Rick Rule, president and CEO, Rule Investment Media LLC

FOCUS: Natural resource stocks

MARKET OUTLOOK:

Resource markets continue to be very soft, providing opportunities for value-oriented resource investors and speculators. Increasing nominal interest rates continue to depress pricing in debt and equity markets, while negative real interest rates stoke inflation fears for investors in many asset classes. Three decades of underinvestment in natural resource productive capacity, supply chain concerns, as a consequence of war, and idiotic government policies around natural resource industries almost guarantee strong commodity pricing, albeit with a concern about recession-induced demand challenges.

On previous BNN appearances, I had stressed my preference on a risk-weighted basis for very large extractive industry companies. However rapid price declines in the juniors have made them relatively attractive, particularly for accredited investors who can take advantage of increasingly attractive private placement financing terms.

I continue to be very attracted to conventional oil and gas, particularly in Canada where popular sentiment appears to be in favour of reversing Ottawa’s “own goal” policies with regard to Canada’s energy industry. Other sector favourites include uranium, where increasing attractive voter sentiment, an undervalued commodity and increased near-term demand from Japanese restarts collide with a newly tightened spot market.

Finally, precious metals stocks are attractive, given their pathetic market performance, the spectre of inflation and very deep negative interest rates.

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TOP PICKS:

Africa Oil (AOI TSX)

G2 Goldfields (GTWO CVE)

Reunion Gold (RGD CVE)