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

Gold Stocks Vs. Bullion: These are not always correlated. The problem with buying bullion is the risk of storage, insurance, etc. Believes that by the middle of next year, the US$ will be weaker again and gold will be rebounding. He prefers stocks to bullion.

Feels that the market is totally in the hands of the US Congress. Feels that the money will be provided to the big three automakers, but there will be conditions, restrictions and performance goals. They need conditions that will let them compete. Feels government caused the problems that they have today and they have to fix it. In favour of the new administration because it will boost confidence in the economy. But there may be problems down the road for Canadians as some of the accords may not be followed. Protectionism is a real risk. Problem is that the banks are not lending, we need to get the economy going.

Pharmaceuticals: The (US) government is not healthcare friendly. There are cost problems keeping it affordable. A lot of pressure in pharmaceuticals.

Canadian Banks Held for 5 Years? If you want reasonable yields, you could pick away at these banks. His choices would be Royal (RY-T), Scotia (BNS-T) and TD (TD-T).

REITs: In general they are screening very well. If you want income in a trust, he thinks there are better plays. Still likes the energy sector in this area. He is really nervous about commercial real estate.

Gold bullion (not paper bullion) and/or treasuries. Even professionals don't know what's going to happen in the next 2 days. Preservation of capital should be very important.

Economy: World is in a recession and potentially going into a much deeper one. For many years, leverage has increased more and more. We have now hit a wall. Globally, banks are now trying to de-leverage by selling assets, trying to raise equity and trying to bring the ratio lower. Therefore they are not lending. Very negative for GDP growth.

Gold: Owning some gold is a protection against a systemic failure in the banking system. (See Top Picks.)

Investing: Canadians should be looking at assets outside of Canada. If we are in a recession, the Cdn$ does not do well in a recession.

Banks: He is a firm believer in their stability, particularly Bank of Nova Scotia (BNS-T), Royal Bank (RY-T) and Toronto Dominion (TD-T).

Mining: Given the future growth of the middle class in emerging countries, Canada's resources are in an ideal position. At some point in the next year or two you are going to see them starting to move. Wait for a couple of quarters. His choices would be Teck Cominco (TCK.B-T0 and Sherrit (S-T). (Owns Teck but not Sherrit.)

Market: Thinks this is the start of an upward trend. Stage is being set up for much lower interest rates so the US can deal with its mortgage problems. Locking these in long term at much lower rates, you kill the US$ and you inflate the problem away. You have to reallocate into areas that will benefit you. Some great yields out there.

Energy: Biggest problem we face is supply shock. Burnet Shale has been shut down and will take about a year to start up again. All the rigs that were brought in for repair from the Gulf of Mexico are not going back out because of the current price. Brazil is shutting down the Tooley (?) Project and won't come online for another 7 years.

Silver: This is a great play right now. Currently it is at $10 and has to be much higher than that to keep its historical spread with gold. He likes Endeavour Silver (EDR-T)

Gold: Looking for gold to be much higher than it is today. It has performed extremely well against all currencies except the US$. Smart money is running into gold as a diversification.