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

My grandchildren won’t see $500 and ounce for gold. About 2.5/3 years ago, the US pulled 3 levers to get us out of deflation, out of a depression that would have made 1929 look pale in comparison. 1) They lowered the value of the US$, 2) lowered interest rates and 3) began to spend like crazy. They pulled the largest economy, the engine of the world, out of serious deflation. Now we’re going back to normal. Interest rates have gone from ¾% to 2-¾%. They have put a bottom on the US$. Feels the budget deficit will get fixed, but not concerned, so bring on the deficit. Better to have growth than to have a recession/depression. To hit the spending button was the right decision.

Sees gold exceeding $1,000 before this bull market is over. Thinks we are in a secular bull market that began in 2002 and we are in the very early stages of it. Conversely feels that we are in the very early stages of a bear market in equities that will ultimately see gold and the Dow approaching unity/parity. The $1,000 price is based on the enormous amount of monetary aggregates that has been created over the years. Wouldn't say it is inflation that creates this, but the rising oil prices as well as a whole lot of other dynamics including, most important, the enormous amount of debt that has been created in the process of creating money which will drive gold to over $1,000.

Likes the deal between Noranda and Falconbridge (FL-T). It will be great for both companies. The overall dynamic is very positive.

Located in Martin Hills which is a shallow gas play which they'll will add about 200 BTU's on in the next week or so. The big upside for them is in an area called Gold Creek. A very high impact area. Should be about 3,600 by the end of Q1. Good balance sheet and good management. In the next couple of years, the company will add another core area.

Now around 3,800 BOE's a day. There's just been a very big discovery that they have 25% of. Have about 700 BOE's behind pipe of which some will come in May and some in August. They believe they will exit this year at 5,700 BOE's a day which would imply a $10 stock. Waiting to see the stats on reserve info, insider trading, insider holdings, etc.

Sector has had a fabulous run. The S&P/TSX Capped Energy (TTEN-I) has gone from $180 to $249. Spring is coming and demand will fall by about 2 million barrels a day. Inventories worldwide are in pretty good shape. If we have 200 million barrels coming in and the US can take 80 of it, we’ll have a lot of extra oil available in the short term meaning that the price of oil at $57/58 is too high. It could come back to the low $40’s during this build period. A as inventories build and takes the pressure off worry, then we should see weakness/correction to $210 (mid-$230’s now.). Some stocks are worth buying now, some on correction. Some companies could correct 10/20%, some more. The sector longer term is very good. Get rid of companies that are not growing production volumes today. If they can’t increase their reserves mid-$50’s oil and $7 natural gas, then there’s a problem with the company. Investors should be careful with royalty trusts. In declining commodity prices, with a 5/8% depletion in the sector, they’ll have a problem continuing with distributions over the next 6 months. Use weakness to buy very good companies that are growing their production volumes. In large caps, the only integrated growing production is Husky (HSE-T) that is going to have White Rose coming on next year. In the big guys, Canadian Natural Resources (QNQ-T), Encana (ECA-T) and Talisman (TLM-T) should be core holdings. Nexen (NXY-N) has not done a very good job, and would be wary of it.

Their model price is $28.86, which is about a 16% differential to it's actual price. It's mispriced, but has run up a lot, so wait for a pull back. The ideal time would be to try and get it around $22.50. With talk of a takeover, Falconbridge (FL-T) is trading in line with this company. To participate in the gains of these 2 companies, would recommend looking at Brascan (BNN.LV.A-T) which is enjoying all those earnings coming in.

Our monetary policy is great. It's stable and going ahead. The 3 levers have been pulled to get us out of deflation. Interest rates, the dollar and deficit. Over time we're correcting them. Interest rates are back to a normal level at 3%. The US$ has reached a bottom and you'll see it appreciating against other currencies. This means 6 to 8 years of wind at your back as far as US assets go. US stocks are dirt cheap viewed from a world wide context.

Sold their holdings when Ming Metals had an exclusive right to negotiate a takeover. That fell through, but they are up for sale. Should do really well as it has copper, nickel and zink. Will be volatile.

Have a great success story in their exploration and they keep firing on all cylinders. Likes it very much. Hard to evaluate the numbers as there are so many moving parts to the company. Cautious on it right now.

Has exactly what you want in a gas trust. Gas prices aren't fantastically high right now. Would like to see gas prices back at $10 with Esprit having a real run up giving an opportunity to sell it.

Outlook for the mining sector is strong. This is one of the key players in Canada. Should do very well and is a good buy.

Metals are the stocks for the rest of the year.

Feels that the income trusts in utilities, power, pipelines are more attractive than the corporations as you usually see very little growth, but with trusts you are getting an income.

Prefer this, Inter Pipeline (IPL.UN-T) or Great Lakes Hydro (GLH.UN-T) over Calpine Power Income Fund (CF.UN-T).