Certainly a major factor in the commodities arena these days is China and other emerging countries, but particularly the Chinese companies, many of which are state-owned and/or state-controlled, buying resources in other countries or buying portions of companies in other countries.

And there's no indication that there's going to be any slowdown of that effort on China's part, or on the part of the host country to minimize the extent to which a foreign country is—whether it's China, Australia, Japan or Korea—acquiring assets. The South Koreans are interested in iron ore because they have a very, very large steel industry. The Japanese are interested in a wide variety of commodities to supply their industries. So it's a factor that's present and it's not going to go away, in our opinion.

TER: How has this potential of government intervention impacted your decision on which countries to invest in?

MB: For one thing, it's likely that prices will get higher for both the commodity and the value of the companies that are producing those commodities. A number of the companies that we talk to tell us that they've been approached by mostly Chinese and, in some cases, Japanese, both representatives of the government, as well as of companies in those countries that are interested in acquiring either the resource or the company itself. And that gets into a competitive situation, which should move prices higher.

One of the areas that we haven't talked about that we like is coal. The Chinese, as you know, are an enormous consumer of coal. They would prefer not to have to import the coal. So we looked at companies that are producing coal in China and we've invested in one just recently that we think has terrific potential, L&L International Holdings (LLFH:OB). We've invested in a coal company that's producing coal in Mongolia, about 20 miles from the Chinese border, that we also think has enormous potential. It's SouthGobi Energy Resources (TSX.V:SGQ), which is about 80% owned by Ivanhoe Mines Ltd. (TSX:IVN) (NYSE:IVN). Ivanhoe spun out SouthGobi and its coal deposits and is concentrating on copper and gold. So SouthGobi is in production, expanding production.

As Malcolm said, it operates about 20 miles from the Chinese border and they're running trucks 24/7 from the mine facility to the Chinese border, where they're loaded on rail cars to be taken into China to be utilized. We would anticipate that at some point in time there may be some business relationship activity between the 80% owner, Ivanhoe, and SouthGobi. But whether that happens or not, SouthGobi is doing extremely well, is well capitalized, well funded, is increasing their production, and we think has a very bright future as an investment.

TER: What other sectors of energy are you invested in?

MB: Well, certainly oil and gas. We invest in companies; we invest in equities. We don't do futures. We don't own the commodity itself for a variety of reasons. We're in oil companies. We, in the past, have been more heavily than we are now in the Canadian energy oil and gas trusts. There have been tax and other changes, so we have reduced our exposure to Canadian Energy Trusts, but we still have some exposure. We still think some of them are attractive. And an area that we have been investing in somewhat and will be increasing is natural gas. Natural gas prices have just been clobbered, and, again, its production has increased, and the demand has gone down.

Weather enters into it. Hurricanes enter into it. A lot of factors enter into it, but the bottom line is natural gas is selling at less than $3.25 per mcf. It's way, way off its high of $15 and way out of line with the historic relationships between natural gas pricing and oil pricing.

We think because we're, at heart, value players — although value to us doesn't necessarily mean that it's some ratio of book value or some of the other metrics that you sometimes see about value players—value means it's undervalued, that there are things that are not being recognized by the market place and will result in a company stock going up in price. And we're also contrarians.

There are very few people we talk to these days or that you hear on CNBC or that you read anywhere who have much good to say about natural gas. There's just a natural inclination for us to look closer at that kind of situation, which we have been doing and we have done some small investing in natural gas companies or the natural gas ETFs for the Fund. We anticipate we will be doing more of it because we think that there's a far greater likelihood that natural gas prices will go up and the stocks go up over the coming three, six, nine, twelve months than it going any lower.

TER: Are you looking just at North American natural gas or do you have a different view of international natural gas opportunities?

MG: We always look everywhere, not just necessarily North America, but we're very sensitive to the political realities of the world and prefer to be investing in safer jurisdictions. And I might be a little more cautious than Marshall in this area. We've also looked at alternative energy. We've had meetings with people who are proposing to produce energy from every agricultural resource imaginable and think that still is some distance away.

It still is going to be on the edges, a small portion of energy production over the next several years. We have invested a little bit in solar and think there may be opportunities there, but we still think it's not mainstream yet. We've looked at hydro, we've looked at wind as well, but we don't think we're there yet. As Marshall has indicated, we are strong advocates of uranium and think that the American public doesn't understand the efficiencies, the improved technology, that safety improvements have been made.

It's not a dangerous commodity anymore. And, also, it would provide a very considerable number of jobs in the United States and, as you know, there's substantial uranium in the United States. It would really reduce our reliance on foreign imports. So, for all these reasons, we are advocates of nuclear power.

TER: Malcolm and Marshall, this has been great. We appreciate the time you've taken with us today.

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