You often find robins in a bear market. And that is exactly the current market environment. The state of uncertainty, global trade wars, geopolitical tensions, and the oil crisis have created an opportunity to invest in two sectors, gold and oil. And they can help you maximize growth in your Tax-Free Savings Account (TFSA).
Going back to the 1980s, a sharp rise in oil prices in 1979 and then a sharp dip that lasted six years led to a global oil crisis. Oil is once again in the limelight after a sharp rise in oil prices following the 2022 Russia- Ukraine war. The global trade war and rising tensions between the US and Russia, the US and Iran, and the US and Venezuela conflict have one thing in common: oil.
Where to invest your TFSA contribution for maximum growth?
While the reasons for oil price volatility in the 1980s and now are different, the impact on gold is the same. This has created an opportunity to invest in market robins.
Invest in gold
Lundin Gold (TSX:LUG) is at its 52-week high and is still a buy. While critics say that gold prices will fall, the war-like situation in some of the biggest oil-producing countries and a change in the oil supply chain due to global trade wars make gold a safe haven. When oil prices become volatile, the US dollar value falls, economic uncertainty rises, or major countries are in a full-blown war, gold’s value increases.
Even today, one commodity that global central banks store in reserve is gold. Backtrack to gold’s performance in any crisis situation, it has been a wealth protector.
The oil crisis that started in 2022 has only escalated and is now turning into a decade-long tussle, as the United States looks to preserve the value of the petrodollar. Even though we are in the midst of uncertainty, there is room for the gold price to grow further.
Lundin Gold is the best Canadian gold stock to buy because of its estimated all-in sustaining cost (AISC) per gold ounce of $1,060–$1,170 in 2026, lower than Kinross Gold’s $1,490 and Barrick Gold’s $1,660. Considering the gold price is trading at $4,900 per ounce, Lundin Gold is likely to enjoy windfall profits.
Invest in oil and gas
Suncor Energy (TSX:SU) stock has crossed its 2008 peak and is trading at $68.72. There is no change in the WTI crude price or US tariffs on Canadian oil exports. Yet Suncor stock is rising over fears of an Iran war.
The market is betting on Suncor’s oil reserve, which is far away from the political unrest that has gripped Iran, Russia, and Venezuela. Moreover, Canada is looking for new trading partners for its oil and gas as the United States capture of Venezuela threatens competition in its single major market. The Canadian oil exports began with the US sanctions on Venezuelan oil, and if that door opens again, Canada might as well secure new trade deals.
A stable, secure oil provider like Suncor commands a premium in today’s market. However, with shares at $68, it is better to avoid buying the shares now. If you already own Suncor, you can keep holding some shares and book a profit on some, as $68 is not a price you see every day on Suncor.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is increasing its exposure to natural gas reserves. It has acquired several natural gas reserves in the last two years and is in talks to acquire another $1 billion worth of natural gas reserves from Tourmaline Oil. The energy producer is looking to maximize its benefits from natural gas exports to Europe, safeguarding its cash flows.
Natural gas remains a viable alternative amid oil uncertainty. With CNQ’s expanding exposure to natural gas, demand growth could benefit TFSA investors positioning for a changing energy landscape long term.
