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

European problems. They may act more slowly and seem not to be as decisive as the US. They have long memories. They saw what happened to Germany in the 30’s. They will come to a solution some time.

Precious metals. Weaker currencies are positive for precious metals. He is very bullish on precious metals longer-term. In the short term, if there is a solution to the US debt ceiling crisis, gold could sell off and this would be the time to get a full position if you don't have one.

Market: We are at a point where the ROE’s in Financials have peaked and now they have to come back to the market to raise capital. You are getting diluted as they come back. Gold is acting as a currency. It is a store of value. His adjusted gold price is above $2000. It could to take 3-6 months or another 3 years to reach that level.

Markets. Very confusing out there right now. We are definitely in uncharted areas. Policy makers are in areas they have never been before and will be taking very cautious steps and very predictive. Quality names, really good stock picking is going to be paramount. A big believer in stop/losses. Volatility is absolutely here to stay.

Earnings VS Cash Flow: Earnings are the bottom line. People pay dividends off that. Cash flow is not on the financial statements. People look at cash flow in juniors when there is no positive earnings.

Market: The market has not reacted at all to what he sees as an impending disaster. Feels the US will be downgraded from triple-A. He also sees a potential breakup of the Euro zone. Gold’s winning streak is justified. There is a psychological component. Gold really is a currency. The gov’t has no way other than to inflate its way out of the debt situation. US probably will raise debt ceiling by Aug 2, but it will be so large that it has to lead to a debt rating reduction. Interest rates will go up and government debt servicing costs will go up. Where you put your money is (a) in golds and (b) in cash so you are ready when the market bottoms. Or you could be in large cap dividend-paying stocks that pay you to wait.

Market: We are still in the Summer Doldrums. He doesn’t do anything except make tax loss selling. He just does research on the sidelines. Debt ceilings are creating an overhang on the markets. They will have to come to a settlement on the US debt level and will do it by Aug 2. Europe could go on for quite a while still. If they solve some problems, often the solution is only a temporary measure. He has sold off 21% of portfolio this year, locking in profit in most cases.

Preferred Shares: He owns 3 banks. Would have preferred the common stock in hindsight. He is holding them now. Doesn’t like bonds.

Markets. His macro view is that there are very serious risks out there, Europe obviously being one of them. Europe doesn't know what to do with Greece, Portugal and the like. Can't allow default as it will kill the banking system. US economy is in terrible shape. Also, inflation has been rising and interest rates will be rising over time. Investors should have a very large cash position. He has about 65% in cash.

How should a portfolio of Corporate Strip Bonds deconstructed? (Should only own these in non-taxable accounts.) Yields are relatively low so you want to make sure you are taking virtually no risk, so stick to the highest quality. Ladder then from 1 to 7 years giving you an average of 3.5 years. If rates go up, you have a maturity.

Gold/Silver. Gold at a record in Euros, British pounds and now in US$. It was just a matter of time. Normally this is a seasonally weak time for gold but there hasn't been much of a pullback. Expects to see some upside in gold and silver in the short term. US is letting its dollar slide on purpose. Currently likes the silver play better than the gold.

Markets. Expect there will be some consolidation and then it goes sideways over the summer time and then have a second wind in the 4th quarter. Correction in April, May and June was more severe than what he expected. In Europe, they will have to put Greece to bed in terms of having a solution for the next couple of years.

Gold. He is a bull on gold. It’s an alternative to paper currency. If you're not in the US$, where are you going to be? Could get to $2300 per ounce at some point.