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

US financials. These are to be avoided. There has been a big recovery but there is a lot of write-offs and challenges to come, particularly from residential and commercial real estate.

Water. This is going to be a scarce resource. You could look at companies like General Electric (GE-N), which is very diversified. While the longer-term theme has some benefits, you have to watch the concentration of companies within the ETF's.

Gold prices. Reasonable probability of gold reaching $2000 in the spring of 2010 but doesn't like putting hard targets on specific dates because market isn't totally free. Feels it will hit $1300-$1400 by late spring. Important to focus on the trend, which has been up for 9 years. Ignore corrections and use them as an opportunity to add to your goal positions.

Gold/Silver ratio. Very bullish on Silver. Ratio in the neighbourhood of 60 to 1 but historically has been in a range from a low of 15 to 1 to 100 to 1. Expects the ratio to fall significantly when this bull market starts to pick up speed and he expects silver to go up dramatically.

Gold stocks or gold ETF? Not a great fan of gold ETF's. He can’t be convinced they are backed with the amount of gold they say they are. Also, the people that have been sponsoring them are the same ones that have been involved with the gold suppression scheme for 15 years.

Does a gold price lead to more M&A activity? He feels it should, especially in a larger gold company.

Major gold strikes. Expects that most of the major new discoveries will occur in places you would not want to spend a holiday.

Small-cap, mid-cap or large-cap gold? Gold stocks have under performed and are relatively cheap to the gold price. A sharp move up in gold prices will restore the confidence and there will be a massive catch-up mood in the stocks. Biggest moves will come in the mid-cap to the smaller vehicles but you should have a mix and you will do exceptionally well in the next few years.

China. Chinese are past masters at manipulating markets/bullion, etc. No question that they want to add a lot of gold in the forthcoming years in order to hold the largest backing of their currency globally. They will go to great lengths to talk the gold price down.

Will gold ever decouple from the US$ and what would be the signals? Next big decline in the US$ will have gold going up. Can see other countries not wanting their currencies to fall sharply against the US$ for competitive reasons. At that point the market will make the judgment that the currencies are terrible and will want gold for its self.

One year out $1150-$1200. Has a lot to do with the US$ bottoming out. US doubled their money supply so we’ve seen an increase in the gold price. Gold is the only commodity that central banks use to back their foreign exchange. Jewelry demand has been less than investment demand. The up trend in gold prices could continue for decades due to financial crisis. If you want exposure to the sector you buy a fund like his, but if you wear a value hat you might want a development company and with a growth cap you would prefer a growth company.

Gold. Likes gold longer-term and every portfolio should have some. Good hedge on the US$. Expects that in a couple of years it could see $2000. Her preference is to buy it on a pullback.

Platinum has a big industrial application so depends on how strong the economy is going to be. In a weak market it will get hit.

“Principal Protection Notes” structure has always been a problem. Transparency is so poor that you never seem to win on them. You can construct your own without paying management fees by buying a 10-year residual bond at a discount. E.g. $.80 on the $1 and with the $.20 you buy the underlying security. If your investment goes to zero, your $.80 goes to 100, which is like a principal protection.

REITs. Generally in good shape. The anomaly is that if rates are 2% and REIT rates are 7%-8%, the spread is very high. He feels that REIT yields should come down. After the income trust conversion there are not many tax deferred structures left and REITs will be the last man standing.