It’s been a big week. The events that took place will have a serious impact on your portfolio – especially if you have been following our newsletter and are invested in resource stocks.
Over the last year, we’ve talked about money pouring into the resource sector in numerous newsletters (see The Breakout) and how it will lead to renewed and continued growth in the resource sector.
This past week, three significant events took place that will add more fuel to that fire.
Let’s start with China.
Story #1: China’s Spending Spree
In our issue, “Action Speak Louder Than Words,” published January 23, 2011, we focused on China’s role in pricing resource stocks. All of China’s actions have a dramatic impact on the sector. If China is expected to slowdown, the sector plummets. If it’s expected to grow, it climbs.
If you haven’t read that issue, go back and read it before you continue (click here for Action Speak Louder Than Words.)
Forget what the reporters and journalists are telling you about China’s need to slow their economy because China doesn’t care. Their actions continue to speak louder than words.
China spent more money than ever last year with investments into Canada’s natural resources. Less than a few months into 2011, China has already begun more spending by making the largest gas deal ever with Canada.
On Wednesday, Chinese oil giant PetroChina said it will invest US$5.42 billion to acquire a 50 percent stake in a shale gas project developed in Canada by Encana (TSX: ECA)(NYSE: ECA), North America’s top gas producer.
With this deal, Chinese investment in Alberta has now topped $20 billion over the past two years.
Despite this being a record-breaking investment by China, I am betting they’re not even close to being finished. As a matter of fact, there’s going to be a lot more buying coming from China.
The Bank of China just announced that it will open its third Canadian location in Calgary.
This means a larger pool of Chinese capital that can fund further resource plays. Having a Calgary office will give the bank a base for intelligence gathering and to network with the business community. This will lead to connections and business spin offs that will lead to further deal making.
All of this leads to one thing: Continued growth in the resource sector.
…..Story #2: Gold as Good as Cash ….HERE