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

Gold: - Likes gold as an investment. Believes he can calculate the value just by looking at the relative inflation rate of the US$ versus the inflation rate of gold. Based on this, gold at $900 to $1000 is fair value. Inflation rate in the US, measured by M3, is rising by 17% year over year, which bodes very well for the gold price. What concerns him is the 50% rise from last August, which could result in a short-term contraction.

Oil: - There will be some reduction in US demand, but this will be offset by drops in supply. Russians are producing one million barrels a day less than they were a year ago. Thinks the price of oil is relatively in balance and will stay on the high side of $100 this year. Chinese are adding 10 million new cars a year.

Energy Stocks: - He is very bullish on energy right now but there is a discontinuity between oil and natural gas. There could be some catching up by natural gas. Oil is a good place to be for longer-term investors.

Gold: - Likes gold very much. Has a number of attributes going for it including good primary demand as well as growing demand in growing economies. Also expects it to continue increasing against the US$.

Natural Gas: - From a trading point of view, stocks will be higher a year from now but if you are trading on a day to day or week to week basis, she is holding off on some of the stocks just because of the big moves they have made recently. If you are an investor and are looking at a year from now, there will be higher prices.

Royal Bank 5.45% Nov 10/13 bond: - A 5 year AA security yielding roughly 200 basis points over a government bond. Rarely has it been at these levels. There could be some issues, news over write-downs, etc. but this is one of the best run banks in Canada. You will get the 5% every year to maturity. There will be some volatility but it's good money.

Province of Ontario 4.3% March 8/17 Bond: - Still thinks there's going to be some declines in interest rates and you are going to get a little bit more capital gain going out the yield curve. Sticking with something a little less risky provincial bond AA is because he is going further out in the term structure.

Corporate Bonds: - Has been a lot of interest rate cuts in the US and in Canada. Corporate bonds did not react the same as government bonds so the yield spreads between these 2 have widened significantly. A lot of that has been the equity turmoil and subprime issues in the US. What is left is a very attractive historical absolute and relative yield spread; the extra yield that you pick up on your corporate yields over government bonds.

Interest rates: - Thinks the government will cut interest rates by 50 basis points next week followed by later cuts in the 2nd quarter.

BCE Bonds 2016/2017: - When the Ontario Teachers’ pension plan announced the takeover of BCE, he sold these as he knew that on a pro forma basis they would have to lever up the balance sheet. Bonds are now trading like BB credits at a very high yield level. He would not be comfortable with these for that length of time.

Loblaws Bonds 4 to 7 years: - Has been a bit of an under performer. Thinks it is a turnaround situation. They are in a tough cycle and have had some supply chain problems. There is a potential for a downgrade and it is still on credit watch but you are getting paid quite a bit. If you do stay short term, which is a good strategy, there is less risk.

Global Bonds: - Last month was a great month for these. General interest rates across the board have dropped quite a bit. Thinks select global markets will do well. One's that are starting from a higher interest rate level such as the UK, Australia and New Zealand are starting to slow and are starting to cut from a higher level. For North America and Europe, Western Europe in particular, a lot of the rally has been done.

Preferreds: - (Q: Why have these not been snapped up? Very good buy, especially with the credit you get for them.) They do have an equity component to them. In a capital structure debt, bonds will rank higher than the preferred equity. Preferreds are still viewed as a bit lower on the food chain. If a common stock gets hurt, the preferred also get hurt. However, they could be a good long-term investment.

Canadian Municipal Bonds: - (Q: Individual investors don't seem to have access to these. Why? What are current rates?) They are very difficult to get, even for institutional investors. There are not that many issued and usually it is done at the provincial level.

GE Capital bond due June 10/2010: - He has no concern with that AAA rated security and will be holding his until maturity. Came out with an earnings miss last week and the stock got hurt, but from a credit standpoint he does not have a problem with that credit.