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

Major gold strikes. Expects that most of the major new discoveries will occur in places you would not want to spend a holiday.

Small-cap, mid-cap or large-cap gold? Gold stocks have under performed and are relatively cheap to the gold price. A sharp move up in gold prices will restore the confidence and there will be a massive catch-up mood in the stocks. Biggest moves will come in the mid-cap to the smaller vehicles but you should have a mix and you will do exceptionally well in the next few years.

China. Chinese are past masters at manipulating markets/bullion, etc. No question that they want to add a lot of gold in the forthcoming years in order to hold the largest backing of their currency globally. They will go to great lengths to talk the gold price down.

Will gold ever decouple from the US$ and what would be the signals? Next big decline in the US$ will have gold going up. Can see other countries not wanting their currencies to fall sharply against the US$ for competitive reasons. At that point the market will make the judgment that the currencies are terrible and will want gold for its self.

One year out $1150-$1200. Has a lot to do with the US$ bottoming out. US doubled their money supply so we’ve seen an increase in the gold price. Gold is the only commodity that central banks use to back their foreign exchange. Jewelry demand has been less than investment demand. The up trend in gold prices could continue for decades due to financial crisis. If you want exposure to the sector you buy a fund like his, but if you wear a value hat you might want a development company and with a growth cap you would prefer a growth company.

Gold. Likes gold longer-term and every portfolio should have some. Good hedge on the US$. Expects that in a couple of years it could see $2000. Her preference is to buy it on a pullback.

Platinum has a big industrial application so depends on how strong the economy is going to be. In a weak market it will get hit.

“Principal Protection Notes” structure has always been a problem. Transparency is so poor that you never seem to win on them. You can construct your own without paying management fees by buying a 10-year residual bond at a discount. E.g. $.80 on the $1 and with the $.20 you buy the underlying security. If your investment goes to zero, your $.80 goes to 100, which is like a principal protection.

REITs. Generally in good shape. The anomaly is that if rates are 2% and REIT rates are 7%-8%, the spread is very high. He feels that REIT yields should come down. After the income trust conversion there are not many tax deferred structures left and REITs will be the last man standing.

Preferred shares. Taxed like dividends but have a set rate. Bought quite a bit when rates for high but with competition, rates have come down and hasn't bought as much. Like them longer term, especially the reset ones.

Banks. If you have to own something in financials, look at Royal (RY-T) or Bank of Montreal (BMO-T). The issue he has is that Canadian banks might be challenged in growing dividends at the same rate as in the past.

Pipelines. Weakness in the sector could be because people have shifted gears and gone back to the offence into economically sensitive names. Expects continued demand for dividend yield but expects to continue seeing volatility with people becoming defensive again. Has no problem with TransCanada (TRP-T) but would probably prefer Enbridge (ENB-T).

RBC bond fund. Hold or switch? With rising interest rates, now would be a time to consider rebalancing your portfolio and switching some of the funds to equities.

Corporate yield spreads have come down a long way and could tighten a lot further because of rising interest rates.

Ontario government bonds will be coming out again and there is always retail participation available. When they do, you should consider participating.