Rick Rule, president and chief executive officer, Rule Investment Media LLC

MARKET OUTLOOK:

Given the relative strength of the U.S. economy, we believe the U.S. Federal Reserve has the ability, and inclination to raise U.S. interest rates at least twice more. As a consequence, we see continued strength in the U.S. dollar, relative weakness in precious metals, and a more pronounced weakness in interest-sensitive sectors. We believe these conditions are already factored into the market.

Many signals, including the yield curve, energy prices, corporate loan demand and conventional energy prices suggest that the market participants believe a recession is likely. We concur that the possibility of recession must be considered.

Most resource sector companies face continued headwinds from cost inflation, anti-development narratives, and demands for increasing social rents.

All of the above factors, combined with investor concern about the return of malinvestment by managers, to constrain demand for extractive industry shares.

These concerns mask the fact that quality issuers in every market cap sector represent attractive valuations, relative to price. Impending supply shortages (perhaps post-recession) make today’s valuations compelling for investors and speculators who are patient, and able to endure volatility.

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TOP PICKS:

Mega Uranium (MGA TSX) 

SilverCrest Metals (SILV NYSEARCA) 

Orogen Royalties (OGN CVE)

PAST PICKS: May 25, 2022

Equinox Gold (EQX TSX)

• Then: $7.58
• Now: $6.82
• Return: -10%
• Total Return: -10%

Sovereign Metals (SVM ASX)

• Then: A$0.50
• Now: A$0.49
• Return: -1%
• Total Return: -1%

Centaurus Metals (CTM ASX)

• Then: $1.13
• Now: $0.89
• Return: -21%
• Total Return: -21%

Total Return Average: -11%