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

Preferences for commodities would be silver at the top and gold right after that. Commodities are acting as an inflation hedge given the monetization and debt that is going on globally. Would put oil next and copper after that and aluminum would rate at the bottom.

Uranium. Expects to see a number of assets come on line in the next 2-3 years. Marginal cost of production is around $60-$65 and current price is around $59. Japan situation may have killed the uranium cycle for the next 10-15 years.

Given the news of the last month, it’s surprising markets have held in as well as they have. Emerging markets, which have been under performing since the fall, have all turned higher. Commodities have turned higher. Canadian and Australian $’s, which are seen as proxies on risk assets, have both turned higher. Stocks are also back into new highs. We are in a persistent broad based rally.

Until a couple of weeks ago gold stocks were under performing the metal itself. Increasing costs for gold miners have been bothering investors. As a gold stock investor he has been more positive in the last week as mid-cap and large cap stocks finally broke out to new highs and follow along with the metal itself.

Oil is probably in a new range. Probably $95 to $105 for a while. Doesn’t see huge disruptions coming out of the middle east. Coming into driving season that generally increases the demand a little.

Because markets are up anywhere from 80% to 90% off the bottom, it’s not bargain territory any more and is getting harder and harder. We also have QE2 is coming to an end in the US and will there be a quantitative easing 3 or is liquidity going to go away. Too early to know. At some point they are going to have to raise rates. He is looking at consumer type non-durable type stocks, some lagging industries and some techs.

Gold. An appropriate asset class but at points in time it gets to an over exuberant level. When you are buying gold, you are buying a piece of something back in the vault and are not earning much on it. He loves buying streams of earnings, which you don’t get from gold. Has an appropriate weighting in it. Likes Great Basin Gold (GBG-T) as a small cap (assets in South Africa). Also likes Yamana (YRI-T) as a lower cost operator with some growth profile.

Margins. This is a personal choice. You are taking on risks to get higher returns on the equity market. He doesn’t recommend it and tends to shy away from it but if you have the skills set you can make some good returns on it.

Wage inflation in 2012-2013. What assets would you hold? Doesn’t see this happening at all. If there is, it is very hard to pass these costs on.

Market: Gold and Silver made a meaningful breakout today. The stocks had been lagging the price but now there is recognition. There is still a lot of moving parts in the world (middle east, European debt, etc.) so currency safety hedging will possibly move gold to $1500. After QE 1 and 2, we now need earnings growth. Companies that continue to grow will do well but those that disappoint will be hit badly. If earnings are ok we will go 5% higher but the second half of the year we will go sideways.

Markets. All leading indicators, with the exception of housing, are improving but the rate of improvement is starting to decline a little, so Q2 could be interesting. Corporations have quite a bit of cash on their balance sheets. (About a 45 year high.) All the cash being used in M&A is nice but it would be nice to see it being used top go into new ventures and getting employment back on side, which would move this market higher. Turbulence is absolutely going to continue.

Nuclear? Doesn’t see a lot of nuclear stocks that are good plays. The beating that has been happening in Japan has not been big enough for him to find Japan or nuclear stocks that attractive. Uranium stocks are not cheap enough and balance sheets are not good enough for him at this time.

Natural gas ETF’s? Sector that is out of favour. Longer term it has to do well. One question is supply. With shale coming on line, it increases supply, which knocks down prices. Clean fuel and with the nuclear disaster it becomes more attractive and ETF’s should do well going forward. A lot of companies do not have clean balance sheets, which making it difficult to buy individual companies. Good contrarian play.

Granddaddy Bear- A bear that sweeps all asset classes so there’s nowhere to hide. Last one was in 07-08 that took everything with it. Usually followed by a rebound Bull. Many investors miss these because they are so violent on the upside. Last 3 rebounds traced at least two thirds of the bear and usually within 20 months. Thinks this will retrace to 100%. Still some elbow room before reaching the highs and would include financials, energy and technology.

New Economy-When you have long sideways congested periods, the next big thing always occurs. This was the new economy. (Internet, Apple, Microsoft, Intel and Wal-Mart could be included.) This took off in 78-79 and the Dow did nothing for another 3 years. Great opportunities. In 03 there was the global boom, commodities and emerging markets. This will include commodities, small-caps and exports. Lots of room to go.