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

Copper: this is his favourite commodity because it is the one commodity that China needs. Currently trading at about $2.50 a pound, which is significantly ahead of where the market is expecting. If the Chinese stop building their inventory there will be a material reversal on pricing. Given his outlook on the economy he would be surprised to see Copper fall below $2.

Silver: Has never been a big fan of precious metals but does prefer gold to silver. Silver had a lot of good industrial applications, particularly photography, x-rays and electronics. Digital photography has eliminated a huge amount of the need and a lot of x-rays are now digital.

Redecard. Processes credit cards for Brazilians. $8 billion market cap. 5% dividend. Forward P/E of 13. Estimated growth of 14%.

Natural Gas: Thinks this is the best risk/reward on the market right now.

Gold: Coming into a weak period seasonality wise. Thinks gold will do reasonably well on the back of a weaker US$. More economically sensitive commodities are going to outperform gold so he prefers to own other things.

Uranium: Thinks uranium direction is up, the same as all commodities. Energy needs for the world as a whole and China in particular are increasing.

Alberta is raising $5 billion through a new issue of provincial bonds. This is a province that 3 years ago had absolutely no debt and was hit by falling commodity prices. Very strong province and the bonds will be very well received. They will become very expensive.

Yellow Pages Group Holdings bonds. Rated BBB. They're in a high margin but high leverage business. Their model is to be fairly aggressive in leverage on their balance sheet. Their spread is relatively attractive for the BBB space. Yielding about 7.75%. There is a bit of refinancing risk in the next couple of years. Doesn't particularly care for this name.

Canadian bank bonds. Credit fundamentals of these banks are very sound. Even though there has been a significant rally in these bonds there is still a great opportunity here. Average yield on a 10 year A rated bank bond is still between 6%-7%.

If we have general price stability (deflation), fixed income assets perform very well. To take advantage of the very steep yield curve that is here, find bonds in the 7 to 10 year area of the curve. iUnits Cnd Bond Market ETF (XBB-T), which includes 70% government and 30% corporate with a yield of about 3.5% would be appropriate. If you want to just focus on corporates, the iShares Cnd Corp Bond ETF (XCB-T) has a yield of about 4.5%.

Greater Toronto Airport bonds. Greater Toronto Airport Authority collects landing fees, parking fees and concession fees. Have complete pricing authority. In the defensive sector of the bond market. Recently suffered because of concerns on Air Canada and declines in air traffic.

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.