Don Coxe is Global Strategist for BMO and has a large institutional following. The following are notes from his Friday conference call. Note that as some have earlier pointed out, he has made wrong calls on commodities for example which got trashed along with most everything else last year.

· S&P trading between 16 & 20 PE which does not make it a screaming buy. This is above historic average for questionable earnings.

· Gold story got more interesting this last week with the information coming from the Gold Conference. Aaron Reedson (sp?) of Barrick pointed out some things that folks are not focusing on. S. Africa for example peaked in the ‘70’s and its gold production has been declining rapidly. Although exploration dollars are at record levels, the results to date have largely been disappointing.

· However the “false gold mines” (a/k/a Central Banks) have helped because they have supplied gold to the market but this has now dried up as they have switched to buyers instead of sellers. This new approach could result in the “mother of all squeezes on gold.” As central banks add to their gold exposures, any gold pullbacks will be short lived.

· Never has an Administration before put out a 10 year budget with deficits increasing – and this with very optimistic projections such as 0 interest rates. Basically the Administration is saying there will never be a return to fiscal solvency but is instead asking the rest of the world to finance the US spending spree.

· Coxe believes 0 interest will last as long as “the eyes can see.” Many are telling him that the economy is stronger than he thinks. His response is that if that’s true then we probably have a bigger problem than before given what will happen to the interest rate derivatives held by banks if interest rates have to rise.

· Still believes like in the ‘70’s that commodities will outperform other stocks.

· Will be revisiting prior to year end their recommended allocation to gold as its entirely possible that if central banks are forced to change their asset mix that we are looking at something much bigger than we were before. He mentioned that the central banks don’t want there to be a gold panic but certainly must feel uncomfortable with what’s happening now.

· All the rain in Oct. could cause havoc with corn due to potential diseases. The “bad news for agriculture stocks is over.” Next year corn at $4.38. That plus the fact that the main commodity indices have to be re-balanced shortly and will be done so in favor of grains. More grains will be held by the Pension Funds. Any growing problems in the spring will be problematic.

· Base Metals – always thought before that rise in copper was a signal of strength in economy but not sure how much of this has been due to China stockpiling versus actual demand.

· More confident of global energy demand than in base metals. (However later question raised on the call cited the possibility that copper should be considered as a energy play with its needed use in all the energy infrastructure that will be taking place)

· Currently Coxe’s global exposure to commodity stocks is PM 33%, Agri 33%, energy 22% and base metals 12%. (Remember he said he was going to review with the suggestion that PM will be upped.)

On another note, David Rosenberg, chief economists and strategist at Gluskin Sheff said in the Wall Street Journal article last week that he sees gold rising through $1300 should another central bank particularly China buy the remaining 203 metric tons of IMF gold. Our friends at Goldman see $1200 “as long as real interest rates remain low.”