Dec '10/Jan '11

Words to the wise

Natural resources the portal to value for independent-minded investors

By Peter Diekmeyer

Ian Campbell, a chartered accountant and chartered business valuator, is the founder of The site, launched in 2008, provides current and comprehensive information on the approximately 1,600 oil and gas and mining companies listed on Toronto's stock and venture exchanges and currently counts 15,000 subscribers. In addition to market and commodity data, the web destination also holds information on investment education, valuation education, macroeconomic news and commentary, targeted industry commentary, and company-specific intelligence on base metal, coal, diamond, gold, potash, silver, uranium, oil and gas, other resource companies, as well as income trusts. Campbell’s work with provides him with a unique platform to follow industry developments. He recently shared his insights with CIM Magazine.

CIM: What are your views on the resources sector as a place to trade and invest?

Campbell: I decided that the resources sector was the place to be in the fall of 2005, and nothing has happened since then to make me change my mind. Naturally, investors need to continuously monitor the macro-economic picture to make sure that it does not change. Right now, the geo-political outlook is filled with uncertainty. If some extraordinary event or conflict were to occur, that could change everything. As far as investments go, I believe that those who take responsibility for making their own decisions going forward are going to outperform others. To do that, individual investors need well-filtered, accurate, easy-to-understand data. This is one of the main reasons that I founded StockResearchPortal.

CIM: What is your outlook for raw materials demand during the coming months?

Campbell: Raw materials demand is generally a function of economic growth. On that score the picture is mixed. I do not see the U.S. economy, the traditional motor of global economic growth, recovering any time soon. The recent mid-term elections (which returned the House of Representatives to Republican control) will only increase gridlock in Washington and make it harder for politicians there to get anything done. The U.K., for its part, appears to be suffering from the same economic malaise, as are many Western economies in one form or another. As a result, the world is increasingly dependent on emerging markets to fuel growth. That said, over the longer term, the raw materials demand outlook is quite bullish. The world population, which was just 1.1 billion people in 1910, is now at 7.5 billion and is expected to grow to 10 billion by 2020. In addition, many people in the emerging economies are moving into the middle class and are adopting Western-style, high-consumption lifestyles. The hard goods that they will be buying will have large material inputs.

CIM: We keep reading that Chinese demand is driving the industry — what is the strength of this trend going forward and what will this mean for the Canadian minerals industry?

Campbell: China is a force to be reckoned with. It has an inexpensive workforce and a strong government that can make and implement its decisions quickly. Not surprisingly, its economy has been growing rapidly for an extended period of time. To fuel that growth, the country has an enormous need for raw materials. But China affects the sector in other ways, too. The country is also sitting on close to $2 trillion in foreign currency reserves and is actively looking for places to invest that money, notably in the raw materials and extraction sector.

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