In times when the Canadian dollar is falling, Canadian investors should have significant foreign investments. However, the Canadian dollar is currently in a long-term uptrend; it is prudent to have mostly Canadian investments now, and only small exposure to foreign securities.

Yesterday and today

I’d like to address an important point from our look at the similarities in economic history between 1929 to 1942 and 2007 to 2017.  Easy money policy attracts speculators. Although most economies have experienced 10 years of easy-money monetary policy, speculators are not rolling the dice in the stock market.

This time around, the speculation has been in real estate. As increasing interest rates cool the fires of speculation, most of the losses will occur in real estate, not in the stock market. When the cash crunch hit the US in 1929, the main casualty was the stock market.

When it crunched in 2007, most of Americans’ losses occurred in real estate. This time around, the excess is in real estate. Canada is particularly vulnerable right now.

Stock market speculators should continue to work in Canadian oil and gas stocks and precious metals stocks. Gold, silver, oil and natural gas are all in long-term up trends right now. And, the Canadian dollar is also in an up trend. You will have many opportunities in speculation if you focus on individual gold, silver, oil and gas stocks that are in up trends. In our June 2017 issue, we listed several examples of stocks in up trends. This is an updated list of stocks that I favour right now:

Canadian Natural Res    (CNQ); Encana (ECA); Suncor (SU); Advantage O&G (AAV); Canacol Energy    (CNE); Enerplus (ERF); Freehold Royalties    (FRU); Kelt Exploration (KEL); NuVista Energy    (NVA); Paramount Resources (POU); PrairieSky Royalty (PSK); Vermilion Energy (VET); iShares S&P/TSX Capped Energy Index ETF (XEG); Dalradian Resources (DNA); Sabina Gold & Silver (SBB); Premier Gold Mines (PG); Osisko Mining (OSK); Seabridge Gold (SEA); Semafo (SMF); NovaGold Resources (NG); OceanaGold (OGC); Centerra Gold (CG); New Gold (NGD); Iamgold (IMG); and Franco-Nevada (FNV).

These are volatile stocks in up trends. If you like to trade, use your trading system on these Canadian resource stocks. They all trade on the TSX; some also trade on US exchanges.

Two notes of caution: (1) The US dollar has been in a short-term down-trend for several months and could bounce up at any time. This will put downward pressure on gold and silver prices. (2) When the US stock market starts to go down in earnest, precious metals stocks will feel the downward pressure too.

One note of encouragement: several of these energy stocks have just gone to new multi-week highs. If your trading system calls for buying breakouts, you will find some gems on this list.

Ken Norquay, CMT, is the author of the book Beyond the Bull which discusses the impact of your personality on your long-term investments: behavioural finance. He can be reached at: kennorquay@yahoo.ca.