Equity Resource Engineer | Resource Trade > Buy Gold, Sell the rest

Energy Sector: Remains in the high risk category due to falling global growth, oversupply and historically low ROE at stretched multiples. We struggle to see clarity in the forecasts without supply side action from OPEC countries. Time to take profit and come back when there is change in the demand/supply dynamics. Metals & Mining (Ex Gold): Remains in the high risk category due to declining commodity prices, US Fed action, China risk and weaker global growth. Recent bounce on short covering rally has moved the multiples past the optimistic commodity price assumption levels. The sliding ROE and substantial premium to fair value supports the negative outlook. Time to take profit and come back when there is change in the demand/supply dynamics. Gold: Gold equities (i.e. EVN, NCM, NST and SAR) outlook remains robust with rising growth and ROE from a long term fair value basis. The rising market risk and falling currency will favour Aussie gold miners. The Gold equities have moved from buy territory in December to hold territory in March. (VIEW LINK)