A Comment -- General Comments From an Expert (A Commentary)

Markets. Precious Metals. Everybody that was patient and waited it out and were properly positioned are going to benefit greatly. We are witnessing a big Short squeeze. Gold broke through $1700, silver is outperforming as he expected. Still likes the producers and feels that the best place to be. Oil. We have the mess in the Middle East that is still fermenting. Foods. We have the drought in the US. There are a lot of negative catalysts but are very good for a lot of the holdings he has in his portfolio. He is now fully invested with 25% precious metals, 20% energy, 15% agriculture and the rest are in things that pay a really good cash flow.

Physical silver. Has read that demand largely exceeds supply but why does the price not reflect that?nIt is starting to reflect that and he thinks that silver will outperform gold. He regularly buys physical silver. Also, there is a much bigger Short position on silver than there is on gold.

Markets: ECB’s action does not fix any of the structural issues. It delays when one of the countries finds it can’t sell debt. They ultimately have to strike a balance with austerity. You have to deal with the long-term structural issues. Dividend stocks are a pretty crowded trade but there are a lot of them. You need high quality and dividend growth.

Markets. His portfolios are set up as a more balanced format. A lot of the yield and defensive names have been trading at top-of-the-line values. If you look at good companies that are going to do well in the next 2-3 years and have an earnings momentum, there will be opportunities to pick them. On a day like today, you have to wait and watch for a few days to see how sustainable this bullish rally is.

Glacier Credit Card Trust, Series 2012 – 1. A Canadian Tire (CTC-T) receivables program for credit cards. This company is at an inflection point as an operating business but its credit card business has been posting very strong numbers. The credit enhancement for the Class B is looking very strong along with the excess spreads.

Markets. Feels that a fair amount of stimulus, both monetary and fiscal, will be coming our way as this year continues to unfold. Has been fully invested all summer long because 1) he is bullish on equities, 2) if you are holding cash, you are basically getting nothing and 3) rate of inflation is generally higher than interest rates so you are losing purchasing power. Currently he is a big fan of the US equity market because US large cap stocks have been a fantastic place to be. In Canada, he is a little more favourable to the cyclical sector a little more than the financial.

Covered Call ETF’s for income? He would be very careful with Covered Call ETF’s. They are seductive from the standpoint of that they generally do pay a big yield but basically you are paying out of capital on this. MER’s are quite high. If you want to write Covered Calls yourself, it’s a very simple thing to do. You’ll have more control over your portfolio and it will cost you a lot less.

Markets. S&P 500 is up 10% and the TSX is up just over 5% this summer. Economic data is actually slowing and decelerating. Because of this, she feels a lot of the rally is being driven by expectations that we will continue to get essential bank intervention by either Europe or the US Fed. She is still cautious because she feels the rally has not been driven by improving fundamentals.

Markets (CDN): He is looking for a couple of more days of softness and then a rally. November and out get very cloudy for stocks. Lots of news coming up for investors to chew on. If you try to distill all of these outcomes then you are either crazy or lucky. The Chinese don’t want more inflation for food and domestics. Bonds came off their 200-day moving average. Gold has been in a great long-term trend. Short term the energies, golds and pro-cyclical moves are moving up but he is invested in Consumer stables and defensives.

Markets. In the last 4 months, May, June, July and August the markets have gone up steadily and consistently with not a great deal of volatility. Because of this, he feels there should be a degree of confidence in the market that has not been there. He is feeling that things are stable now and there is not a “great” deal of risk going forward. Doesn’t expect anything to happen to bank rates for the rest of this year and, quite possibly, for all of next year as well. You should have a suitable mix between equity and income and most people should be a little more weighted towards equity. He would divide your equity money into 5 portions of Cdn stocks, US stocks, Intl stocks, emerging market stocks and then tangibles (hard assets) such as commodities, oil, gas, real estate, etc.

Caller earns $250,000 a year and spouse earns $60,000. Best tax strategy? Income splitting allows you to lend money to your spouse at 1% currently and if he uses the money to invest, he can deduct the interest. You have to have this papered and interest has to be paid by the end of January every year. Another option is flow-through shares which offer tax deductions to the underlying holder because they flow through the tax deductions that would otherwise be available to the company that issues them. These things are risky and can fluctuate and are also temporarily illiquid.

Market. Thinks the reaction to Ben Bernanke’s speech today has been pretty positive however she doesn’t think there were any surprises. Central bankers are standing there to act in opening up their balance sheets if need be but that was expected. Gold and silver are having a pretty good day. Global growth is the key factor she is looking at and looking a year out, she is not really seeing a lot of strong growth. It is good that central bankers are supporting the market, so you are not going to see negative growth but there are not a lot of strong catalysts for the market.

China. A few quarters ago it guided to 7.5% growth, which is the next five-year plan. However, she has been hearing they are below that number and the yield curve is somewhat inverted so they are seeing slowing in the economy. Some of the provinces have a lot of debt. Expecting it to ease, but it might be a couple of quarters out. However, she is not negative on China but expect they will reach a peak growth of about 7.5% so it is still fairly healthy for them.

Gold. Thinks this will range between $1600 and $1800 for the next 12 months. Would add to your goal positions.

Commodities. Just waiting for commodities to start rallying. Commodity prices are doing not too badly but there are a lot of issues with commodity stocks, energies and a lot of material stocks. Year-over-year, from the end of July until now has been very tough for this group. This is putting a big cap on the TSX so we are not seeing big rallies.