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

Markets. Usually valuations will rise on a combination of expansion of PE ratios and improvement in earnings. We are actually seeing some weakness in earnings so this has all been an expansion of PE ratios and the reason for this rise is strictly quantitative easing and ongoing low interest rates. He has about a 3^rd of his portfolios in cash.

Precious metals. Gold has done well, trading at an all-time high. As bad as the European situation is, it is becoming pretty obvious that the Europeans will do what it takes to fix their situation. Every country in Europe has austerity programs in place. Their debt to GDP is starting to decline. Deficits are down sharply. In 2, 3 years they will be in somewhat better shape. At that point, the premium on gold will probably dissipate somewhat. Expect that gold and silver will suffer a little bit.

Markets: There is some risk that the EU bond buying doesn't happen. On the 13th you get the result of the meeting when they decide. His view is that castles are being built in sand. He thinks they need significant austerity in the US because they can't afford to carry the debt there. Structural reforms needed and will be difficult in the US. Thinks there is some risk to the Euro currency.

GOLD: The easiest choice for Governments is to print more money. He doesn't see that changing. Gold is not going to be a straight ride up; there could be a 20% correction at some point. It depends on your ability to handle the volatility. Long term the trends are up. If you can handle it, look to handle dips and market reversals. As long as you think the trend is up you are going to have less downside volatility. Seasonal trends are positive until the end of October for Gold. QE3 never went away. They may launch it in 2013.

China and India Trip: Tried to talk to local people. China is in for a bit of a harder landing than people think. It has been quite developed quite a bit but he thinks there is over capacity. Condos with 30-40% occupancy. There has been a lot of over capacity. There is room for more roads and so on. But government counts for 50% of GDP. Over next 5 years. Horrified by sewers and there is lots of room for infrastructure spending. India has room for massive growth compared to China. Universal thoughts were that Government is too corrupt. India and China are 40% of world population. Other Asian countries have more room for growth.

Markets: Market continues to climb a wall of worry. With all the Euro worries, it has continued to climb. Thinks most likely QE3 will happen. Wait for the numbers on Friday. Thinks Bernanke has done a very credible job. Finding a lot of value because market is mesmerized by the macro and not looking at the micro. You are starting to see a lot of mergers and acquisitions as a result. Doesn't buy on acquisition opportunity but on fundamentals.

GOOD WILL: Look at balance sheet and look at soft assets – amount over paid for a company. Then he looks at hidden assets like properties.

Markets. Thinks we are going through a rolling crisis that is going to continue for a long, long time. Doesn’t think Europe is going away and it will come back at some point. Also, once you are through the drama of the US election, there is no question we will move towards a discussion towards fiscal restraint. Also, we are still dealing with a dramatically slowing Asian economy. Market is going to be increasingly focused on forward earnings momentum, which sort of sets forward PE multiples. Feels markets are fairly valued now but not extremely overvalued but he would be surprised to see them significantly higher priced than they presently are. He has about 20% cash in his portfolios.

Economy. ISM numbers came in and were, down for the 3^rd time, indicating strong recessionary influences potentially at work. Those people who believe that QE3 is coming in, and he happens to be one of them, are wondering if it is going to be announced as early as the next Fed meeting. If they wait another month, until October, and the numbers look worse, it is going to look a little politically motivated.

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.