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

Payout ratios of banks. At what percent is a red flag go up? Banks currently devote 40%-45% and he would not disagree with this. Looks at what internal capital requirements are and what do they have to spend to sustain the business. What internal growth potential is there and how much is it going to cost to access that and will internal growth give a higher return on equity.

Markets - Range bound and investors are going to have to make decisions on what they want. Be prepared that if the market is up 200 points, it may not be there tomorrow. In a trendless market, dividends will play an important role. When the markets get to their upper range of about 1400, start reducing and raising cash in your portfolio. When it gets down to around 1000-1100 start adding, but always focus on dividend payers.

Gold - With the move by the Swiss franc today, European investors were probably pulling their deposits and going to gold as the Swiss franc is no longer an option for them. This will probably be more positive for gold going forward.

Markets – With monetary issues in Europe, liquidity in the global markets could easily become a crisis. He is Short a lot of the European banks.

TSX: Broke trend line, triangle formation, and it made a breakout. But it is in a downtrend. There is a lot more problems on the downside.

Gold: His target is past $2000 with point and figure chart. To see a double top you would need to have volume and momentum confirmation. Pay attention to trend lines and moving averages. We are very clearly in an up trend and yes, it could pull back. Don’t get out of gold stocks too soon.

Market: European news, unemployment caused another day of sell-off. We could have a rally and he will use that to generate cash. September is the worst month of the year with the end of the sell-off in October. WE have sold off quite extensively, so a bit of a rally wouldn’t surprise him. Use it to get rid of weaker stocks. The bottom is not in. For TSX it is about 11,000. We have not been in a bear market long enough to wash everything out.

Economy. US won't see the job growth that was there many years ago. When there are such heavy government debt levels around the world, there won't be economic growth that people are expecting. Feels the US is too focused on job growth rather than the restructuring of the economy. This applies to many countries. They lack the political will.

Oil. Feels current levels are a fair price. Doesn't expect it will grow as rapidly as people think. Potentially has the ability to go higher but at a slower pace than expected.

Natural gas. Seems to be trying to stabilize around $3.75. Natural gas has a very distinct seasonality from mid-August to mid-October. Coincides very nicely with the hurricane season. His preference would be to own the gassy stocks rather than gas itself. His preference would be the Natural Gas ETF (FCG-N). Inventory levels were very high last year but are now getting close to the bottom of their 5 year range.

Silver. Seasonality starts to turn positive around the end of September and goes right through until springtime. Because it is an industrial product, it tends to follow the industrial sector. Might be a little early, but a very interesting play going forward.

Crude Oil. Seasonality is from January to September. This year it is not following the seasonal trend and is under performing the markets itself. Currently it is in the downward trend.

Treasury bills maturing in one month. Be careful in the month of September. Markets are currently overbought after going very strongly for the last 4 weeks. 4 negative events happen every September. 1) Analysts overestimate earnings. 2) Hurricane season. 3) Consumer spending is down. 4) Lower confidence levels.

Treasury bills maturing in 2 months. You want to set yourself up so that right around October 28, (average date to reenter equity markets) you can put your money into equities.

Treasury bills maturing in 3 months. Gold and silver stocks do very well at this time of year. Agriculture historically goes from the beginning of July right through until the end of the year.