BT Global Growth's Podcast
BT Global Perspectives Podcast – Hosted by David Creighton, Chair of the BT Advisory Board, with Paul Beatty, Managing Director and Co-Founder of the BT Global Fund. This episode reviews recent investment performance and emerging market trends. The fund finished last year with record growth of 67% and is already up over 20% in the new year, driven by strong momentum in precious metals and hard assets like silver, platinum, and copper. Paul and David discuss the significance of hard assets, the surge in silver prices, and why the Asian physical markets are increasingly shaping the metals market. The conversation combines insights, humor, and actionable perspectives for investors.
BT Global Growth's Podcast
EP.27 - Taking something off the table
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In this episode, David Creighton (Chair of the BT Advisory Board) and Paul Beattie (Managing Director and Co-founder of the BT Global Growth Fund) discuss current investment strategies amid significant market volatility.
Welcome back to the BT Global Perspectives Podcast, where we probe into today's investment strategies and have a look at what's coming over the horizon. In Montreal, I'm David Creighton, chair of the BT Advisory Board, and I'm with Paul Beattie, the managing director and co-founder of the BT Global Fund. Before we get going, I'll invite you to peruse our disclaimer, which can be found on the BT website. Good to see you, Paul. Good to see you, dude. Since our last chat a couple weeks ago, we've been knocked around with the unfolding events in the Middle East, the gold and silver kind of sideways to a little weaker, and we all know the oil story. Are you able to make any sense out of this? How do you position in something like this?
SPEAKER_00Aaron Powell Very uh big change in the market, right? This this moving around has changed the entire investment game for us, right? Um because we can't what is going to happen, I don't know. I don't know. Uh it's it's tough to predict. Um what we've decided to do is get a little more cautious, right? Um because I think I saw one analysis saying like there's a good chance, 45 percent chance, that uh Iran is just going to, you know, continue to uh uh status quo basically for a few months uh from here. And if they do that, you know, if the Straits of Hormuz do not open up in the next couple of months, we will have a worldwide energy crisis. We'll have $150 oil and maybe higher. It may not be everywhere in the world, right? North America will be fine, but Europe will not be good. India will be very bad, and um Asia's gonna suffer.
SPEAKER_01So it's amazing. It hasn't really started. I mean, I just came back from Southeast Asia last week and and Thailand, for instance, I didn't see any lineups for for gas. Um you know, nobody I I wasn't getting charts um any surpluses for you know higher gas prices for any of the trips that I made in the area. I mean, it's just as though it's not an event, but it's gonna be.
SPEAKER_00That's right. And I I've been told this is, you know, it's it's two months kind of thing. The other thing I just learned is that uh you know, if those oil wells, right now in in Iran they're not they're not pumping oil anymore because they have no place to store it, right? So uh but the the uh all those oil wells, the older oil wells, if the if they're not pumping, uh there's there's permanent damage. Trevor Burrus, Jr.
SPEAKER_01Yeah. They have to keep pumping. They have to pump. You can't just turn them on and off.
SPEAKER_00So uh so we're uh they've got you know serious, serious problems. They're gonna come off off market for the next whatever, six months, a year, no matter what. And they're a big producer. So we're gonna have higher oil prices, I think. And and and so you know it's a 50 percent, let's call it 50-50. Uh who knows? But I don't think the stock market's gonna be able to handle uh $150 oil. And uh we're gonna have a 20% setback in the markets overall. So um the other thing is it's the month of May, right? Sell in May and go away in Canada.
SPEAKER_01May and go away.
SPEAKER_00I mean, we all head to the cottage or whatever uh in Canada it seems, and uh and and and you know, liquidity dries up and uh markets, especially the smaller cap stocks, drift lower. So this is another reason and uh to take some money off the table, and then uh we're going into a trade negotiation with uh with uh Trump and his and his and his his team.
SPEAKER_01Yeah. I I guarantee you I mean those negotiations are already sort of happening now, but um but yeah, we we roll up the sleeves.
SPEAKER_00So there's gonna be headline negative news vis-a-vis Canada and trade coming in July.
SPEAKER_01Yeah, but he's gonna come out with a cannons right at the start and just blow us the smithereens and then you know walk back on it as well.
SPEAKER_00So that's coming and it's coming in July. Yeah. So do you really want to own like Magna stock? You know, uh you know I don't know. Do you want to own Canadian banks? You uh maybe Americans will say, oh, this trade thing may not go Canada's way. Maybe we should uh you know short some Canadian stocks, the Canadian dollar, whatever. So I mean, I don't know where that's gonna go exactly. I'm sure it's all gonna get walked back. Uh I'm sure we're gonna have a fine uh trade agreement with America. By the way, they have a great agreement already. Yeah. So I think uh uh it's just gonna be headline news and volatility. So what we're doing in the fund is we're we're taking like 20, 25 percent. Let's say between 20 and 30 percent, uh reducing all our positions, just uh uh raising some cash.
SPEAKER_01Can you do something equivalent to the VIX in the U.S., just you know, be able to take advantage of the volatility, buy the volatility one way or another, or maybe that's just through options or something?
SPEAKER_00It's it's tough in Canada. There is no VIX, right? Canadian VIX. Right. Um and and anyway, we're what do you own some energy stocks for sure? Energy stocks are are not expensive in the first place, right? Uh Canadian energy stocks traded low cash flow multiples and and uh energy goes up, these things are going up. We own all these uh international energy companies listed here in Canada. Valura's we've owned and talked about for years. Uh PAREX is uh a meeting with management next week. These stocks are so inexpensive. The multiples are so low, it's it's ridiculous. I think ParEx might be trading right now uh you know at one and a half times cash flow. But we'll confirm that next week. Anyway, they they're cheap. And by the way, it has a six percent yield, and it's a growth company. I mean, so uh have some energy, but then you also have precious metals. And and nowadays, unfortunately, one day uh precious metals are up, oil will be down, or vice versa. So um uh the overall portfolio just treads water.
SPEAKER_01So gold, I think whatever it was, a month ago or maybe six weeks ago or something like that, gold kind of started to feel a little bit toppy and then really kind of came off by a good 10 percent or something like that.
SPEAKER_00Aaron Ross Powell Well, the Turkish government sold 60 tons in six minutes, you know.
SPEAKER_01Okay, so that uh the I heard that there were a number of central banks that had been selling and just taking some profits because they'd they'd only bought it you know earlier on the year.
SPEAKER_00I think they needed the well, I mean I don't know for sure, but uh my understanding is they uh they wanted sixty billion quickly to protect uh you know for their own domestic use and protect their currency. And uh they sold it very quickly, right? Um they dumped it. Dumped it. And uh but in general, the uh the it's confirmed just the other day, data come in and it came in and uh the central banks are buying uh you know a thousand tons a year, which is they did last year and the year before. And uh these are these are you know big numbers. And so and I I I think Turkey stopped selling pretty quickly, and you know. So you know, uh it was a kind of a uh uh a shock to the to the gold space. That uh Negle Eagle, the best gold company for sure in the world, largest and best run and everything, that stock uh a broker called me today and said, you know, this stock's down thirty-three percent from its high. So, you know, we've had a setback uh in in the space, but uh I think it's uh temporary. I mean, we if if this thing if is the Iran situation uh clears up, gold's gonna go uh precious metals are going higher. Um and uh funny, uh the all the U.S. banks now are are making healthy forecasts for gold this year. All of them. You know, Wells Fargo came out and said uh six thousand this year, and I think they said eight thousand uh next year. So it's kind of strange, right? All the U.S. banks have such bullish uh forecasts for gold.
SPEAKER_01And silver is just getting dragged along. Yeah.
SPEAKER_00Yeah. But silver's in it, we're going into our sixth year of deficit. Uh global deficits in silver. It's a strategic metal. And um you can't just go start up a silver mine somewhere. It's uh it's really a byproduct.
SPEAKER_01Well, you were talking last time we got together, you were talking about some um expensive mines that are now being reopened.
SPEAKER_00Yeah.
SPEAKER_01Um and uh so is that playing out? Have you bought some of those?
SPEAKER_00Yeah, we bought uh we bought a bunch. Uh but I think what we're gonna have is uh softness till as I said, we sell them A, go away. Well, when do you return? You return in August, just before Labor Day. You uh you reload for uh for uh what I think will be an interesting uh uh fall, right? Precious metals may may be flat for the next three, four, or five months and um and uh we'll revisit in the fall.
SPEAKER_01And I guess an overlay on this also is because higher oil prices are working themselves through the system, um discussion at central banks is now leaning more towards a rate hike rather than a uh a drop. Yeah. And uh you know that that'll slow down a lot of things, including inflation. But uh, you know, watch out for for that.
SPEAKER_00It's gonna be uh I think that we're gonna have choppy markets uh here for the next six months, at least is what we're thinking. And it's it's it's not easy. This is the the the year started out so well, uh uh January and February, both double-digit months. And uh, of course we knew it can't last, right? So I think that's what we're gonna have, a good start to the year uh and then a good finish to the year.
SPEAKER_01Yep. Yep. Um kind of separate to all this, but something is going on in uh in Ottawa. And we don't usually delve into politics here at the BT Global podcast, but we were chatting yesterday about Canada's new proposed sovereign wealth fund, um, which you know, at the first glance, a sovereign wealth fund that, you know, like the the the uh NOR fund and the um ADIA, the Abu Dhabi Investment Authority and the KIO and Kuwait and so on and so forth, these are all um countries that have a surplus. And even the Alberta Heritage uh fund, which is uh run by AMCO, that was a uh provincial wealth fund. But Canada is not running a surplus, and we you know so where's the money gonna come from to go with us?
SPEAKER_00Trevor Burrus, Jr. So this uh our glorious prime minister, right, is supposed to be a uh a business uh person, uh worldly financier, and he comes up with this concept of a Canadian sovereign wealth fund, but we have no wealth in it.
SPEAKER_01I mean it's just to invest in infrastructure and various things. But we all we also have a relatively new infrastructure bank.
SPEAKER_00Yeah. So what's this gonna do that's different? And it it's so outrageous. Anyway, I heard uh they're they're already working on changing the name because of course it's been pointed out that uh uh it cannot be called a sovereign wealth fund, right? By definition. Um but we don't even know what this fund's gonna do. And then they actually said we're gonna give Canadians an opportunity to invest w into that fund. Oh my goodness. I mean, if like this is not a smart idea. And um and in fact, it's just embarrassing. I I cannot believe Canadians put up with this kind of silliness coming out of Ottawa, but uh that's just my view.
SPEAKER_01Aaron Ross Powell, Jr. So none of those other sovereign wealth funds um sell shares in their business to their people. These sovereign wealth funds are funds for the people, um and you know, just socking away for a rainy day when they run out of whatever commodity it is that they're they're making. So no, it it doesn't make sense. And you know, maybe it'll just fizzle out, but I don't know.
SPEAKER_00Well, what do you think the Norwegians, when they read about this, what do you think they're thinking about uh Canada? I mean, they're saying, well, yeah, we have a sovereign wealth fund, we take our energy, we sell it at a profit, we have way too much money, so we put it in a fund to do investments. What do you Canadians do? Oh, you don't like the energy business, or at least your government doesn't like it, you don't back it, you don't endorse it. We haven't built a refinery. We don't have a refinery in this country uh that serves the Canadian market. It's just unbelievable. We can't build pipelines uh to the east. And and and yet we say we have a uh uh we're gonna build a fund to invest. Like uh it it's embarrassing. Um anyway, uh though I'm sure there's things this thing's not gonna survive. But uh anyway, enough of that.
SPEAKER_01We'll we'll we'll watch this space, I guess. Um so uh on the commodities, we talked about gold and silver, um you know copper, all these other ones kind of going in the same direction, or is there anything that you see unfolding? I know that there's been a lot of talk about graphite. There was that fellow who found a huge um synthetic graphite uh load in a worn-out warehouse somewhere in southern Ontario, um, and it's supposedly worth a ton. So, you know, some of these metals are are starting to percolate to the surface. Aaron Ross Powell, Jr.
SPEAKER_00For sure. And these rare earth metals is uh this uh they're gonna we're the government's gonna start building stockpiles of rare earth metals. And uh so th this will be a trend for years. Um it's very uh it's very interesting. We're we're all excited about some of our exploration plays, right? Some of the uh some of the stocks. Um you know uh well, I'll give you an idea. Two uh two takeouts just happened uh in the gold space uh in the last month. And uh it's pretty simple. The math is uh they they paid five hundred dollars uh per ounce in the ground. Proven. Proven. Yeah. And uh most of the stocks, uh exploration stocks, you know, uh development stocks, whatever the in in in the space trade around $100 an ounce. So is Mike Gentilli, uh very famous investor here in Montreal and uh in the space, uh, he says most of my portfolio trades uh under $100, and guys are getting taken out of $500. I mean, just that's as much math as you need to know. So um so it's gonna be an exciting time. We're gonna have MA. That's that is for sure coming.
SPEAKER_01Aaron Ross Powell So I guess just circling back on your strategy, you're taking some um cash off the table, um, waiting for the various bumps in the road that are gonna be coming through with trade negotiations and so on and so forth, but also having enough money in your back pocket to be able to make some of these investments.
SPEAKER_00Aaron Powell Yeah. I mean, uh there's always opportunity, right? So the the it takes some money off the table. Uh we have trouble keeping it off the table. I mean, uh some gentleman just walked uh in here uh an hour ago, and his company's trading at 4.2 times EBDA, public Canadian uh company. And so we're just sitting there going, uh and by the way, they're number one at what they do, right? The is that high tide company, right? The the largest retailer of cannabis in Canada, right? He owns 250 stores across the country. He's trading at uh you know under five times cash flow. And uh so yeah, we have to buy some of that.
SPEAKER_01So of equal importance, uh big game tonight. Montreal Canadians against Buffalo. Are they going all the way?
SPEAKER_00Apparently the pros are all saying uh Buffalo has the uh edge. And uh so I think the Habs will uh will win. Yeah. Okay.
SPEAKER_01So let's let's uh keep an eye on that one. As always, uh we're gonna have to uh cut it off there. We appreciate the feedback that we get from our listeners and be happy to tackle a topic um that's on your mind. Just give us a call or get in touch through one way or the other. Um uh thanks to our recording and production engineer, Eric Cost, in post-production, which is overseen by Marianne Mount and Karen Valderrama. And till next time, be safe out there.