Resource World Magazine

20 www.resourceworld.com J U N E / J U L Y 2 0 1 6 L ooking back, I'm always fascinated by the parameters that create a new bull or bear market, and in particular, a resource based bull or bear market. Most are caused by simple supply or demand fun- damentals, some by a change in the price of the underlying resource, and a few are caused by events not even directly related to the resource involved. Let's take a look at a few examples. Going back to 1999 – 2000 the classic secu- lar or long term resource based bull market was created from many years of declining prices that pushed gold down to US $275/ oz, copper to US $0.50/lb, and crude oil to US $12/bbl to name a few. Then, with economic expansion and rising demand, a long term bull market for most commodi- ties developed and ran almost unabated for about 11 years to the spring of 2011 when an unsuspected bear suddenly appeared. Most resource bear markets are caused by an excess of production. But in April 2011 the bear was triggered in an instant by Mother Nature herself in the form of an earthquake off the eastern shores of Japan and the resulting devastating tsunami that flooded and ultimately shut down that country's nuclear energy infrastructure. And with Japan being one of the world's largest users of uranium, the price of ura- nium itself collapsed overnight from us $105/lb to just US $20/lb, with the price of most uranium stocks following suit. This was followed by a cyclical or five- year bear in gold, silver and most metals (and their related equities), as a strong US dollar, helped by the anticipation of rising American interest rates, became the go to currency of the world. Crude oil entered a bear market in mid- 2014 because of technology – in particular – the technology of fracturing or fracking the ground with high pressure water to extract more oil from every well. This tech- nology became so good that the US became self-sufficient in oil production to the point where the world's largest consumer of oil actually lifted its export ban and started shipping crude to the highest bidder. Early this year the resource bulls returned and in most cases, such as gold bullion, the new bull markets were the result of many years of exhaustive selling that finally came to an end when more and more central banks officially took their key lending rates down to below zero. There's nothing like the reality of buying a nega- tive interest government bond to get one to instead consider buying the equivalent amount of gold bullion. And most recently, we suddenly expe- rienced a new bull market that was caused by of all things – a weekend sales promo- tion by Tesla Motors. Interest in lithium and lithium stocks soared immediately after Tesla announced that in one weekend they had pre-sold over 400,000 new electric cars that would be powered by lithium batteries. Looking back on bull and bear markets – is always fascinating. n Rodney Blake is an Investment Advisors with Canaccord Genuity Wealth Management, a division of Canaccord Genuity Corp, Member- Canadian Investor Protection Fund. The information contained in this article is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it does Rodney Blake, Canaccord Genuity Corp, or its sub- sidiaries, or affiliated companies, assume any liability. This information is current as of the date appearing in this article, we do not assume any obligation to update the information or advise on further developments relating to these securities. This article should not be considered personal investment advice or a solicitation to buy or sell securities. Canaccord Genuity and holdings of its respective directors, officers and employees and their associations, from time to time may buy or sell any securities mentioned herein. The views expressed are those of the author and not necessarily those of Canaccord Genuity Corp. He can be reached at 604-643- 7567 or rod.blake@canaccord.com at t h e m a r k e t R o d B l a k e n Alberta Lithium portfolio controlling 300,000 hectares of brine formations n Controls 14 of top 25 historical high grade lithium properties (>=90 mg/L lithium) n Initial process design completed CSE: XMG 1080 Howe St., Suite #303, Vancouver, BC V6C 2T1 Tel: 604.681.7735 www.mgxminerals.com Bull and bear markets

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