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Jared Rabinowitz,President & CEO, ETF Capital Management

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BMO Exchange Traded Funds

Gold is in the News…

8

• As central banks & governments double their balance sheets & fiscal deficits, some analysists are increasing their targets

• Still, a strong USD backdrop, falling equity market volatility and weak jewelry demand in India & China may remain headwinds

Gold is in the News…

9

• It has not been a straight line up for gold… • Liquidity at times will be a consideration too…

ETF Access to GOLD

10

• There are three ways in which investors can access commodities through ETFs• Which one is best depends on the investor and need at the time

Advantages Disadvantages ExampleEquity-Based 1. No contango or backwardation

issues2. Natural leverage to underlying

commodity3. No storage costs

1. Commodity companies can behave more like stocks than commodities

BMO Junior Gold Index ETF - ZJG, TSXSr Gold – XGD, ZGD

Physical Commodity- Based 1. Almost no tracking error2. No default risk3. Pure exposure to underlying

commodity

1. Storage costs2. Not all commodities are storable

(i.e. perishable commodities)

GLD, IAU

Futures-Based 1. No storage costs2. Exposure to many types of

commodities, including perishables

1. Subject to contango/backwardation Issues

2. Forward contracts could be subject to default risk

DGL (single)

Looking at Gold over 12 Months

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• Gold equities and bullion ETFs saw a combined inflow of $382 million this month• Investors see gold as a ‘safe haven’ and some investors are using it as an inflation hedge

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

4-30-2019

5-31-2019

6-30-2019

7-31-2019

8-31-2019

9-30-2019

10-31-2019

11-30-2019

12-31-2019

1-31-2020

2-29-2020

3-31-2020

4-30-2020

ZGD ZJG Gold

Source: Bloomberg May 19, 2020 – ZGD – BMO Equal Weight Global Gold Index ETF, BMO Junior Gold Index ETF

Example of Gold Over 12 Months

Weekly Insights

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Disclaimer

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.

This communication is for informational purposes only. While the information contained in this document is believed to be reliable, no guarantee is given that it is accurate or complete. The information contained herein is not, and should not be construed as, investment and/or tax advice to any individual. Particular investments and/or trading strategies should be evaluated relative to each individuals circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment.

BMO Global Asset Management is a brand name that comprises BMO Asset Management Inc., BMO Investments Inc., BMO Asset Management Corp. and BMO’s specialized investment management firms.

*BMO ETFs are managed and administered by BMO Asset Management Inc., an investment fund manager and portfolio manager and separate legal entity from the Bank of Montreal.

Commissions, management fees and expenses (if applicable) all may be associated with investments in exchange traded funds. Please read the prospectus before investing. The indicated rates of return are the historical annual compound total returns including changes in prices and reinvestment of all distributions and do not take into account commission charges or income taxes payable by any unitholder that would have reduced returns. Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated.

All logos and trademarks of other companies are the property of those respective companies.

® “BMO (M-bar roundel symbol)” is a registered trademark of Bank of Montreal, used under license.

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Today’s Agenda

– The New Buyer of Last Resort –

– Assessing Fear and Greed –

– Looking Through the Eye of the Storm –

– Question & Answer Period –

The SLEEP-AT-NIGHT secret is to make bets when the odds are favourable. Only take risks when the probability of success vs. the probability of failure is attractive. THAT’S IT (PERIOD!)

How Much RiskShould You Take?

Optimism

Excitement

Thrill

Euphoria

AnxietyDenial

Fear

Desperation

Panic

Capitulation

Despondancy

Depression

Hope

Relief

Optimism

Point of MaximumLoss

Point of MaximumOpportunity

Daniel Goodwin, who oversees a team of paralegals for a law firm in Indiana, would typically bet $100 on a handful of sports games every night. A few weeks into the shutdowns, with matches on hold, he fired up a dormant ETrade account with several thousand dollars and began to buy stocks.

“I’m not here for the long run — I just want to throw a thousand bucks at something to see if I can make a few hundred,” said Mr Goodwin, 39, noting that so far he has done well on MGM Resorts and Caesars Entertainment, the casino groups.

“With sports, if I throw $1,000 at something, I lose the whole thing real quick, but here if things go south you can cut your losses.”

Who is BuyingThis Market?

When Risk Factors are High, Take Less Risk7 Factors

§ Market Vol VIX <>50-day average

§ 5-day Put/Call Ratio

§ Market Breadth: McClellan Volume Sum Idx

§ Diff 20-day stock vs. bond return

§ NYSE #new 52-W Highs/Lows

§ Spread JNK vs. LQD

§ SPY % <> 125-Day averagehttps://money.cnn.com/data/fear-and-greed/

Put/Call Ratio: Speculators with Leverage

Stocks vs Bonds: Portfolio Rebalancing

Breadth: Is the Rising Tide Lifting All Boats?

Volatility: Still Elevated, Moderating

Breadth: Leadership is Narrow

Crappy Companies: Only Because Fed’s Buying

Mean Reverse: Still Mean?

Is Now the Time to Take More Risk?

The Eye of the Storm• IT CAN’T LOGICALLY BE A “V”…

• We MUST be in the Eye of the Storm

• Volatility declining

• Headlines OK

• Optimistic worst is in rear-view mirror

The Eye of the Storm: June 2008

The Eye of the Storm: June 2000

The Eye of the Storm: 1973

Bear Market Rallies: 1930s…

The Eye of the Storm: 1938

Era of Populism Begins… #MAGA

OWN WHAT YOU LIKEHEDGE MARKET RISK§ Blank Check Policy = TLT, ZTL, GLD, CGL, GDX, ZGD

§ EM cheaper and younger = EEM, ZEM, XEM, VEE, THD, VNM, EWY, FM, INDA, SCIF, AFK, NGE

§ Debt levels will KILL growth. 1-2% GDP World = ZPAY, PYF

§ Avoid companies in $SPYB that need $$$ = Shorts

§ Technology: CIBR, ARKW, SNSR, ROBO, ICLN, IGV, EMQQ (KWEB), ARKG

§ Post WWII, the economies that thrived were young with strong demographics

§ Coming Inflation STIP, ZRR

§ Infrastructure: XME, ZMT, COPX

§ HEDGE The Pops, Cover the Drops

Question&Answer

“What would your trading strategy be if a vaccine is found today

when the market is still overpriced? Would you still expect

market revisiting the lows and wait for that to happen

to start shopping based on your shopping list? Or would you

start buying if the vaccine is found?”

- Lili -

Question&Answer

“Over the last 20 years of globalization we have seen great currents of money flowing from

the United States to China for goods. In turn China has flowed money to its energy and

raw material suppliers. The energy states have then flowed much of that money back

into American and European stock and bond markets. What is your view of the possible

impact to the financial markets of the reductions in this money flow brought about by

Covid-19 demand drop and recent American policy announcements?”

- Ron -

Question&Answer

“The markets keep going higher, there is no connection to

economic realities. Is the market rise a function of so much

liquidity being pumped in by central bankers that retesting the

market lows (March 2020) is a moot point?”

- Mike -

Question&Answer

“My question is, given the current High Volatility, how does

one implement a Dollar cost averaging strategy (for long

positions)? The temptation is there to try to time the

market...especially when there is a large INTRADAY move.”

- Allan -

Question&Answer

“Wondered what you thoughts are re: holding stock in

senior living facilities? I currently hold Chartwell.

What about Extendicare or Sienna? Despite Corona, there is

still a third of Canadians who are boomers.”

- Brian -

Question&Answer

“Markets have snapped back with some strength since the March lows indicating confidence

in what central banks are doing (e.g. flooding the markets with cash, buying bonds, etc.).

The market is overvalued by many standards but investors are still buying into it.

It seems Central banks have the upper end and like many say, "don't fight the Fed", seems to

be the right attitude to take in this market. What do you think will be the catalyst that will

bring the market back down? A second wave on top of the damage already made by the first?”

- Raffaele -

Question&Answer

“My question is: would you consider Horizon Betapro

Enhanced Gold Producers Income Fund HEP a good way

to have a position in Gold?”

- Guy -

Question&Answer

“Are you in favour of investing in ZQQ? or is there

another Technology ETF that you would recommend?

By the way, I think you’re the greatest!”

- Sandra -

Question&Answer

“With sugar prices near the lows of its long term range, is now

the time to establish a position? If so, what’s the best way to

invest? The TSX has Rogers Sugar - would it benefit from a rising

sugar price like a gold miner would rise with the price of gold,

or would you recommend another security?”

- Andrew -

Question&Answer

“Retired and need stable income, how will ZPR hold up

during downturn? Will yields fall as well as ETF value?

Require stable income not growth, any suggestions.”

- Doug -

Question&Answer

“Is it reasonable to think the INR ( Indian currency ) will weaken for

the next 12 to 24 months or any period? After this period of

INR weakening, how much would Larry feel the INR will strength

against CAD? Is it reasonable to think, emerging currencies will

strengthen against the CAD and USD?”

- Ishwar -

Question&Answer

“I am a young investor and have never been through a financial crisis

before. How is it that the markets can look past everything that is going

on with the economy and keep going higher and higher? Do you think

the market will test the March lows again? What will it take for the

markets to realise the current state of things financially?”

- Justin -

Question&Answer

“Can you explain how and if the recently passed Senate

legislation will affect Chinese listed stocks like Alibaba and JD?

CNBCs Josh Brown stated it wouldn't really affect Chinese stocks

with American accounting firms. I own ZCH as well.”

- Dave -

Question&Answer

“With the possibility of supply chains moving away from China,

what countries would be the beneficiaries? How long do you

foresee this process taking to become established? Thanks.”

- Paul -

Question&Answer

“I know we are six months from Tax Loss Selling season, but is

there any merit on buying good stocks at beat up prices during this

period? What are you thoughts good or bad on buying equities

during Tax Loss Selling season?”

- Patrick -

Question&Answer

“Awhile ago you suggested that if the VIX stayed below 40

for more than a week, only then could one conclude that the

bottom is in. As you know, it has been below 40 for almost

a month. What are your thoughts today?”

- Tim -

Question&Answer

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