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

Markets. Coming off the earnings season in the US. Now starting to focus on economic numbers but they’re not so good and people are challenging valuations. Speculation has been fairly high and people have been questioning that. Weaker employment numbers. There’s a big number coming out tomorrow and people are scared of that and don’t want to be in the market so they’re pulling all their speculative bets off the table. This is the time of the year to be more conservative.

Oil. This is the end of the season for oil. Oil tends to run from Feb 25th to May 9th. He started taking his oil positions off in April when he saw some weakness.

Linear vs. Log Charts. Linear is an arithmetic chart while a log chart measures in percentage gains. If you have a 100 point move. Preference is for a Log charts in technical analysis.

Agriculture and fertilizers tend to go up from the end of July to Dec 31st. Since 1990, the average return in this period has been 15%.

Oil Stocks. Oil is holding firm above $110 but stocks really haven’t followed oil up as much since the crisis began early this year. Any time you get a really rapid run up in a commodity, it’s generally bad for the economy and you start seeing demand destruction and an impact on retail sales. He would like to see oil modestly lower.

US$ is central and affects everything else. It has been weakening since 2001. Now at a support level where it was in 2008. If it breaks through that then the risk trade is on again. They have the Japanese model of a weakening equity market and strengthening dollar, which they will want to avoid. June will tell us a lot. Will there be a QE3 starting?

Silver. Recently had a big correction. The 50-day moving average of $38.94 was kind of critical. You’ll have some really good support at $33.50 and $36.50. Gold probably has a better opportunity. Expects we’ll see $50 again.

Markets. Had felt from late February to early March that we were in a corrective phase and would probably go into May. Seasonality. A key level is $13,555 on the TSX. There will be a bit more time before the key questions can be answered.

Market: Portugal has reached a bailout deal. This will stop the bleeding. Sees more of this spilling over into other countries such as Spain. European debt restructuring is the biggest story of 2011. This is driving Gold and Silver. Thinks these are crowded, bubbly trade. Once interest rates start to go higher, this will be a really lousy trade. He has ABX instead of gold. He is starting to buy more US names and things that everybody hates.

TFSA: The promised to double the size of these in the future. Media has not done a good job of telling us what we can buy in a TFSA. You can buy stocks, bonds, and preferred shares.

Dividends. If you are going for dividend yield, he would probably look to the banks. Their dividend yield compared to the bond yield is so high now and they are growing their earnings and they have good valuations. Also some of the old Income Trusts on the energy side are still paying out some pretty substantial yield.

Market. Has been quite strong year to date with the S&P500 up over 9%, (only 3% in Cdn$ terms) and the Cdn market is up about 4.5%. Market has been very strong since the US Fed announced the Q2 but could be vulnerable with some near term concerns with Q2 ending, rising inflation, profit taking and seasonality. She remains constructive on the market over the balance of year, but could be volatile.

Precious Metals. Gold and silver are not in a bubble, but are just reflecting the reality of the US$. The index he watches shows the dollar right at the bottom. Even though Bernanke is not going to continue QE2, they have to keep buying the debt. $ is too low to raise rates yet.

Silver still has a lot of room to grow. Comparing it to gold back to the 1980’s it should be much higher than where it is. This week the COMEX raised margin rates twice against silver. They are forcing the silver market down in any way shape or form. Expects the futures will well overtake the paper.

Gold. Pricing is in a new paradigm. No longer the simple buying of gold when there is going to be inflation or the US$ is dropping. Universe of buyers has broadened enough that it has muddied the waters. Expect it will continue to be in decent shape for the foreseeable future, possibly another 18 months, but ultimately when interest rates start to rise, gold will peak and then start to pull back.