Money Show, Gordon Pape

Gordon Page is the Editor and Publisher of “The Canada Report” by Gordon Pape Enterprises. His talk was titled “Where to put your money in 2012”.

Gordon starts by saying that we are in for a couple of tough years, but the sky is not falling. We do have problems, the US credit rating is down, Sovereign debt is high, there are record gold prices and stock markets are volatile. We also have very low interest rates with a recession looming. He thinks that we are heading into a recession that will last until 2013.

He feels that knowing the past will help to tell us the future. The US down grade was not a non-event. It was a shock to the Bond Market. The US has gridlock in politics and nothing will happen until the next election in 2012.

He thinks that the Euro zone is a house of cards. If the German people are not willing to support Greece, Italy etc. there is going to be problems. The gold market will continue to go up and volatility will continue. Interest rate will continue to be low and we have a 50/50 chance of having another recession.

He thinks that the TSX will probably break even in 2011, although it is currently down about 6%. He sees a high demand for high yield securities and these will also be the winners in 2011. (One main reason for demand for high yield securities is demographics.)

This year bonds have done better than stocks as they are up about 6.6%. REITs are also doing well as they are up around 8.2%. Telecoms are also up around 11.9%. The TSX aristocrats are up a bit this year. (The TSX aristocrats are large caps that have raised their dividends each year of the past 5 years.

What he sees a winners for 2012 will be gold, dividend stocks, trusts and limited partnerships and bonds. Gold is still moving up as people see it as a store of wealth. (This is a universally accepted view of gold.) He sees the world in disarray with some countries on the verge of default. This will go on for some time and will help gold to rise.

Stocks he suggests are Agnico-Eagle Mines (TSX-AEM), Barrick Gold Corp. (TSXC-ABX); Franco-Nevada Corp. (TSX-FNV); and Silver Wheaton (TSX-SLW). He likes Silver Wheaton, as have a number of other people at this convention. They buy silver royalty streams. They have just reintroduced a dividend. The stock is low, but it is rising. For ETFs and Mutual Funds, he recommends RBC Global Precious Metals (RBF178); BMG Bullion Fund-A (BMG100) and Claymore Gold Bullion ETF (TSX-CGL).

If you want to buy stocks, you should be into dividend paying stocks. You want stocks that offer down market protection even if you do no need the income. Stocks to buy would be Enbridge Inc. (TSX-ENB); BCE Inc. (TSX-BCE); Fortis Inc. (TSX-FTS); Telus Corp (TSX-T) and Emera Inc. (TSCX-EMA).

Other stocks to consider are Trust and Limited Partnerships such as Inter Pipeline Fund (TSX-IPL.UN) and Brookfield Renewable Power (TSX-BRC.UN). You should try to buy IPL below $15. It is currently around $16.09. Brookfield is a green source electricity company. It used to be Great Lake Hydro. It has a 5.6% yield and it is a buy currently at $23.10. He stressed that we should not discount trust and limited partnership companies as investments.

He thinks that it is not a good idea to buy US Limited Partnership companies as you would need to file US taxes. However, Brookfield Infrastructure LP (NYSE-BIP) is fine as it is based in Bermuda. This company has a good yield at 5.3% and they increase the dividends each year around 3 to 5%.

He thinks that the return from bonds in 2012 will be around 3%. He suggested iShares DEX Universe Bond (TSX-XBB); iShares DEX Short Term Bond (TSX-XSB) and Claymore 1-5 year Government Bond E.T.F. (TSX-CLF). He also suggested Beutel Goodman Bond Fund.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.