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

Silver. Looking for it to trade around $18-$19.

Geothermal. Expecting an increasing number of plays in the sector over the next 10 years. The way to play this is by buying a basket.

Gold. In his opinion, the price of gold will break out above $1000. Looking for it to form a base of $950-$1000.

The better than expected earnings this earnings season were based on cost cutting. You would like to see earnings lead by revenues. The Economy may pick up in the US when the consumer opens their wallet, are they just going back to zero or negative savings rates. It’s going to take a while to get out of this.

US$: US$ has surprised us over the last 6-9 months in how well it has held up. Only recently has it traded if against the Canadian dollar. Worried about all the money they are printing. Parity is possible by the end of the year.

Everything lined up for a short-term rally and now the economic evidence is there. There is a lot of stimulus out there and you have stared the momentum. He has not taken that much off the table in profits and is not sitting in a lot of cash. Likes technology. You are getting spending there. Bullish on gold. Gold will be a winner, will go to 1400 in a year or two.

The Canadian dollar will go to $1.10US. It will continue to appreciate.

Market. Last 6 months is just a result of stimulus money coming in and it is time to start getting cautious. Starting to raise cash. S&P 500 is overvalued but could go higher if the US$ crashes. There is a lot of weakness in the US economy. Subprime mess is what got us into this situation and only 47% of the debt has been rolled over and the next wave is just starting. More stimuli will be required.

Precious metals will be the sector to be in over the next couple of months. Had sold his gold and was riding the silver but is now back into gold. A lot of institutional money is coming in. Chinese are going to buy $50 billion of the IMF gold sale. Central banks are not selling as much gold anymore.

Oil. Isn’t looking for it to go higher this year. If there is a good correction this fall, and the economy recovers, you could be looking at $95 oil next year.

Energy. A lot of Canadian companies have a fair bit of leverage on their balance sheets and these reset in the spring after the companies get their 3rd party engineering results and report them in their annual reports. Resets often cause downward revisions from the Net Present Value of assets. Expects a cataclysmic bottom in natural gas stocks in April/May with a once in a decade buying opportunity.

Looking for a pullback. September is usually the worst month. We had a strong rally in the stock markets. There was a 10% pullback in May but it was slight, so we need another. We had a lot of good news but people are starting to discount it. Valuations are neutral at best. We can’t get a handle on the economy. Stimulus numbers mixed in with others.

Natural gas. There is some serious short-term pressure on natural gas. 1) Amount in storage is off the top of the chart. 2) New technology for producing it from shale has doubled the reserves in North America. 3) Arab countries used to burn their excess as a waste product but are now converting it to liquefied natural gas. However, there are companies and homes that can convert from oil. Historic ratio to oil has been broken. Believes gas will come back but not in the short term.