Don Coxe 11.4.11 Conference Call

· Absolutely amazing that small Greece should be causing so much trouble. But it is because it is challenging the basic assumptions underlying the Eurozone.

· ECB did cut its rates as Don had predicted and thinks there will be another rate cut coming. This injection of liquidity did give a brief respite to the markets. ECB’s one and only mandate is to fight inflation but that seems to be getting blurred with their recent actions.

· Market is now moving on to what the next problem will be in the Eurozone. The deal with Greece with the 50% cut was that it would not be deemed a default since it was voluntary. Question that comes up is how big are the credit default swaps on the Euro bonds? Don thinks we are talking about really huge amounts that banks are holding as to the credit default swaps. If this contagion spreads, there will be a real challenge to the global financial institutions. Don has disliked these credit default swaps for years and always thought they posed great risk. We seem to be limping from one global crisis to another because of the big bad bailout banks.

· There is evidence the Eurozone is sliding into recession which is not helped by the fact that all countries now seem to be moving to “greater austerity.”

· Countries like Italy should be using its gold to go to longer term gold backed bonds. This would certainly help them refinance their debts. But no one seems to be considering that at this stage anyhow.

· Bad news also out of Canada this morning with this month’s employment numbers being reversed.

· One has to ask themselves how in the midst of all this bad news is there still such strength in the commodities. Consider for example the price of meats. Why are commodity prices so strong? Investors should be looking at investing in companies that have pricing power. Consider things such as supply and demand. Means there will be good prices for “stuff.” Believes this is a theme everyone should be looking at. Don does admit that even with this thesis when all stocks get hit, so do the commodity stocks. For him this means there will be good buying opportunities in the future.

· Any recession will not be like that of 2008 given our current low interest rates …will not have the depth of that recession. Companies also have been much more cautious about their balance sheets since 2008. But what we do need is to own companies that will make money during a recession.

· Sarkowsky is facing an election in the spring and will be only be in power for a bit longer. Feels like Merkel will be considered the “queen of Europe.” She has good common sense and can build a constituency abroad. To Don, finding a leader of her caliber gives him hope that they will eventually find a solution.

· Ironic what has happened in Greece, a nation that gave us the concept of democracy and has had it now taken away by the “elites.” The elites did not want a Greece vote. The euro concept was never voted on in many countries and was instead hoisted upon the people by those “elites.”

· As for Jon Corzine he became a leader of a major commodity trading firm and tried to make it similar to a large bank. His background was such that he was running the bond market at Goldman during the Reagan years when bonds just ran and ran, so everyone believed that he was a genius. Don sheds no tears for him as he has caused a lot of trouble for many including a formerly well respected firm.

· All of these happenings virtually guarantee that gold will have a bigger role as we move forward. Gold will be the last store of value standing when everything gets wrung out with the euro and then the dollar. Focus is now on the euro but at some time focus will shift to the dollar. We had a spirited gold rally after ECB cut the rate as this was recognition that there would be more money printing. Ultimate reason for holding gold is because of the large amounts of paper printing….eventually there will be so many adjustments and so much pain that someone will want something like gold.

· The case for the equities within the commodity group is also if anything stronger. We will just have a better buying opportunity later.

· Oil companies have terrific investment merits at a time like this because they will be making vast amounts of money and they don’t have to deal with “scrap.” Don’s interest in the oil stocks remains, but the outlook for the Alberta oilsands stocks is being questioned due to the recent actions of the Governor of Nebraska moving to block the Keystone Pipe Project. Sad but true. The sheer scale of hysteria does give one pause. Principle is to try to reduce political risk so you may not want to make any additional investments at this time in the oilsands until we know more. We have to allow for the possibility of a really stupid decision (e.g., pipeline not allowed to go forward).

· Thinks Obama will be going against Romney as what happened this week looks like the campaigns of Cain and Perry are done.

Question: Any comments on these “war rumbles about Iran, US and even Britain?” Don - There’s no question that the strategic position of Israel has weakened especially in the last 6 months. Don is still of the view that we do not know what the strength is of the Iranians and how close they are to having a nuclear weapon, although Israel may have a good idea. Don thinks it is something out there but not something that will happen in the near term. But what we don’t know is what level of desperation Israel may be feeling at this stage.