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-- Posted Friday, 2 March 2007 | Digg This Article
I May Be the Only Bull Delighted That Gold Fell $40+ This Week Gold $640 By Peter Grandich Based on all the calls, emails and what I’m reading and hearing in the media, I just may be the happiest gold bull in the world today. Now, before there are any wisecracks (save them for the Internet), I don’t do drugs and I don’t drink. My medications are all working and I haven’t snorted what’s left of all the “white-out” in the world today…. Still don’t believe me, hey? I’m about to travel to the world’s largest mining and metals conference so I can’t write a long essay but I didn’t want loyal readers to go through the weekend listening and reading what I’ve had to endure today without what I believe is the reasonable expectation to have going forward. Let’s start by stating that I’m actually more bullish as I write this short note than I was a week ago. When we began this week, there was near-record open interest on the Comex gold contracts. Funds were aggressively long from much lower prices and commercials were aggressively adding to their short positions. Now, I’m not even going to discuss the manipulation aspect since whether there is or there isn’t (I believe there is), this spread among funds versus commercials has historical consequences that highly favor the commercials. As simple as it’s going to sound and knowing it will be far too simple for most to accept, this alone is much of the reason for the $40+ decline. The added fuel is what happened around the world in the financial markets. Throw in the need to sell and then the “surface” assumption that if gold is going down when it should be going up, one should sell, not buy.
For the few of you who still have maintained your sincere bullishness, not only do I say congratulations, but the answer is yes to those who said it feels like déjà vu. You see, gold has been going through these sharp, painful but rather brief corrections for several years now. Just look at the last six months of trading and go back and read the media and public comments at the time and this past week looks like it’s all rehashed. Last May, gold peaked around $730 (I remembered issuing a warning just hours before the peak and the comments that followed). It fell to about $550. It then rallied to about $640 by early September (see chart above), only to fall back to $560. By then, the air was full of bears calling for the end of the bull run. We then rallied to $640 again in December, only to decline back towards $600 in early January. Guess what? Yes, you’re correct if you said the calls you hear today were heard back then. In fact, I went on ROB-TV with gold at $602 and said the next $100 is up, not down, or don’t have me back. Guess what? We rose to $640, hit resistance but then busted through and rose for seven straight weeks until last Friday. So now where do we sit? Right at former resistance around $640 – a technical feat that often occurs after a breakout. And the bearishness? Yes, it’s out there again, along with fear and some panic. And what’s the gold price $540, $440 or $340???? No, $640. Let me say again - $640. And the very overbought condition we saw a week ago has all but evaporated. There are all sorts of bullish divergences as well as a host of screaming bullish fundamentals, so call me crazy but I’m actually whistling as I write this. And if you’re still allowing the emotions of the past week to make you forget why you were so bullish only a week ago, let me remind you of a few good reasons not to wrap your mouth around your car’s tailpipe for at least another week, or even a lifetime – another month: • Psssss – the U.S. Dollar, once “THE safe haven” of all safe havens during turmoil, behaved instead like the terminally ill patient we all know it is and should continue to be. The sign read “Closed” for any safe haven refugees. • The single best historical factor for gold is its inverse relationship to the U.S. Dollar. Paste that on your forehead and keep looking in the mirror this weekend! I believe the U.S. Dollar is going lower. If you do – past the next day or week, history tells us there’s about 85% chance gold should head in the opposite direction. If anyone has a proven technical or fundamental factor that’s been correct more than 85% of the time – PLEASE TELL US ALL! • Is the world suddenly safer? Has peace rung out in the Middle East? • Has jewelry gone out of fashion? • Has mining become easier overnight? I’m rushing to get this done desiring for my readers to at least wait until 9:31AM Monday before pulling the trigger – figuratively and literally! God Bless, Peter Grandich P.S. Even silver looks great again. Grandich Publications, LLC. P.O. Box 243 • Perrineville, NJ 08535 www.Grandich.com phone • 732-642-3992 email • Peter@Grandich.com Grandich Publications, Inc. provides research, analysis, and investor relation services for certain of the companies featured in the articles appearing in its publications (each a “Featured Company”). Featured Companies may pay fees to Grandich Publications, Inc. that may include securities-based compensation that would appreciate if the company’s stock price rises. Accordingly, there is an inherent conflict of interest involved that may influence our perspective and provide an incentive for publishing favorable information with regard to a Featured Company. Grandich Publications has been given the right to exercise stock options. A complete list of options and share price (in Canadian dollars) is listed on the company website. Furthermore, most companies have entered into agreements to pay Grandich Publications a monthly fee. Fees are also listed on the website. The material herein is for informational purposes only and is not intended to, and does not constitute the rendering of investment advice or the solicitation or an offer to buy securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). In particular, when used in the preceding discussion, the words “plan,” “confident that,” “believe,” “scheduled,” “expect,” or “intend to,” and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the Act. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward-looking statements. Such risks and uncertainties include, but are not limited to, future events and the financial performance of the Company which are inherently uncertain and actual events and/or results may differ materially. This report may refer to “measured, indicated and/or inferred mineral resources”, which do not have demonstrated economic viability. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever achieve the status of “ore reserves”. A Preliminary Assessment is based on inferred resources that are geologically speculative, and as a result, there is no certainty that the economic considerations or results will be realized. Third party statements contained herein and information contained in any source cited herein are not endorsed by or adopted by Grandich Publications, LLC, nor has their accuracy been verified by Grandich Publications, LLC.
-- Posted Friday, 2 March 2007 | Digg This Article
Peter Grandich is the Managing Member of Grandich Publications, LLC (www.grandich.com).
The company publishes The Grandich Letter (first published in 1984) which covers the metals and mining industry, follows world markets and economies, and covers the Canadian markets from an American prospective.
Grandich also provides a variety of corporate finance and development services to publicly-held companies.
Peter Grandich is also the Managing Member of Trinity Financial, Sports & Entertainment Management Company, LLC (www.trinityfsem.com), a Registered Investment Advisor in the State of New Jersey. Trinity provides investment advisory services to individuals, small to mid-size businesses, professional athletes and entertainers.
Peter is a long-standing member of The New York Society of Security Analysts and The Society of Quantitative Analysts.
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