The managing director of SuperCharged Stocks sees investing in mining stocks as one way to strengthen a portfolio amid the market turmoil.
As markets around the world react to the coronavirus, Andrew O’Donnell of SuperCharged Stocks thinks investors should return to where the value potential lies: mining stocks.
The managing director of the sector hub also spoke about the global supply chain and economy, describing them as fragile systems that could be weakened by one small catalyst.
“We haven’t created a robust or well-structured system at all,” O’Donnell said. “It’s actually extremely fragile to one event, and this one event, a flu, totally destroyed it in one step.”
Addressing gold’s recent volatility, which has been linked to liquidation in favor of cash, O’Donnell was critical of this strategy and the motivation behind it.
“There wasn’t a flight to safety, there was a flight to cash, which doesn’t make any sense to me,” he explained. “Because if we look at US$16 trillion of negative-yielding debt, essentially what you’re saying is, ‘I’m willing to put money into a country or someone where I think it’s safer and make negative returns because I’m assuming the future doesn’t look too positive.’”
The concept that investors would rather hold cash than safe haven assets is what O’Donnell described as a “pretty big indicator” that we are not in a normal world situation. He went on to point out it may be a good time for countries like the US and Canada to evaluate their dependence on outsourcing.
“(We’ve) made the decision to have all the commodity and all the stockpile of it and all the creation of goods pretty much in one country to save on labor costs, and now you’re stuck with a problem,” he said.
In terms of offering advice on how to weather this financial time, the market watcher referenced Warren Buffet’s stance on silver being a better play than gold due to its many industrial applications and its correlation to currency.
“I like owning the stuff that makes stuff,” O’Donnell quipped.
For those looking to bolster their portfolios amid the volatility and uncertainty, O’Donnell had the following advice.
“Why wouldn’t (money) go into a longer-term cyclical play that’s already had its butt kicked for years and years and years that has a timescale that’s a little bit longer, but also has an upside that’s incredible? Right now is the time to be looking at mining.”
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.