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

We had been in a fairly wide trading range since fall of last year and now have broken out of it. He favours energy because price of oil has moved up quite nicely and is sustainable. He can see oil hitting $90 and maybe even $100 by end of 2011. Calgary and Alberta-based companies are quite exposed to Nat Gas. A lot of their valuation models have an expectation of higher gas prices. It could get to $3 or less.

Natural gas prices. Shale revolution and horizontal drilling has made the question of price recovery open-ended. There are massive shale reserves in North America. Might be some shorter-term spikes but the supply is there to meet them. Expect we are in the range of $3-$7 longer-term.

What a big turnaround in the markets since the spring. The double dip is a memory. You can’t loose for commodities. It’s rare to see all asset classes going up together. In the long run something has to give and he believes that over time bonds and gold will trend down. Gold and bond prices have gotten ahead of themselves. There were no earnings warnings heading into the third quarter. Profits are going to remain strong. If we have a 5-10% pull back in stocks, bond holders should move into stocks.

Gold: Can’t believe it’s got this high. Prefers to own the big producers. Maybe it will in deed hit $1500.

Canadian Bank Tier 1 Bonds and the call feature? Bonds can be called on a change in regulatory or tax regime. With the coming change in taxes, there is a risk these could be called early at par.

Greater Toronto Airport bond due 2027 paying 6.45%. Trading pretty expensively right now so might be an opportunity to take some profits.

Real Return Bonds. Taxes a factor when determining inflation rate? You face taxation every year on implied increase in value on your bonds based on a change in inflation. He recommends these for tax-exempt accounts only. Right now they are very expensive.

(A Top Pick Oct 19/09. Up 1.86%.) Government of Canada 1.25% Due Dec/11.

Gold bullion/Gold equity. Some of the influences for this are a weaker US dollar and Global government concerns. These problems will continue. His clients hold from 5% to 15%.

Oil. Despite the recession and weaker demand, it has held in quite well. This is also influenced by the weaker US$. A fundamental area for a core exposure. Nice to have companies with yields.

Gold. At $1300 an ounce, a lot of lower grade/smaller mines become attractive for acquisitions. Doesn't know whether gold will stay at this price or go higher.

Gold. Has about 15%-18% weighting in gold stocks in his portfolio. Largely in the mid-cap companies and companies that are adding to their resources with production growth and could be takeover targets.

Gold. Looking for a big move on gold, either up $1000 or down $400.

Natural gas. US emissions standards are going to be tightening in 2013 and beyond which will be positive for natural gas. Commodity has not performed so prices may be range bound at the $4-$5 level for the next couple of years. Some stocks you could consider are Daylight (DAY-T) 60/40 natural gas (6% yield) and Crew (CR-T). A pure natural gas would be Encana (ECA-T).

Dividend Re-Investment Plan (DRIP). Good thing to do.