Tiny Canadian company taps $45 billion market

Monday, 22 October 2018
Melbourne, Australia
By Bernd Struben

  • Why Russia’s markets look set to boom
  • Wentworth voters blinded by climate change rhetoric

It’s been five days since Canada legalised the recreational use of marijuana.

Five days since every adult has had access to the highest potency cannabis on the planet.

Yet Canadians are still getting up to go to work.

The trains are running as punctually as they did during prohibition. Teachers and students continue their routine of teaching and learning. Back at home, parents carry on caring for their children.

And, to the best of our knowledge, not a single fatal overdose has been reported. Not even a spike in road fatalities, as doomsayers in Australia would have you believe is inevitable should we follow in Canada’s footsteps.

So, what’s going on?

Is it possible the hysteria surrounding legal cannabis is based not on carefully researched facts, but on 50 years of drug war propaganda?

It certainly looks that way.

Which is not to say that marijuana is harmless. But like alcohol, tobacco, caffeine and…dare I say…sugar, it shouldn’t be left to the nanny state to place it in a locked cupboard marked, ‘Keep out under penalty of the law’.

Now to give credit where credit is due, Canada is the second nation to make this bold move. Uruguay beat them to the punch by fully legalising cannabis last year. But for obvious reasons, the Canadian market is getting much more attention.

The country’s size and wealth mean consumers are likely to spend US$32 billion (AU$45 billion) on legal weed by 2022, according to Arcview Market Research and BDS Analytics.

That’s $45 billion taken from the criminal underground and dropped straight into the hands of free market entrepreneurs. The good news is that Aussie investors can join in the massive potential profits being made in this green gold rush.

And we have the Canadian stock market to thank.

From Bloomberg:

Medical marijuana has been legal in Canada since 2001, but it’s only been about four years since the first cannabis companies began to list on Canadian exchanges. In that short time, about 140 pot companies have gone public in Canada, with a combined market value of more than C$60 billion ($48 billion).

If you follow along with Port Phillip Insider, you’ll know Sam Volkering. You’ll also know that, among the many hats he wears, Sam’s rightfully earned the title of pot stock guru.

He’s been atop the pot stock story since day one.

Last week I mentioned Sam’s recent recommendation of an Aussie listed pot stock to his readers in Australian Small-Cap Investigator. I hope you took the time to check that out.

Today I want to tell you about another pot stock recommendation he’s just made.

This enterprising cannabis company is much, much smaller. And it’s not listed on the ASX. It’s listed on the Toronto Stock Exchange Venture market.

It’s among the first recommendations Sam is making in his new service, Microcap Global Trader.

That’s right. Sam’s gone global on his hunt for the ultimate microcap winners.

Now he readily admits to the added risks and complications for Aussie investors buying into global microcaps. But don’t worry. He’ll walk you through those. At the end of the day, it’s not rocket science.

While the risks of investing in tiny, unproven companies is much higher, so too is the potential reward.

With gains of 3,000% or more on the table, Sam is determined to open up the foreign-listed microcap universe for a small number of subscribers who’d like to invest there.

I can’t tell you anymore about this Canadian microcap pot stock here. Or about the other two international microcaps he recommends in his new report, ‘World Wide Microcap Challenge’. Though I can tell you the other two stocks have no connection to the cannabis market.

If it’s really big gains you’re after, and you can stomach the risk, you can find all the details here.

Now a look at the markets.

Markets

Over the weekend the Dow Jones Industrial Average closed up 64.89 points, or 0.26%.

The S&P 500 fell 1.00 points, or 0.04%.

In Europe the Euro Stoxx 50 index finished down 0.77 points, or 0.02%. Meanwhile, the FTSE 100 lost 0.32%, and Germany’s DAX closed down 35.38 points, or 0.31%.

In Asian markets, Japan’s Nikkei 225 is up 104.96 points, or 0.47%. China’s CSI 300 is up 4.40%.

In Australia, the S&P/ASX 200 is down 35.79 points, or 0.60%.

On the commodities markets, West Texas Intermediate crude oil is US$69.25 per barrel. Brent crude is US$79.72 per barrel.

Turning to gold, the yellow metal is trading for US$1,227.49 (AU$1,725.70) per troy ounce. Silver is US$14.65 (AU$20.60) per troy ounce.

One bitcoin is worth US$6,456.07.

With the exception of the brief price spike to US$6,857 last Monday, it’s been a remarkably stable week for the world’s largest crypto. Just have a look at the seven-day chart below:



chart image

Source: CoinDesk
Click to enlarge


Some analysts believe bitcoin’s wild volatility may be a thing of the past, which would make it far easier to use in daily transactions. But you still hear others predicting bitcoin is heading to zero…countered by the bulls who’ll tell you today’s prices are a bargain.

With so many competing forecasts, what’s an investor to do?

You can filter out the noise and get the latest investment advice on bitcoin and the other major cryptos here.

In the world of fiat currencies, the Aussie dollar is worth 71.13 US cents.

Why Russia’s markets look set to boom

From some of the noises coming from the mainstream press, you’d think US President Donald Trump has set the world on the path to the Third World War.

No, it’s got nothing to do with North Korea. Or China. Or Iran…

So, what has the Donald done to ruffle so many feathers this time?

Chuck the US–Russian 1987 Intermediate-Range Nuclear Forces Treaty (INF). A treaty widely credited with ending the Cold War.

From The Australian Financial Review:

Donald Trump has been slammed by European allies, former Soviet Union leader Mikhail Gorbachev, and senior US Republicans for threatening to scrap a critical nuclear disarmament pact between the US and Russia that helped end the Cold War.

Almost 31 years after signing the deal — known as the Intermediate-Range Nuclear Forces Treaty, or INF — Mr Trump declared Russia had “violated” the agreement over many years and the US would now withdraw…

Members of Mr Trump’s own party also levelled criticism against the president, with Senate foreign relations committee chairman Bob Corker saying withdrawal would be a “huge mistake”.’

Well there you have it.

Trump’s making another ‘huge mistake’.

Or is he?

I recall when Mikhail Gorbachev and Ronald Reagan signed the INF back in 1987. I was a second year economics student at the University of Michigan back then. Like my fellow students, I welcomed the news.

The treaty prohibited the US and Russia from developing or holding intermediate range (500–5,500 kilometre) ground launched cruise missiles. What’s not to like?

The thing is that 30 years on, the picture is quite different.

First, according to US, British, and other international intelligence agencies, the Russians have been cheating.

Second, China is not part of the treaty, and thus not restricted in its own ballistic missile production.

Third, the original treaty was between the US and the USSR. The USSR no longer exists. In part that’s because it was driven into poverty in an expensive arms race with the US it could never actually afford.

Today Russia — stripped of its many satellite states from its Soviet Socialist Republics’ days — can even more ill-afford an arms race.

To give you some idea, in 2017 US GDP was more than 1,100% greater than Russia’s. China, on the other hand, is a different story.

In canning the treaty, Trump is not only calling the Russians out on their cheating, he’s looking to force China into signing a new three-way deal.

As Trump said over the weekend:

We’ll have to develop those weapons, unless Russia comes to us and China comes to us and they all come to us and say, “let’s really get smart and let’s none of us develop those weapons”, but if Russia’s doing it and if China’s doing it, and we’re adhering to the agreement, that’s unacceptable.

It looks like US and Chinese negotiators will have more to add to their plates. It could take some time to bring China into line here.

As for Russia, I expect Vladimir Putin will be more than happy to sign off on new treaties. He may even abide by them this time. As mentioned above, there’s no way Russia can match the US in any renewed arms race.

In fact, I wouldn’t be surprised if Trump and Putin had been discussing this long before Trump made his public announcement. The two leaders have been exchanging secret letters, after all.

I’m not claiming to know the contents of those letters. But as I’ve said before, conventional politicians and analysts simply can’t get their heads around Trump.

You likely remember his decidedly unconventional summit with Putin on 16 July this year. And how Trump got slammed for pandering to Russia, the enemy the world has to have.

Most of the US’ international allies condemned Trump at the time. Back home his opponents and even many Republicans joined together in outrage.

As The Guardian reported in July:

John Brennan, a former director of the CIA, tweeted: “Donald Trump’s press conference performance in Helsinki rises to & exceeds the threshold of ‘high crimes & misdemeanors.’ It was nothing short of treasonous. Not only were Trump’s comments imbecilic, he is wholly in the pocket of Putin.”

Trump’s made it clear he wants to normalise relations with Russia. And Putin would like nothing more than to see an end to sanctions against his nation.

But it seems the two leaders have learned a valuable lesson.

You can’t just stroll onto the world stage, exchange pleasantries — and a soccer ball — and end 70 years of animosity. You need to be a lot subtler about it.

One way you might got about it is by tearing up obsolete treaties and forging new ones.

Which is just what I believe we’re seeing play out here.

Trump now gets to look like he’s tough on Russia as the US heads for its 6 November midterm elections. After that, I expect he’ll push hard for meaningful reforms with Russia. And another friendly meeting with Putin.

That could well see sanctions lifted over the objections of vested interests intent on keeping Russia as the go-to enemy.

And it could spell good news for the Russian economy.

One way to play a resurgent Russia is the iShares Inc/MSCI Russia ETF [NYSEMKT:ERUS]. The exchange traded fund seeks to track the investment results of an index composed of Russian equities.

So far in 2018, ERUS is down 2.94%. Over the past 12 months it’s up a slender 0.54%.

But if Trump manages to mend fences with Putin, the next 12 months could be a far rosier story for Russian stocks.

Of course, in the international realm anything is possible. If sanctions aren’t removed, or perhaps even intensified, ERUS would likely lose money.

As a reminder, I don’t make official recommendation in the Port Phillip Insider. This is just an idea you likely won’t read anywhere else this week that you can explore further yourself.

‘Wentworth Voters Blinded by Climate Change Rhetoric’

Your local representatives have about as much power to influence the Earth’s temperature as the mice living beneath your home. Yet far-left activists managed to convince enough Wentworth voters that climate was a crucial local election issue to sway the outcome.

Fortunately, the government is standing firm with its energy policies.

Not even running Canberra with a minority government will…’

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Cheers,
Bernd