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

Japanese Yen vs. Cdn$. Japan has just elected a new government for the first time in the postwar period, which may clean up a lot of corruption in the financial and corporate industries. This will probably be good for the yen in the long-term. If you think the world is out of recession and the US$ is going to crumble under the weight of its debt, you can buy yen. Feels the Loony will be stronger on the back of increased commodity prices.

Thinks natural gas will bottom sometime in the fall because it is so ridiculously over extended. The ratio between natural gas and crude is a historical deviation so it eventually has to come back to the mean. Natural gas stocks, by and large, bottomed in April, rallied and they are sitting at a higher low in July. None of the big Canadian natural gas players have taken a new low, which tells him the low is not sustainable. Stocks to consider are Breaker (WAV-T), Crew (CR-T), Fairborne (FEL-T), Galleon (GO-T), Progress (PRQ-T), Talisman (TLM-T). Buy 2 or 3.

Real return bonds. Acts as a hedge to inflation. Limited to governments, mainly Canada. Coupon is fixed but the face amount is adjusted to the inflation rate. Can be complicated from an administration and tax standpoint so there is the cost of the ministrations for the individual investor. Most of them are issued for very long terms, 30 years+. Are getting shorter now in the last 5-7 years.

Bonds versus ETFs & Funds. With the bond, you know you'll get the interest as well as the principle of maturity. ETFs and funds have no principle so should you focus more on the direction of bond prices? An ETF or fund will take a lot of the risk and worry out of selling or maturing issues.

Corporate bonds. There has been a great run in the corporate bond market. There is still value for select issues and it is probably worthwhile to be in corporates’ as that is where the return is. They will give you that extra yield over Government of Canada's.

Canada June/37 bond yielding about 5%. This is the benchmark long Canada bond. One of the most sensitive bonds to yield movement. Currently at about 3.91% yield equivalent of $118.40 for a $100 bond. If you're a long-term investor is a good one to hold onto.

Gold and silver. If gold breaks through $1000 it could easily be $1200-$1300. If this happens, silver could be $18-$20 without any trouble.

Gold. Believes this will go through $1000 and when it does a good easily go through $1200-$1300 in the next 18 months. It's the corollary of the amount of money that is being printed. Eventually when economies do pick up, that will feed through at some stage into higher prices.

Province of Ontario Australia$ bond maturing 2016 with about a 6.75% yield to maturity.

Dividend Stocks. He is a big believer in quality companies that pay dividends, especially ones that increase them on a regular basis. Comparing stocks and bonds historically there is no comparison. DRIPs for retail investors is a pretty good strategy also.

Gold and Silver. Big tug-of-war, which is why they are going sideways in US$’s. In Cdn$’s the price has been going down as the Cdn$ has been going up. He owns gold as insurance.

US financials. If you are a trader and are fairly nimble there could be some upside to the extent that they have been oversold. Short-term you are looking at very strong trading revenue for some of the banks that have good exposures.

How do you play US stocks with Cdn$ going higher? You could buy Bear ETF’s on the US$. This will partially hedge your exposure.

Natural Gas. Did what he expected by dropping to the $2.95 area. US inventories are at about 3.2 TCF and maximum capacity is about 3.7. Plugging in the average of 5 years storage between now and end of September, it will be full either the last week of September or the first week of October. Withdrawal does not start until November 1st so there may be a few weeks where there is no place to store, which might have prices go down to very low levels such as $1 or $1.50.

Oil. There is still 100 million barrels more in storage. Demand did not go up and once you get past Labour Day gasoline demand will fall off again so there will be too much crude. OPEC is cheating at 75% compliance versus 80% a couple months ago. Expecting $10-$15, maybe $20 of downside in the S&P TSX energy index. When the correction comes you want to be ready to buy the bargains.