Don's tone on the call today was a bit different. He was the most enthusiastic I have ever heard him on gold and in particular on the miners. Remember who his audience is - pension fund managers and institutional investors. If they follow his call, there should be more folks getting the fever.....gold fever. susan

Don Coxe’s 8/26/11 Institutional Conference Call

· Political pressures on Bernanke are intense and very unlikely he will be able to do anything dramatic to help the economy.

· Bank story – epicenter is Euro zone but feedback loop is coming right back into the US

· Warren Buffett’s move into BOA even though heralded as confidence in banking should be viewed with skeptism

o All 50 attorneys Generals have litigation against BOA due to Countrywide. Issues will be in the courts for years with potential treble damages. All sorts of bad practices will need to be addressed.

o Does not see this as the bottom for banks. Ill effects of economy are starting to show in mainstream banks.

· Reasons for his concerns are not the near term negative economic outlook as everyone knows about this. There are so many assets on the bank’s balance sheets that cannot be accurately valued.

· Big, big, big 10 year bull market for gold compared to the financials is really something.

· “I believe that gold remains the alternative to stock market and in particular to banking stocks.” Banking stocks are the residuals for all the ill valued currencies and the over valued assets they are holding on their books.

· Gold market still has a long way to run. On pullbacks investors should be adding to their positions BUT additions to the stocks and not the bullion. Bullion has been the play thing of the hedge funds (e.g., just take a look at GLD).

· Gold stocks right now compared to bullion are as cheap as they have ever been in Don’s lifetime. He said he makes that statement quite carefully. You can value miners as they have earnings and growth in dividends. This week BMO put out a splendid document valuing the gold stocks at current price and what is the best way to play them and he recommended this to his listeners.

· Can’t say too strongly that this is the time we should use this distraction that the gold players on TV and elsewhere are only “peddlers of gold” to instead focus on the main story of this relentless and sustained big gold bull market that is going on. Gold has outperformed in economic recoveries, economic collapses, economic recessions, etc. There is going on a historic return to gold as an asset and a currency. Note that Central Banks are no longer dumping their gold.

· The only new suppliers of gold are from mines and from scrap. Those wanting to protect themselves will drive the price higher.

· I see gold not so much from a greed perspective but as an investment vehicle for those who have the most to lose (e.g., those in Eurozone, those invested in financial institutions and in real estate).

· Now is the time to be able to buy these resources cheap where there is enormous leverage to gold prices.

· As to our economy, we are on the cusp of a serious recession.

· Believe the agricultural sector within the non gold sector is the best place to be (outside the gold sector) due to supply and demand.

· What could go right to undermine this thesis (e.g., buy gold)? Well if economy took off. Thinks instead we need to build into our portfolio the possibility of something going wrong and this time, the rescuers will be significantly restrained as the political climate in US has changed dramatically as the stimulus is now viewed as the elites bailing out the elites.

· In the Euro Zone, Germany’s growth has been cut significantly. Not sure then how the rescue will be done there. The risks at this stage are really unquantifiable. We are going to have a period of pain. S&P right now is priced not for a period of pain but of growth, hence the problem.

· You are wise not to be governed too much by past rules of investing. Instead something else will have to be devised but they will be devised by consideration of gold as part of the built in formula.

Still believes this process will be one that slowly evolves. He is not talking here about a crash. We have a high to debt to equity ratio but not a high interest rate environment.

· Compare it for example to the end of the 80’s when gold peaked we were looking at 18% interest rates. Back then you knew that if you bought a bond of any duration you were going to make money two ways, with interest and with capital gains. This time there is no interest rates so it’s a level playing field that way (bonds versus gold).

· Do not be distracted by the wide fluctuations in the buillon price itself but look instead at the miners. Shortage factor will be on our side forever.

· We are awaiting the decision about the Keystone Pipeline. This is a major decision for Obama who has strong opposition from the environmentalists. If he defers this decision and sends it to committees it will be extremely negative for oilsands stocks and for the US economy because the oil prices will then be problematic. This decision could be one big shock or a sense of relief.