Don Coxe July 22, 2011 (Note his comments about gold going to get more investment community respect)

· What’s happening now in the world is much much more than just bailing out Greece. A much bigger question for the investment community is how going forward do you structure an investment portfolio and gage its risk. The old business models have effectively been blown up. Something new must be developed.

· Believes this is gold bullish as it is no one’s liability and will become more acceptable in “polite society.” Capital asset pricing model in the past marginalized gold but he believes this is going to change.

· They will be able to keep Greece afloat for now. But what’s clear is that they will have to do something with other countries where interest rates on their bonds are sky rocketing. How do you value government debt especially when it’s valued in the EURO??? The Germans initially when the EURO was created demanded that there would be no assistance programs for each of the member countries. This was part of the EURO guidelines when it was created….a basic tenet. The EURO is thus in serious trouble as all its basic rules have been violated. This currency is only based on a theory. Banks are loaded with all these bonds based on sovereign debt. How then do you value the banks? This is the closest thing to shear chaos in the financial markets that Don has ever seen. How then do you construct a long term investment model when governments can rewrite the rules whenever they want to deal with difficult situations???? What do you do when they throw away the rule book and the modeling systems???? Means that everyone will have to make their own decisions on portfolio’s on their own without these previously acceptable models.

· Do treasury bonds still remain the one risk free rate of return? Short term risk now shifts from EURO zone to USD. Debt talks illustrate this as John Boehner has issues in the House where many were recently elected based on their promise to get big spending cuts. Remember also that in the House they get elected every two years so members will have to face the voters next year. August 2nd is looking more and more like a stretch. While the country will not implode, there will be a technical default.

· But what does this mean for an investor? There are no text books to deal with this. But this has to be gold friendly. Gold is simply the asset that was used for thousands of years to buy goods and assets. This is something that more people will be moving into. It’s the alternative asset. This will not be a good summer to be vacationing and away from the markets. They will be writing about this situation for years. This will be a big one.

· If Italy goes down, there is no conceivable way to handle that.

· Therefore he recommends that you assume that a bad outcome will not only be a possible outcome but is a real possibility. Therefore be cautious about investing when the old rules are out the door.

· One of the reasons the stock market has held up so well as it’s not so difficult to value stocks (as it is debt). You could argue that equities are a safer bet than when government debt is in trouble. Debt markets are going to be the ones with more risk in an environment where you don’t know what will happen next.

· Don thinks EURO is on its way to oblivion. No logical basis for EURO any longer. It will be a collector’s item at some point. Crisis has been dealt with for now in Europe so now our eyes turn to the US.

· In terms of dollar assets, assume there will be some volatility. However, longer term investments need not be disturbed as the US will eventually finds its way out of this.

· Question about Emerging Market debt? Don – has to look better than the European debt. Yes this is an asset class that has to be rated upward compared to the others….just need to make decisions based on the specific countries.

· Question about corn being down and that impact on agricultural stocks? Don – one of the things that will get done is that many of the privileges for ethanol will get taken away. But no one has had the courage to take away the mandates for ethanol especially with the high price of oil. There’s no great downside to corn from this though as the basics for ethanol look good especially given that the US is now selling it to Brazil. Coxe has a new agricultural fund trading under CAG.un on Toronto exchange. (Implication was that ag stocks were still a good bet.)

· Peter Breger a bid money fund manager said that Don was one of the most decisive insightful thinkers he has ever heard and said he had benefited greatly from Don’s insights.