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-- Posted Tuesday, 29 May 2007 | Digg This Article
For quite some time now, I’ve spoken about my belief that the U.S. stock market could not top out until such time that the mood on Wall Street is convinced the Federal Reserve will move, or already has moved, to an easing position. It’s at that point where I believe the last blow-off rally should take place and where I would personally like to short the market. Despite an ever-increasing number of bearish economic, social and political factors, I continue to believe this easing is the needed “last shoe to drop” before we enter a long-term grinding bear market. While I haven’t gone short yet, I do believe investors should use further strength strictly as an opportunity to lighten their load (except for precious metals issues). Gold – I haven’t witnessed a more pronounced bearish mood in the gold market given the least amount of price decline since this secular bull market began five years ago. Not a day goes by where I don’t read yet another formerly bullish forecaster painting a gloomy outlook for gold for the foreseeable future. The mood among retail speculators is so thick with pessimism you can cut it with a knife. Yet, here we sit this morning with gold still north of $650 and above key support of $640. One shouldn’t simply discard this marked increased in bearishness. For starters, gold is now in the historically weakest seasonal period of May through August. It’s also been absolutely hammered – not only by aggressive central bank selling, but by a continuing pattern of strange selling on the Comex that almost always is concentrated around the 11 a.m. time frame. The fact that this is when most of the physical buying worldwide shuts down until later in the evening in Asia is no coincidence. It’s easy to see why gold bulls like me may be scratching their heads wondering why the bullish boat has thinned out, especially when you read so much double-talk like we are currently hearing from a so-called gold expert on one of the most read gold bullion websites. This gentleman can not only talk well from both sides of his mouth, but I often wonder if he and I are looking at the same market? Make no mistake about it; we remaining gold bulls are on the defensive until such time that gold breaks above the all-important $700 level. Gold must hold above $640 or we are all but certain to see a test of $600 or even $575. (Please put down the gun). But even if that was to occur (though extremely unlikely), the fundamentals remain solid for gold and by sometime in 2008 (if not sooner), we should be testing the old highs of around $875. I continue to like the bullish side of silver, platinum, palladium, uranium and cobalt. I’m now firmly on the bearish side of most base metals. Oil – With hurricane season upon us and a continuing thirst for gasoline, there’s little reason to think oil can see much downside below $60 and it wouldn’t surprise me to see a spike back to and beyond last year’s highs. U.S. Dollar – Despite all the propaganda the “Don’t Worry, Be Happy” crowd on Wall Street gives to the financial media, rest assured the Fat Lady is not only in the building, but Last Rites have been administered to Uncle Sam’s currency. Put a fork in it. Mining and Exploration Shares – What began as a serious correction in the uranium stocks became a serious correction (or even a mini-bear market) among producers and juniors. Very few issues have escaped this and our list of companies is no exception. Because I don’t believe the gold market is going to get much worse before it gets better, I’m personally going to ride this sluggish time frame out. I believe most of the surprises in precious metals and related equities should be to the upside for the foreseeable future. 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. 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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. 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 Tuesday, 29 May 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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