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

Gold. If the US was to cover every $ in circulation with 100% gold backing, gold would be about $7,300 an ounce. If you inflated gold from the past peak at 2.5% a year, it would be around $2,200. He predicts $1,250 to $1,500 in the next year. A little concerned that if people stop reacting to fear of currencies gold may have a set back.

Leaps. Long dated options. Still available. He doesn’t trade in them.

Base Metals. Longer term he is positive on commodities but more on precious metals. Have dropped recently but this is normal when they have been so strong.

Fundamentals have improved fundamentally both from a supply and demand perspective. We are at an all time high for demand. $90-$95 ceiling for oil prices because of supply that Opec can ‘turn on’. Natural Gas has over supply and standing inventory of wells. Canadian suppliers have to compete with US supplies that are closer to consumers. He is excited about 2011 because of higher oil price and due to wet conditions less drilling was possible in 2010.

Buy Cdn$ versus US$. Bullish the Cdn$ which has traded in a $0.90-$1 range in the last year. With current oil price, Cdn$ should be at $1.035. He’s been Buying below $0.955 and Selling above $0.985. Be cautious of timing as it is currently about par and could easily go back to $0.95 on a global crisis. (This will happen over the next couple of months.)

Bond funds? Wouldn’t go this route. With interest rates going higher, it will lose you money.

“Backup in Yield” phrase. What does it mean? Means bond yields are increasing. Today bond yields are backing up and everyone is worried about it so you so you don’t want to be long interest rates.

In oils likes mid-cap exploration/production companies as well as international intermediate companies that are doing some elephant hunting. Interesting that trusts converting to Corps are largely under owned by institutions. Yields are very attractive so dynamics are better than in the large integrated oil companies. (Likes Gran Tierra (GTE-T) and Baytex (BTE.UN-T).)(See Top Picks.).

Banks -Only has a small weight in Cdn banks because the sector that has been under performing. Dividend growth will be muted going forward. Groups earnings growth is a little challenged. This is the time when lagging groups start to join the party but you have to be careful. For a yield play, he would rather have an energy stock.

Market. In a sweet spot right now. Normally markets move higher from Oct 28 to May 5 each year. This year, on a technical basis, they clicked in a little bit later, Nov 18. Looking for a 15% move on the S&P 500 to $1,440 and 15,500 on the TSX. Moved all his cash into the market on Nov 18.

Stochastic. When to Sell? Uses Relative strength Indicator (RSI), Moving Average Convergance/Divergance (MACD) with the stochastic. All 3 indicators moving in the same direction has more impact. Also likes Volume Reversal, which is important when entering into a seasonal trade. Caution, once a chart has established a trend, don’t use stochastics.

Silver. Seasonally you are just in the sweet spot. Price of silver goes higher from October right through to the middle of February. Has a lot to do with trending gold but also silver is an industrial commodity. Word of caution. Some silver stocks are giving short-term Sell signals so you want to Buy on weakness.

Natural Gas. Prices are low and anticipated to stay low by most observers because of US overproduction in shale gas. Expects low prices will persist for most of 2011 with a little recovery at the end of 2011. Bullish on gas prices long but couldn’t say when. Have 20 years at most counting proof reserves. Once people start to realize it is a finite resource, there will be a price recovery.

Natural Gas. He is very much long. Expects market to become aware of limited gas in the latter part of 2011. Prices will start picking up. His portfolios are marginally more gas weighted versus oil and that is likely to increase going in to 2011.

Oil. Expected to return to higher prices. No supply problem yet but there is a production problem. World doesn’t seem to be able to produce more than 90 million barrels a day. Demand is growing globally and projections indicate a scarcity in North America in the next couple of years.