. Then you have the leverage on bullion, which are the shares (for all practical purposes).

In between, you have something like SII that runs an ETF. Or you could have a streaming company that collect royalties off of the operating companies.

There's a hierarchy -- bullion, miners of bullion, royalty companies, then a Sprott who's an asset manager. He's owned them all.

His position today is that he's trimmed back his gold position dramatically by reducing names. For example, AEM was a 10% holding but today it's at 6%. Same thing with all the names in the portfolio.

Gold hasn't performed over the last 35 days, but it did its job over the last 2 years. He'd be a buyer today. His clients should be at 10% for the insurance component; today they're not quite there at 8%. The equity component is about 7%. So 8 + 7 = 15% in golds today. His gold plays are AEM and FNV.

Preferred shares have been spectacular fixed income investments. At his firm, they look at how much cash is generated for returns and at the growth profile.

There are so many options out there, so he's hesitant to recommend a specific one. His portfolios have held Enbridge preferred shares in US dollars for a long time. Wonderful yield, better than the common shares.

If you can buy a preferred share at a discount ($22-23), you have some upside potential should it be taken out. A lot of preferred shares have been taken out.

You can do an internet search to look for names. In the space, he owns pipeline and financial names. Yields can be 5-6%.

His clients have about 10% in producers, all with a gas bias. Natural gas is a long-term solution to all the green problems in the world. Stability comes from market demand from data centres, etc. Perfect intermediate fuel between today and nuclear power.

As an investor, your head will spin trying to figure out what the price of oil is doing today. First thing to look at is the futures contracts. Specifically, look at December -- price has gone down for the last 2 months. It's not discounting a high price going forward. When an investor values companies, they're valuing them off that long-term price than off the spot price.

His team likes hard assets, low obsolescence. So they both fit. They think longer term. Natural gas is a long-term play, and Canada really benefits from that. If he were to "bet", he'd guess oil is going to $80. If it goes to $120, all bets are off everywhere.

Gold is an interesting play from an insurance perspective against geopolitical concerns. Those tend to be more financial-related -- interest rates and deficits. Hard to handicap. His "bet" would be that the next move for gold is higher, not lower.

His portfolios are 15% gold exposure, and a little under 10% in oil & gas. Hard to tell what's going to happen in the next 3 months.

Can't yet, but it's coming and it'll be hot. Need a good broker to get access to it. He can't get a fundamental handle on what Elon's done. Not sure he'd want to pay the valuation it will attract. 

Looks very expensive. There are other fish out there.

Zooming out to the 10,000-foot view of portfolio construction, they have very well-diversified portfolios that are built to be resilient in all weather conditions (including wars). This gives them room to not react in a knee-jerk fashion to headline risk.

All year long they've been, more or less, fully invested in equity portfolios. Business as usual has involved "culling weeds from the garden", where things haven't worked or the original thesis has been negated. Also partially trimming winners. Selectively introducing new ideas, including some dip-buying.

His team gets that the world has its hair on fire, and understandably. But their practice is not to let it rattle them, while still being nimble and open to opportunities. When it comes to investing, you should always do it from a place that's calm, cool, and collected, with ice in your veins.

Still likes it. Has a double-digit weight in both of his firm's equity mandates (Momentum and Dividend). Diversified basket between the miners and royalty companies. In a strong, multi-year, secular uptrend. It's really the only non-fiat currency.

The younger generation would call him a dinosaur and say that bitcoin is digital gold. Yeah, not so much the last 4-5 months ;) Gold is doing what it's always done -- serving as a store of value, an inflation and geopolitical hedge. Lots of the move underpinned by central banks buying it hand over fist. The bloom has come off US treasuries.

They've been buying on dips in the last month.

Today is a fast-moving day with a lot of moving pieces. Pullback in oil is due to "TACO Tuesday". Have to see if the ceasefire holds. (One piece of non-investment advice is to fill up your gas tank while the getting's good, as we don't know how lasting this truce is going to be ;)

He owns no telcos, though doesn't think they're in secular decline. The serve a need, not a want. Won't be technologically obsolete anytime soon. 

However, revenue is driven by price and volume. Volume headwind is that Canada is restricting immigration. Which leads to a price headwind of lowering prices to compete for market share.

The next 24 hours are significant that will effect the direction of the market. Since the US-Israel-Iran war started, we've seen violent moves in the market, but also rangebound up and down, from hour to hour. Seeing a lot of big swings. Once we hit Trump's deadline to Iran, then what? In a few weeks, earnings season could also effect--we'll see what companies say about how the war is effecting the economy. Sectors he likes: energy, steel, chemicals, utilities. These are defensive. With more confidence, metals and industrials will bounce back. 

He uses relative strength (RSI) to analyze, primarily. SIlver broke out at $35 and peaked at $95. But we're seeing a retracement approaching 50%.

Reality is that the market analysts, from a company-specific basis, are looking at everything that's happening geopolitically as "temporary". That is, companies are not guiding yet towards lower outcomes. Until that happens, the analysts will stay the line. Very few of them are bold enough to say, "Hey, this conflict will have long-term consequences."

No one really knows how this is all going to play out. He thinks it's going to be an issue. Question is how long will it last? There are things you can do about it from an investment perspective. But, typically, that will involve far more sophisticated strategies than the DIY, at-home investor can execute.

He'll unpack this a bit more in the Educational Segment.

In the history of the world, these things are always relatively short-lived (measured in weeks to months). But if there's a clear disruption to the supply of materials through the Strait of Hormuz that turns into years, that would be extremely problematic.

The world can handle a number of months' disruption, but we're already starting to see rolling blackouts and supply rebalancing. The biggest thing that comes to mind is fertilizer for food production.

From an uncertainty standpoint, investors are looking at markets and wondering what to do. We should be prepared for several more months of this. Boots on the ground are not politically palatable at the moment, but inevitable if the US is really going to claim victory.

Trump's current claims are certainly not founded.

Central banks, no matter if they raise or cut rates here, can't move the needle. Rates don't impact, in any remote way, what's happening in the Middle East.

We need a resolution in the war. Because of the uncertainty around added inflation, it makes sense to pause any additional rate cuts. If the conflict lasts longer, central banks may have to get more aggressive at cutting rates because the economy is weakening in other ways. Rate cuts are not the cure for this kind of market disruption.