Don Coxe 9.30.11 Conference Call

· Greek/Euro tragedy is on a grand scale and will not end anytime soon. When people say but Greece is so small, they are not aware of the real issue. The problem here is because of the willingness of banks across the Eurozone to buy bad debt from Greece when they got into trouble.

· Capital Asset Pricing Model has been destroyed. Banks this time around loaded up on “risk fee Greek debt.” Greek debt now trading 30 – 45 cents on the dollar so that the banks will take a big hit. Problem now is to try to save the European banking system. Its just a matter of time until Greece defaults on some portion of its debt. If they have to then leave the Euro zone then panic will force everyone to look at the other PIIGS like Italy.

· European Banks have until 2017 to get their capital ratios up to par but this is dreamsville as its not going to happen. The overhang on the capital markets is due to problems in Euroland ….this story is just going to hang on. There are no exit strategies that will be painless for anyone.

· Therefore Don remains very cautious on the outlook of the financial markets. Suspect debt on the Euro banks is problematic. Doesn’t see how this is going to work out.

· Feels the consumers can limp along as long as we don’t have a big increase in unemployment. Without a huge increase in unemployment we shouldn’t have the recession like we did in 2008.

· Draconian measures being imposed on Europe is going to guarantee a recession over there.

· This time the only risk free asset is cash backed by a debtor who won’t default. Unfortunately its not earning anything. So you have to find some assets out there that while there will be volatility should be basically strong.

· In his Basic Points focus has been on dividend paying stocks. He mentions for example Bristol Meyer Squibb not because it has a huge dividend but because it’s a reliable dividend. Companys are going to become believers in paying dividends as a way to protect their company’s stock.

· Inflation numbers in Eurozone (Canada & US) recently came out as 3%.

· USDA has once again surprised us by not correctly forecasting the crop. Inventory levels for corn came in much higher than expected thus driving down the price of corn. Livestock is being culled all over because it is becoming too expensive to feed them. Size of the cattle herds in the US will be significantly smaller.

· Still better off emphasizing commodities because these are still things you will need. Will still need to eat.

· Brent has move from $111 to $103. WTI has moved all the way down to $81.50. Does not think we will have food and energy prices being really high like initially thought.

· Gold just up around $100 from 2nd quarter. Even though down in 3rd quarter still best place to be in the 3rd quarter. Silver has definitely decoupled from gold. At some point investors will be more interested in getting into silver. Still being in gold makes great sense. Within next 3 years we will lose the 2nd biggest currency in the world. This is now causing the dollar to rally from 75 to 78.61. Dollars behavior now is showing sheer fear factor.

· Financial community is under stress everywhere except for Canada.

· In the meantime, what you want to do is own gold. Better off owning the great gold mining stocks now than the buillon.

· Question about the extreme volatility in the copper market and the new ETFs and their impact on them??? Copper clearly remains the best of the base metals including the great copper mining companiesthat will survive no matter what. But it does show that economic news in the next 6 months will not give us great joy.

In Don’s latest Basic Points, he speculated about the possibility that US government itself could start becoming a buyer of gold. Gold has demonstrated its ability to perform despite adverse circumstances. The downside for gold doesn’t look all that great compared to other things. If Obama did a Roosevelt, gold would be worth a lot