Ben Davies of Hine Capital - Kingworld Interview 2/8/11

· His fund had been accumulating physical gold around 1350-1360 area. He should have been more nervous around gold given that nothing much came out of CFTC hearings. No ruling means that the banks who control the paper markets could continue doing so.

· Physical market has never been so tight in the last decade. Premiums becoming very high. But even in the face of all this tightness the fact that market has gone down makes it very very strange. Great amount of buying going on probably by the Chinese. Would not be surprised if we have now seen the low.

· Feels that the paper manipulators are losing the battle. Feels extremely bullish now seeing what he is seeing. Strong physical demand out of both China and India. Huge dichotomy in the market between the physical and the COMEX paper.

· Thinks there is inaccurate reporting going on involving the ETFs, GLD and SLV. There is not net outflows going on that would suggest people are getting out of the metals. He thinks instead what is happening is that there is a redemption of shares for the physical metals. That gold is needed elsewhere. Could be that the Paulson’s fund is exchanging the GLD shares for the physical. In general the regulatory market is going to get trickier so why not just take your gold and store it outside the US where you can also use it for collateral?

· He made a specific point of clarifying that GLD and SLV reductions is a sign of need for metals NOT a getting out of the metals.

· Precious metal traders recently stated that there were “stunned” with the size of the demand buying coming out of China recently.

· There is a new China fund that will invest in physical market that will take more metals out of it. These Chinese people “are not stupid” so they will not invest in the ETFs run by the banks.

· Silver markets are in backwardation; physical very hard to get hold of; Sprott had difficult time getting its total physical; believe silver will be pushing forward in in next 3 months; silver eagle demand is through the roof. (Susan – backwardation is where the spot price is higher than future. The opposite of Contango)

· Talked with Hugo Salinas in Mexico and Mexico is pushing forward to have silver monetization and if that happens silver will skyrocket and we will start seeing $50 prices. Thinks we will see silver increasing over the next 3 months especially with our supply constraints. For example, look at cyclone now hitting Australia. BHP’s largest in the world silver mine is right in the middle of its path.