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

Bankers’ acceptances - These are promissory notes that a small corporation issues to raise short-term money. They can't do it through the money market so they go to a bank who, for a fee, stamps it and the stamp signifies that it is 100% guaranteed by the bank. Very liquid and trade every day. Very safe investment.

Canadian $ - He and it would be imprudent to change currency into the US at this time.

Provincial Bonds - Have a very stable yield spread from Government of Canada's. Every province now has a surplus. If you are biting government bonds, by provincial rather than Canadian, which gives you a better year low.

Molson Coors 5% bonds maturing Sept 22/15. Pays 5.5% at the current price of $96.86. Since the merger, their balance sheets have strengthened considerably and their net free cash flow has tripled.

Advantage Energy convertibles. 8% coupon maturing Dec 31/11. His view is that natural gas side is due for a rebound in the next couple of years.

Bell 5% maturing Feb 15/17. At the present price of $85.34, it is paying 7.17%. Mildly speculative.

Bond Funds - You should not buy any bond funds because you are paying too high a management fee for uncertain performance. You don't know what the fund is going to be worth on a year-to-year basis because fund managers extend terms and shorten terms.

Bank of Montreal bond maturing January 2010 and paying 7% is a very short-term bond and it will amortize downwards back to par. Very little chance of a capital gain here.

Canadian banks - Not keen on the banks in general. Have more issues than the other non-bank financials. Sub primes are causing them to have write offs. Basic Capital Market business is going to be slowing.

Gold - October is typically a weak month for gold, but not sure it will be this time. $800 is an easy objective in the next 3 to 6 months. He couldn't rule out $1000.

Banks - Have been subject to some top forming and some problem areas. Had a strong up leg and then went into a head and shoulders formation and the prices have fallen below the moving averages. This will indicate some problems ahead.

Gold - In a major uptrend, but gold stocks are going to take a pause, with one exception. (See his Top Picks.) They may have to do some meandering around their current trading ranges. In the long term, he believes gold is heading towards $1000.

Liquid Natural Gas (LNG) - Potential of LNG coming into the US has been the prime culprit in putting down Canadian gas prices. Currently there is between 6 and 7 BCF LNG conversion capacity. With plants being built/expanded, there is room for a total of about 12 or 13 BCF a day of capacity in 08. When normal winters come back in Europe, their gas prices will go up and LNG will be shipped into those areas.

REITs could be attractive. Looking out 4, 5 years, inflation could be a factor. They pay a very low tax rate. He doesn't own any but is looking at Calloway (CWT.UN-T), H&R (HR.UN-T), Primaris (PMZ.UN-T) and RioCan (REI.UN-T).

Canadian Banks - Have been lagging year to date and yet are still very good long-term places to be. Looks like rates are not going up anytime soon, which helps. They'll probably end up doing low double-digit again like they always do.