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February 18, 2025
Like it or not, the next four years will likely be chaotic in the resource sector.
That’s what often happens when new leaders step in and destroy established trade agreements.
Trump made it clear that his team will use their time in the White House to the maximum and leave no stone unturned.
(In case you’ve missed it, we touched on the proposed tariffs against Mexico and Canada last month.)
No one will be spared from extreme volatility and uncertainty.
The broad market keeps the outlook positive, maybe even too optimistic. This overconfidence can lead to major consequences if the companies fall short of quite lofty expectations.
We are not calling for a market crash, but a healthy correction is long overdue.
Commodities, which we focus on, have a mixed outlook. The performance of the resource sector will depend on the health of the demand, geopolitical risks, and overall market mood.
The latter, in fact, changes extremely fast, which makes it nearly impossible to track.
In this article, we’ll show how investors can position and protect their portfolios without spending 24/7 reading Trump’s X (former Twitter) or Truth Social feeds.
First and foremost, make sure to diversify your portfolio.
Keeping your eggs in one basket is a recipe for failure. Make sure your portfolio isn’t concentrated in one sector or commodity.
Second, having gold in your portfolio is wise—not for gains (although they may happen, too) but as protection against excessive market volatility.
Think of gold as a tool for long-term savings. It’s not as liquid as cash, but it keeps its value over time and outperforms other assets in times of distress.
Recently, gold soared above $2,800 an ounce as investors braced for a volatile year.
Either physical metal or gold-backed exchange-traded funds will be a good choice.
Silver, the other monetary metal, is more volatile given its partial industrial use. However, both metals could potentially shield your portfolio from excessive volatility.
The long-term history of market crashes shows that gold outperformed major asset classes during market distress. During the last ten market downturns, the S&P 500 dropped by 32.2% on average. At the same time, gold gained 19.4%, and silver remained nearly flat, with a slight average decline of 1.2%.
What about crypto assets?
Cryptocurrency is a relatively new investment tool, and there are no long-term track records for it, especially during market declines. Trump supports crypto assets, but we wouldn’t call them safe or reliable just yet.
All crypto assets remain high-risk investments. Make sure you know the risks of investing in the crypto space.
With portfolios well protected from extreme volatility, investors will wonder how to grow their capital during Trump’s second term.
Since gold and silver perform well in volatile times, mining companies in the precious metals space should provide good exposure to and leverage over the metals’ prices.
The US-based miners can be a good bet. However, companies working in Mexico and Canada can become more attractive to investors even despite the recently announced tariffs.
We would even argue that a weakness in the Canadian stock market indexes could potentially be a buying opportunity.
Due to their limited industrial demand, precious metals won’t be affected much by the tariffs. At the same time, a stronger US dollar will lower costs for miners paying bills in local currencies.
Mexico, which wasn’t fully supportive of the mining sector, started to act on the tariff threat and began issuing new mining permits. At this point, these are only for underground operations, but we may also see open pit permits this year as well.
Companies developing gold- and silver-focused underground mines in Mexico should be on your watch list.
Canada remains the leading mining nation and one of the world’s most liquid markets for publicly traded resource companies, yet permitting new mines was challenging under the Liberal government. There is a good chance that the Conservative Party will take over the government in the upcoming election. If so, that will support local businesses, including mining companies.
However, we should still be cautious about Canada and Mexico’s industrial metals and energy resources. Trump’s tariffs targeted oil with a 10% tariff, for example.
Argentina can be a place of interest for those with an even higher risk appetite. President Milei’s pro-business agenda has already started attracting investors, slowly turning Argentina from an investment hell into a nation with potentially high returns.
Argentina isn’t subject to US tariffs. Moreover, Trump follows Milei’s path and plans to cut the government, aiming to save up to $2 trillion. We hope that will work.
Still, Argentina is in a recovery phase, making it a risky destination for capital. However, watching Canada-based mining companies with assets in Argentina could be a good move in the current environment.
It’s uncertain how far Trump will go with his plans, but, either way, volatility will persist, and investors should be ready.
We don’t expect Trump to stop surprising the markets. Hence, it will be wise to buckle up for a wild ride. First, diversify and protect your portfolio with safe-haven assets. Then, speculate only within your comfort zone and according to your risk tolerance.
The Canadian Mining Report will keep you updated on the latest news in the resource space.
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Disclaimer: This report is for informational use only and should not be used an alternative to the financial and legal advice of a qualified professional in business planning and investment. We do not represent that forecasts in this report will lead to a specific outcome
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