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

Markets: Should be waiting. Cash is your #1 asset class to hold. The housing crisis in the US has led to a banking crisis and is now leading to a credit crisis. Banks are nervous about one another and don't want to lend to each other or take on any risks. Thinks it will be 6 months to a year before you see it turning around. Wait for analysts’ revisions on the financials to turn. Financials have always led the markets down and always led it up.

Oil Shell Extraction: Oil shells are prevalent throughout North America. These are about as tight a formation as you can get. Have now developed a new technique, part of which is horizontal drilling and major fraqing.

Canadian Banks: If he had to pick one right now, Royal (RY-T), Toronto Dominion (TD-T) and Bank of Nova Scotia (BNS-T) are ones he would look at. An interesting way to see what the market thinks of them is to look at the dividend yield. It is very attractive in that you get the dividend tax credit and the equivalent yield of 20-30 year Canada bonds.

Gold: If you adjust the $850 peak price from the last peak, you probably come out with an adjusted price of $2200-$2400. $300 of the rally from $550 to $850 was speculation; so eliminating that gives a current price adjusted for inflation of about $1200, which is his target. He has Gold ETF’s (GLD-N), which is his prime play plus 3 gold plays Agnico Eagle (AEM-T), Kinross (K-T) and Yamana (YRI-T). These are great intermediate stories with great growth potential in front of them.

Canadian$: He is presuming that this will stay $0.02 either side of par, that is, $0.98 or $1.02.

(A Top Pick Feb 5/07. Up 4.1% total return.) First Capital Realty five-year 5.08% bonds. Real estate bonds have generally outperformed the credit market.

(A Top Pick Feb 5/07. Up 8.65%.) Government of Canada 2029 5.75% bond. Feels that real rates are coming down. Bigger believer in deflation than inflation. Was rewarded when inflation numbers were lower than both the street estimates and Bank of Canada estimates. Feels inflation rate could drop through 1% in Canada.

Bankers Acceptances: - They use the inner bank markets to set their interest rates. These are safe as long as the banking system in Canada is safe.

The credit market problems are very serious and profound. US Banks only have a small fraction of clients’ money in their accounts. Bank rules say they each have to have a certain percent in their vaults but because of daily transactions they may not have it so borrow from each other at the end of the day. December credit scare happened because banks had to borrow 36% of the money they were supposed to have. The highest borrowings since March 1933 when it was 46%. Last month, they borrowed over 100%, which means they have nothing. He is buying physical gold. Although your money is insured, it is only for a very small amount. Doesn't know Canadian bank requirements.

Physical gold. Gold is one of the most liquid markets in the world. You can rapidly convert your gold back into paper money. The only game here is to preserve your capital. If assets get cheaper, you want to have buying power.

Natural Gas: - Last week’s draw on gas was one of the largest there has been in a long, long time. The wrench in this is what will happen with Liquid Natural Gas and this is a bit of overhang. Doesn't expect to see anything too aggressive until at least next winter. Could be more weakness this summer.

Junior Golds: Junior explorers/miners have a long way to recover in terms of the bullion price. Everyone is risk adverse and they go into the large caps first and then to the commodity. Now you have a situation where the leverage to some of the small-cap names is quite dramatic. If gold goes to $1000 or $1100 you'll get giant swings on some of the small cap stocks that have been ignored. He thinks June or July could be possible for $1100.

Silver: Thinks it has more potential than gold. Shortages could be acute. Above ground inventories are very low. There are limited Silver stocks available. Silver Wheaton (SLW-T) would be one way to play it once Goldcorp (G-T) gets out of the way.

Oil: Nothing has changed about basic fundamentals. Total production will be on an undulating plateau but into an irreversible decline. Prices will gradually rise from about $70 to about $95 over the next 10 years or so. Last fall's price was a total aberration caused by a mistake that the Saudis made. Very attractive investment environment for both oil and gas going forward

Natural Gas: Total Production in the US peaked several years ago and is levelling out in Canada. He is anticipating a significant long-term irreversible decline and prices will have to be high enough to cause a decline in consumption. There has been an aberration for the last 2 years, primarily because production has been restrained by developing tight gas through closer and closer drilling as well as new techniques. Prices will rise gradually from $7 to about $11 during the next 7 years. Very attractive investment environment for both oil and gas going forward