Resource World Magazine

O C T O B E R / N O V E M B E R 2 0 1 7 www.resourceworld.com 29 At the Market by Rodney Blake I n my last column I suggested inves- tors follow the insiders' money trail to see if they thought their companies' shares were a good buy; the theory being that insiders know when their compa- nies are undervalued. With this column I'd like to encourage investors to compare the underlying commodity charts to the resource companies they are following. The theory being that the charts may give you some insight as to future prices of the stock. Case in point: While the TSX Venture Exchange has just come through a very quiet summer that has seen the world's foremost com- modities-focused market languishing in a near an all-time low range of about 750 – 780, the underlying commodities that support this resource based market are tell- ing a much different story. In fact, rather than being range bound most commod- ity charts suggest the bull market started some months ago. Examples: Copper has moved from US $2.50/lb in May to a recent three-year high of US $3.15/lb in September. Zinc rose from US $1.15/lb in June to a new 10-year high of US $1.40/lb. Gold bullion went from US $1,210/oz in July to a one-year high of US $1,351/oz. Similarly, silver rose from US$15.42 to a six- month high of US $18/oz. With the petroleum sector – both crude oil and natural gas have just broken up through short term resistance to new respective 3½-month highs of US $50.50 and US $3.15. Now granted – charts don't tell the whole story. Each commodity has its own value due to economics and demand and some may have gone up too far too fast and may have corrected somewhat by the time this article is published. But the underly- ing theory is intact. While investors have left most resource stock prices at or near record lows, the underlying commodities have been moving higher. I believe the next broad based bull mar- ket in commodities has begun. After what must be a four to six-year bear market in mining stocks, precious metals, some base metals and battery metals are now trend- ing upward. Some trends such as copper and zinc are due to world demand. Some such as gold and silver may be a reflection of world events or currencies, and some such as crude oil may be due to a tighten- ing of supply while natural gas may be due to seasonality. But for whatever the reason, the upward trend from lower left to upper right on the charts is clear. Just how much have the resource stocks decoupled from the commodities? For example, when cop- per was last over US $3.00 in August, 2014 the same Venture Exchange was well above the 1,000 level or some 30% higher. In short, commodities are telling a bullish story that so far has gone mostly unnoticed by the market. Compare the charts. It's time to take notice. 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 provid- ing it does Rodney Blake, Canaccord Genuity Corp, or its subsidiaries, or affiliated compa- nies, 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 hold- ings of its respective directors, officers and employees and their associations, from time to time may buy or sell any securities men- tioned 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 Compare the charts

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