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

Province of Ontario 5% March/2014 bonds. Likes the value that the provincial sector is offering versus government and corporate. Yielding about 85 basis points over Canada's. Likes the risk characteristics, liquidity and the higher quality over corporate bond.

Province of Quebec 4.5% December 2019. Provincial scene in general looks very attractively priced compared to the corporate market. Yielding about 1.2% above 10 year Canada bonds

(A Top Pick April 13/2009. Up 9%.) Government of Canada Real Return Bonds 4% maturing Dec 1/31. Had bought this more from a trading perspective and it has been sold.

Integration/Deflation? There is a huge debate on this issue and he thinks it could go either way. If the Fed decides to monetize the current debt, there could be big inflation but if they put a clamp on the money supply we could have deflation. Do not expose yourself by buying long-term bonds. Some gold in your portfolio could act as a hedge.

US 10 Year Bonds: There is a debate going on in the bond market. Is rise in bond yields being driven by concerns around inflation or is it simply money rotating back into risky assets? Thinks we will see increases in long-term credit costs and the trend for yields would be higher. He has no US government bonds.

Market is in consolidation and doesn't expect a lot of downside. There is a mountain of people sitting on the sidelines hoping share prices pull back. Every time it does pull back it runs into those buyers so he doesn't expect to see the market pull back..

Canadian Banks: A little ahead of themselves as he believes the next 2 quarters they will take some losses on their credit card books and some of their loan books. This will probably cause them to pull back a little. Try to get them 10%-15% below where they are now.

Normally markets do not do very well from May through October. This year it has done so well through the last of months that we are going to be in for a more difficult time. He is not a believer that the market will continue to go up. Wouldn't surprise him to see it go down 15%-20%. He will be waiting before putting more money in.

Natural gas: Likes as it fits in with his contrarian views. Whole sector has been decimated. Some possibilities are Pengrowth (PGF.UN-T) and Harvest Energy (THE.UN-T). You could also try True Energy (TUI.UN-T) but is very dangerous. You could also look at convertible debts. Trouble with all of these is that their balance sheets are all pretty ugly.

Silver: As a monetary investment, he would personally wait for it to be at lower levels. He prefers to earn interest on his investments but it still could be part of a portfolio but he wouldn't go hog wild on it.

Pulp and paper: Thinks this sector will come back because there has been so much cutting and so much abysmal horrific results that a turnaround is in store. The problem is that so many companies have very poor balance sheets.

Gold: He likes gold. The chart is showing a reverse head and shoulders. It's important to have gold in your portfolio. The anchors would be Barrick (ABX-T) and Goldcorp (G-T) and then surround those with a couple of growth such as Agnico (AEM-T), Red Back (RBI-T), Yamana (YRI-T) or Iamgold (IMG-T).

Base Metals: These will lead us out. Has started but had a pullback in the last few days. Anytime we are in deep recession, they will lead us out.

Gold: Nice rally up to about $980 but tumbled because of the rally in the US$. Short term he doesn't see a big spike in gold bullion because he doesn't see inflation. In the mid-to long-term there is a big threat of inflation. That's when you want to trade. Play gold by buying a stock and selling a call option against it. He likes large cap almost exclusively.

US banks: Not out of the woods yet. The worst of the housing may be over but you are just starting to see the effects of bad commercial real estate hitting the US banks. Raised a lot of capital and that is great but still too risky for him.