I posted my notes from Coxe's conference call in Peter's blog although I have expanded a bit here to talk about his take on Natural Gas and Agri as well. This call was not scheduled but due to volatility in gold and all the calls I presume he received from his institutional following, he put on the call none the less.

Don Coxe 12/11/09 Conference Call about GOLD

Coxe had one of his most interesting conference calls in a long time . My “take” on it follows but be warned…I thought his analysis was complicated so may have missed something & I am long winded so you may just want to skip this message. BOTTOM LINE HE SUPPORTS GOLD INVESTMENT & RECOMMENDS 1/3 OF COMMODITY HOLDINGS BE IN PRECIOUS METALS. BELIEVES THE FUNDAMENTALS IN GOLD ARE CHANGING FOR VARIETY OF REASONS INCL. DIVERSIFICATION OF FOREIGN EXCHANGE RESERVES.

· He analyzed the relationship between foreign exchange reserves and the dollar and what that means for gold. Exporting countries foreign exchange reserves are growing exponentially. While typically invested in dollars thus providing dollar support (e.g., Foreign Central Banks buying treasuries), they are becoming anxious about using their wealth/savings to buy dollars and subsidize the US lifestyle/questionable US monetary practices.

· India has for example held around 20% of its foreign exchange reserves in gold. Now due to its significant exports its gold holdings got below 4%. Even with its recent purchase, gold is only at 6% of India’s holdings.

· China only has around 2% of its reserves in gold . While these countries will try not to drive up the price, they will buy on dips. This is a “New Factor” that will support gold’s price (the foreign reserve diversification into gold).

· Couple that with what’s happening in Greece where the story just keeps getting worse (is Italy/Spain next?), and the European Central Bank may not be able to exit its easy money policy. Makes it more unlikely that high growth countries will be overweighting their FOREX reserves into Euro’s. What’s left? GOLD!

· Put it all together and over the next few years more countries will be moving a meaningful % of foreign exchange reserves to gold although the huge move in price recently may have to be digested for awhile.

· This will have large impact on mining stocks whose value has increased substantially due to the increased value of their in ground reserves. Small caps will now have enough money to build their reserves. Finding new mines is increasingly become expensive for the big players. (while he didn’t specifically say it think “take overs”)

· NATURAL GAS – uptick in natural gas because of the 1st serious winter story resulting in draw downs in natural gas.

· Folks are considering whether the initial forecast for a mild winter may need to be revised.

· AGRICULTURE – View is there’s better news ahead for grain prices plus there’s no large carry overs should winter storms continue

· MONEY PRINTING CONTINUES – Bernake’s money printing continues and picks up recently. He may be restrained from doing what he knows will have to be done fairly shortly given the political climate including now recent Congressional oversight.