Four Signals that Point Towards the Recovery of the Resource Market

Signal #1: Gold

After the controversial Brexit vote, gold has rallied substantially in June, reaching its highest level since the global recession in 2008. Stocking up on gold has always been the default reaction to times of uncertainty, and this surge of buying causes gold prices to soar. With all of the global economic and political uncertainty, gold is seen to continue doing well over the next few years. In its recent report, Merrill Lynch said that gold is headed for $1,500 an ounce this year because of global crisis happening one after another.

Signal #2: Silver

Now that the previous precious metals’ five year cyclical bear market looks like it has been replaced by a bull market, silver prices have jumped nearly 50% so far this year. Just like gold, silver price has received a significant boost in June, after the Brexit vote and increased the most out of all the precious metals. Compared to gold’s rise of 6.8%, silver price has increased by 14.3%. Seeing the latest market trends, silver looks to continue to do well, along with the other precious metals.

Signal #3: Oil & Gas

The oil & gas sector has made a significant comeback in Q2 as Brent and WTI had their best quarters in years with 35.1% and 37.3% increases. The low oil price has forced the oil and gas industry to innovate new ways oil is being developed and produced. Price forces innovation in terms of reducing unit costs of oil production and ultimately increasing unit margin and achieving higher return on capital employed. We are seeing this happening now as the oil and gas sector is making its comeback.

Signal #4: TSX Venture Exchange (TSXV)

As a Canadian index tracking many of the world’s junior mining and energy stocks, the TSX Venture has also done well along with the rise of precious metals and energy. The TSX Venture was the best performing benchmark in Q2. Seeing the upward trend of Gold, Silver and Oil; Gas markets, the TSX Venture Exchange looks to continue to do well.