3/9/12 Coxe Call

·Unemployment nos show that US economy is coming back and US is way out performing Europe.It’s a reassuring sign that US is at least dealing with some of its problems.(Did have good numbers last year but then we lost them.)

·Big news this week is that Greek managed to get private holders to take 75% cut on their bonds.These are primarily banks that bought for small yield.

·Gold story may be different but it is tied into other developments.As a long time gold follower, I have never seen anything like the 5 minutes the way that gold got blasted.What’s fascinating is that no one has come up with an explanation of how/why that happened.You have to feel like there were several motives.Many theories abound.Wanted to mark down their exposure to gold for month end.Also maybe some central bank needed to raise millions in short term and selling of their gold was one way to do it.What it did was break the rise in gold.

·Many are now saying that gold has had its run.Our theory has been that the ratio of supplies of gold compared to money which is now joined by Japan.This then is still the backdrop for a major uptrend in gold especially if everyone wants the value of their currency to go down.Case for gold then is that this is only real monetary thing left.Gold story is not over.

·Other assets are improving.No return even from long term bonds.Stocks then become the assets of last resort for those who are not prepared to buy the inflation hedgles of last resort like gold and to some extent, silver.

·We will be looking at how to re balance your portfolios in the Basic Points we are working on.Don’t assume then that the stock market is about to roll over.It’s not.

·Likeliest outlook is that we will get QE3 as soon as the economy starts to stall.Bernake now realizes that the Fed is only backstop for the US bonds as China has been a net seller.China now diverting its reserves into commodities.Greatest expansion into commodity investments that we have ever seen.Does not look for China to resume its support of the Treasury market.They will be investing/speculating into countries engaged in commodity production.Even at China’s reduced rate of growth it still means tremendous commodity consumption.

·Japan is coming back (2nd best growth story in G7 only behind US) but doing it by printing money at unbelievable rates and driving down the value of their currency.

·We will get another rally in gold at the time that the Fed starts up its process again.

·In US there are still tremendous levels of consumer debt.For those with equity in their houses the average is only 3%.

·Oil story is a complicated one as we don’t know how much of the price increase is simply need versus hedging against Iran/Israel conflict.

·All we can look for is modest economic growth but that should be enough for the stock market.Does not see much downside risk in the stock market.If we get some relief in oil which will help the consumer.

·Stocks at these prices are much better alternative than cash.