Don Coxe Institutional Call 7/8/11

· For 2nd week in a row we have been blindsided by a government report which was so far from expectations it was amazing. Last week it was the corn report which showed so much more corn being planted than expected. This week it was unemployment was so far away from predictions that it shocked the market and is raising all kind of fears about a weakening economy.

· Total no. of jobs created was only 18,000 with unemployment rate rising to 9.2% but the scarier thing was the restatement of former numbers downward. Government jobs were down which is a continued retrenchment.

· Some could suggest we are going into a double dip recession although Don thinks its too early yet to say that.

· Fate of US economy and Europe are so intertwined. However, Europe once again raised its interest rates which is so far different than the route the US is taking. It’s amazing to Don how strong the Euro has been even though Europe has been in a crisis environment week after week (e.g., Greece, Portugal).

· He was planning on saying today even before the payroll numbers were released that the case for gold was still very strong…. and that was on the assumption that employment number would be good. (While Don didn’t say so this comment gave me the impression that he feels the case for gold now is even stronger than he originally thought.)

· Balance sheets of Americans have been improving continually which is one reason why purchasing is not occurring. Thrift is reasserting itself driven by fear. Assumption by so many that the American consumer will be coming back and thus the economy would have to improve may not be true after all.

· US has the lowest interest rates of any country except for Japan and this never worked for Japan.

· Assumption over the last 48 hours is that in the US there was going to be a big deal over the debt ceiling. This was due to the fact that the President had finally taken this situation seriously by getting involved. But not sure now where that stands although if there were an agreement Don would take that as a bullish signal for the stock market.

· AS to what investors can do at this time……the two commodity groups least likely to impacted by this news is the golds and the agriculturals which are subject to supply and demand. As to the energy sector, there is a European side to that story too which is that the problems in the Euro zone are not only bad banks but bad cost pressures. Oil in Europe is more expensive than in US due in large part to the availability to the US of the Canadian oilsands.

· The dollar which has been holding up well, will not be able to survive a debt default.

· Don has great doubts about survivability of European banks. The stress test they used was a joke.

Question raised about rare earths, what Don thought about this story, and whether this would be one way to diversify one’s portfolio. Don said the world has allowed itself to become so very dependent on China’s metals. So many of these rare earths are contained in ore bodies where there are high levels of radiation but Chinese don’t worry about the protection of its workers like happens in other parts of the world. He agrees that rare earths would be diversification but doing so takes you out of low risk areas like precious metals into high risk areas like rare earths. Feels There definitely will be more available supply of rare earths in the future given their high prices.