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

Caller: On the historical 10-year graph of the S&P and Dow Jones there is a sharp correction in March of odd numbered years. Bill: Trouble is that when everyone looks at these rules, they stop working. They don’t work as well any more.

BMG Bullion fund. One-third silver, one-third gold and one-third platinum. They hold the gold at the Bank of Nova Scotia (BNS-T). The units have performed very well.

Can’t ever remember when we had such a difference in world markets. You have leaders and laggards. The economies now are almost diametrically opposite. We are seeing the beginning of a major change in the economics of the world. China is getting there now. The impact it has on the rest of the world is the proof in the pudding. Likes sector rotation. Likes companies that are feeding the needs of the emerging markets - energy, agriculture, and materials. Still has positions in precious metals. Doesn’t like bonds and prefers high yielding equities. Doesn’t use ETFs very often, but uses ADRs.

Natural Gas: He was bullish on Natural Gas. He thought it was pretty cheap. It had a nice run and didn’t hold. We had a good draw down today and Gas didn’t move. The big months are coming up. There is a lot more to Nat Gas than supply/demand. It depends what the traders do. He is positive in the next 3-4 years. It’s the cleanest, cheap and under utilized. Thinks it will firm up a bit in the next couple of months.

Silver: Been bullish on the precious metal complex. Silver has a lot of uses that gold doesn’t have, industrial, medical, etc. Silver will track with gold. Thinks ratio of gold to silver will tighten and thinks silver will out perform next year.

Gold. If the US was to cover every $ in circulation with 100% gold backing, gold would be about $7,300 an ounce. If you inflated gold from the past peak at 2.5% a year, it would be around $2,200. He predicts $1,250 to $1,500 in the next year. A little concerned that if people stop reacting to fear of currencies gold may have a set back.

Leaps. Long dated options. Still available. He doesn’t trade in them.

Base Metals. Longer term he is positive on commodities but more on precious metals. Have dropped recently but this is normal when they have been so strong.

Fundamentals have improved fundamentally both from a supply and demand perspective. We are at an all time high for demand. $90-$95 ceiling for oil prices because of supply that Opec can ‘turn on’. Natural Gas has over supply and standing inventory of wells. Canadian suppliers have to compete with US supplies that are closer to consumers. He is excited about 2011 because of higher oil price and due to wet conditions less drilling was possible in 2010.

Buy Cdn$ versus US$. Bullish the Cdn$ which has traded in a $0.90-$1 range in the last year. With current oil price, Cdn$ should be at $1.035. He’s been Buying below $0.955 and Selling above $0.985. Be cautious of timing as it is currently about par and could easily go back to $0.95 on a global crisis. (This will happen over the next couple of months.)

Bond funds? Wouldn’t go this route. With interest rates going higher, it will lose you money.

“Backup in Yield” phrase. What does it mean? Means bond yields are increasing. Today bond yields are backing up and everyone is worried about it so you so you don’t want to be long interest rates.

In oils likes mid-cap exploration/production companies as well as international intermediate companies that are doing some elephant hunting. Interesting that trusts converting to Corps are largely under owned by institutions. Yields are very attractive so dynamics are better than in the large integrated oil companies. (Likes Gran Tierra (GTE-T) and Baytex (BTE.UN-T).)(See Top Picks.).

Banks -Only has a small weight in Cdn banks because the sector that has been under performing. Dividend growth will be muted going forward. Groups earnings growth is a little challenged. This is the time when lagging groups start to join the party but you have to be careful. For a yield play, he would rather have an energy stock.

Market. In a sweet spot right now. Normally markets move higher from Oct 28 to May 5 each year. This year, on a technical basis, they clicked in a little bit later, Nov 18. Looking for a 15% move on the S&P 500 to $1,440 and 15,500 on the TSX. Moved all his cash into the market on Nov 18.