Jaime Carrasco, portfolio manager at Canaccord Genuity

FOCUS: Precious metals and North American dividend stocks

MARKET OUTLOOK:

Like a broken record over the last couple of years I have been telling investors to slowly build their allocations in precious metals using the two main investing rules of the late great Jesse Livermore:

1. It was never my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!
2. Patience is the key to success not speed.

The main thrust behind this advice was the understanding that this market was being manipulated, and the historical fact that for 4000 years the precious metals have withstood the test of time in protecting investors from the negative consequences of central bank policies. History teaches that these have always resulted in monetary wealth destruction, greater income inequality and by default greater populist societal conflict. My speculation was that it was not going to be different this time.

My formative years gave me a personal experience on the consequences of these policies, as my father fled Chile during the economic hardships that hit Chile and most of Latin America during the 70s and 80s for the very same reasons. However, I also experienced how my maternal Grandfather protected his wealth with hard assets during this period. My advice continues to be that investors hedge their portfolios with at least a 10 per cent position in precious metals, but I must point out that clients are now sitting at 30 per cent and feeling quite sheltered from the coming storm.

If history is rhyming, what we are seeing is the beginning of the inflationary storm that always follows when paper money dies; the stealth devaluation of the purchasing power of the currency due to central bank policy. As a result I continue to advise that investors hedge accordingly.

To help, I structured two portfolios in 2015 specifically designed to protect investors from monetary devaluation:

1. The Special Opportunities Portfolio is a stand-alone solution for investors that have figured that they need to protect their wealth, but have yet to figure out what investments to buy. This portfolio gives investors a ready-made solution with a proven track record in which they can quickly take a 10 per cent stake in the sector.
2. The Equity Income Portfolio is a diversified portfolio of dividend paying blue chip stocks with a 30 per cent weighting of precious metals.

Both these portfolios require a minimum investment of 300,000.

TOP PICKS:

Calibre Mining (CXB TSX) This recent pullback offers a great entry point into this Nicaragua fast growing gold producer, we have it ranked as a buy with a $4.25 target.

First Quantum Minerals (FM TSX) Copper has broken out and First Quantum is a great producer to participate, we have it ranked as a buy with $28 target. A great inflationary hedge.

Exxon Mobil (XOM NY) In December I took a position on Exxon as yield hit 9 per cent, while stock has since appreciated the yield is still offers a great entry point at 7.7 per cent. We have it as a buy.

PAST PICKS: February 21, 2020

Fortuna Silver (FVI TSX)

• Then: $4.95
• Now: $9.50
• Return: +92%
• Total Return: +92%

Osisko Gold Royalty (OR TSX)

• Then: $13.91
• Now: $13.84
• Return: 0%
• Total Return: +1%

CASH

Total Return Average: +47%