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

Gold; - Betting that over the next 2 years it will hit $1,000, certainly $850 to $900 next year and after that much higher. It has to do, to some extent, with the fear factor and a hedge against disaster. The more likely reason is that inflation is going to be alive 12 to 24 months out because of all the pump priming that is going on in the US.

Oil/Gas Service Companies: - Drillers will go up before the other service companies, so you want to get into them first. Because the drillers have been hammered, you need to be careful timing wise. If you are looking at buying drillers, such as Precision (PD-T) and Ensign (ESI-T) slowly scale in and make sure debt is not a problem.

Market: “Fear the Greed/Greet the Fear”. When a market is going up and everything seems to be too good, you should worry about the greed. Today, when everything is so negative, fear tends to end the market selloff. Would like to see more fear than there is now. In this situation, you buy like mad. Buying opportunities in energy, gold and base metals should be good in 2008. Financials are probably going to suffer.

Bank Stocks: There are periods of times when even the bank stocks get hurt. Sooner or later they are going to recover. Wouldn't go bargain hunting. These stocks will have to settle down, get the problem out of the way and then will probably make a base giving a buying opportunity again.

Q: S&P 500 lost 10% of its value recently. Is it good for a short rally? A: Yes. The chance will be that not only will the Fed lower rates in December, but also could see a 2% or 3% rally.

Banks: - Would like to be able to say that Cdn banks would be good choices but that would be guessing as to where the bottom is in this overall correction and possible bear market.

National Bank 4.7% bond maturing Nov 2/20. Will probably be called in 2015. For the first time, you are having bank bonds giving you value.

Base Metals - Commodities are correcting. Expects to see some upside, but feels you have to ride out some volatility. Focus on US economic growth is affecting commodity prices, but with continued demand coming out of China and India and the need for commodities over the long term, investors should do very well in commodity plays. Long-term outlook for copper and zinc will be positive. Zinc seems to be in a pretty firm downtrend but thinks it will bottom out here. Copper is moving more sideways and doesn't expect a big uptick in the near term.

Ibiden - Ceramic packaging company. Has about 70% market share a diesel particulate filter of which the demand should double over the next 5 years. This has to go into the exhaust systems of any diesel automobile/transport vehicle made. (Ed. -Listed on the Japanese exchange.)

Market Outlook - Earlier in the year financials rallied, made a peak, corrected and then failed to make a new high. They then broke their low mid summer. That was a signal of the top. Are we going to have 1) long down bear like we had in the 70s 2) short, dirty bear or a 3) flat rotational bear. He thinks the latter because the commodities continued making new highs and are now correcting. In other words, half the market is doing one thing and half is doing the other.

Gold - The recent spike is just short of an all time high so you might consider this as the overhead resistance. If gold stays in its trading range where it is now, if the Cdn$ calms down a bit maybe gold stocks play catch-up. There may be opportunities in the stocks.

Index Investing - The time to own an index is in a strong bull market. The time not to own them is when the market is going down.

Bank of Nova Scotia 5.65% bond maturing July 22/08. A good pick up over treasury bills that are artificially low right now (3%+) because of the flight to quality bid. This is a fixed floater, i.e., it has a fixed coupon up to July, but if the bank decides not to mature the bond, it will float plus 1%.

MetLife 4.35% bond maturing Feb 10/09. Very good US insurance company, AA rated.

GE Capital Canada 4.4% bond maturing June 1/14. AAA rated, This is a great global, well-diversified company.