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

Market. It is a wonderful time because no body knows anything now. For the last year we had this COVID shock and then the markets almost doubled. If we are not going back to something normal we are going back to something new. You have to own the kind of stocks you want to own when you don't know what comes next. Worker productivity should increase in the next year. As a society we have not absorbed the implications of our ability to work at home.

Price of Oil. It has been surprising in all directions. Demand has already picked up and it will take time for supply to catch up to it. For all of the power we are generating we are eating it up in generating bitcoin or charging electric cars. Oil prices will continue to remain strong but Canada has to figure out a way to capitalize on it. We only have about 5 years.

Market outlook. It is clear that all the stimulus and central bank actions are responsible for the boost in asset markets. Powell hinted at froth in the markets. What the feds are doing is not solving inequality and structural problems.

Inflation. The large parts of the inflationary impacts are supply issues. The real question is on incomes. People must have a will to spend, but also wages need to go up. If this goes up, inflation will really go up. Employment numbers in Canada and US is really where we must watch. Feds cannot do much about it since if rates go up, the economy will collapse.

You cannot taper bond issuances, and contrary to this, it must be stepped out. The debt must be financed and this will push yields higher.

Precious metals as a hedge against inflation. Precious metals accounts for 2-3% of the market. 30% allocation would be too much. However, inflation will be an issue and gold could be a good asset class. It is personal how much you want to allocate.

Educational Segment. S&P500 companies have been reporting great earnings and most times, investors are selling into it. FANGs, Tesla and Visa are some examples. Selling on news is not a bullish thing. On the last two earnings of Apple, you can see that the stocks rallied up into expectations of good earnings, and then markets sold off for a couple weeks. Tech heavy NASDAQ will continue to weigh on markets. Market breadth is important to look at. Slowly, stocks are starting to break their intermediate trend line. This usually leads to a correction. We could correct 5-10%. Time to be more conservative.

Another record-breaking month should be turning bears into bulls, but it isn't. Tech rolled over today. Now, we'll subjected to talk that great earnings don't matter because we're at the peak and there's not enough money for all sectors to rally (which is true). Bears only see rolling over. Enough of that. You must own stocks now that the consumer is flush. Money will return to tech.

There is finally a structural bull market for oil. Goldman Saks and JP Morgans are now calling for $80 oil in Q3. The party is just starting. His fund is up 70% this year. Stocks fell so much last year that they are up quite a lot. Even at $60 oil, you can buy stocks at 2-3x cashflow. These used to trade at 7-8x. Best measure is free cashflow yield. Companies need to commit to meaningfully increase dividends and buy backs. OPEC will be out of spare capacity by the beginning of next year, global off-shore is in decline and US Shale hyper growth is over.

Gold and inflation. Gold is manipulated. It's about the fiscal deficit we're in. The longer it takes to get out of this mess, the higher the price will correct. Buy right and sit tight. He owns many gold and silver producers that have massive leverage to the price, which will have to go higher. Copper is signalling a lot of money devaluation. Copper above $4.50 is a bad sign. People think that inflation means things go up in price. What it really is, is things are constant but money is devalued. We're facing a bigger storm because of the currency reserve. Look at the CPI number today. With all the stimulus thrown at it, it's not a good number. We should have had a much bigger rebound. We're facing exponential money printing, which is bullish for gold, but not for the dollar. The currency reserve is in trouble, as the USD couldn't muster a rebound above 92.50, and yesterday's jump above 91 lasted only hours.

Interest rates. Rates are already rising. 1.69% is not a good number. To bring yields down, they'll have to print a lot of money. In history, whenever central banks are buying debt and producing debt, it's a facade, with very negative consequences. He'd rather hedge for the consequences. We're on shaky ground.

Gold explorers. Precious metals are the place to be right now, as they're trading at a ridiculous value in relation to earnings. Build a foundation with the producers first, and then look at the explorers. Once there's a big discovery in the States, a lot of US money will come into the sector and that could be bullish. You want 5-6 explorers to diversify the risk. A good explorer has good quality real estate with good potential.

Commodity supercycle. Three components. Demand, as the economy picks up. Lack of supply, as we haven't been exploring. Third, the key is devaluation of money. Best way to play the supercycle is with the ultimate hedge of gold and silver. Prices are depressed, so it's a good opportunity to get into these stocks. Impossible that copper's going higher and silver isn't. He continues to acquire the producers that will move once the price goes up. Silver has a number of supply issues. Put your money in silver first, then gold, and he's just added a bit of copper.