The Eye of the Hurricane is Upon Us

Editor’s Note – The last two weeks have been quite interesting, to say the least. I left for Vancouver on January 14, only to end up being sick for most of the trip. I had a low-grade fever for almost the entire stay (came home on January 22), bad cough, and little strength to do anything. I missed the last day of the conference and most of my meetings with companies took place at my hotel. Upon returning home, I was diagnosed with acute Bronchitis and sinus infection. Thankfully, I’m on the mend and felt the need -- both business and personal -- to write this update.

I never fully realized just how many readers were following my thoughts and opinions until this past week. While I’m honored that so many of you have written or called to express your gratitude for my market observations, I also realized many are treating my publication as an advisory service. It is not!

The disclaimer at the end of all of our publications is there to make readers aware that we’re not Investment Advisors. While I had been a Registered Investment Advisor in my other business up until recently, no one should use this publication for anything more than informational purposes. Please keep this in mind and remember to never do anything without first discussing it with your financial advisor.

As noted at the start, I don’t want anyone using these market observations as personal investment advice. Instead, look at it as Peter Grandich thinking out loud. I value you as a reader who may have an interest in one or more of our clients, and in exchange for that, I take nearly 25 years of experience in and around the financial arena and express it in this newsletter.

With that in mind, after a combination of technical work and a gut-feeling, on January 22 I concluded upon the market opening that at least a dead-cat bounce was coming. I sent out a message on this at 10AM EST and was fortunate to catch the bottom up until now. The bounce could even go so far to the point of it appearing the cat is “born again”. But don’t lose sight of the fact that this is just the end of the first down stage in what I feel could be the worst secular bear market since the Great Depression. It’s only a matter of time before the next stage takes hold. Any significant rally is just an opportunity to lighten up and/or get short again. Stay tuned.

Despite record high nominal price, there’s little interest in gold outside of the metals and mining industry. And I hope it stays that way well into four digits. Yes, at times it feels frustrating to hear so-called experts and the media bash gold and continue to preach that financial assets are the way to go despite gold’s absolute smashing performance for several years now. But, that’s been the M.O. of this secular gold bull market. It rises sharply and gets a little attention, corrects a part of the rise and the attention wanes, only to see gold make an even higher high. I fully suspect that should be the case until at least the breaking of $1,000, which IMHO, is only a question of when, not if.

Despite being mortally wounded, dollar bulls continue to predict a stronger U.S. Dollar. The recent consolidation of massive losses is already being touted as a new bull market forming. While the consolidation could lead to a bear market rally above 80 on the U.S. Dollar Index, we would need a close above 95 before having to rethink our stance. The Vancouver Canucks have more of a chance of winning the Stanley Cup, so don’t sweat the 95.

Did you ever think $90 oil would be called “weakening?” I continue to believe we’re in a broad trading range of $80-$120 for as far out as one can see.

While I was there only one day, the recently-concluded Vancouver resource show had a record crowd. It was truly standing room only. Such attendance could suggest too much euphoria, but a good part of the attendees I polled were there because of overall market concerns, and this show was a good place to hopefully learn something. I’m just sorry I couldn’t perform my normal duties and missed some people (although our evening workshop was packed, many seemed pleased and the NY Giants won while I was speaking).

The disparity between mining shares (especially those on the junior resource side) and underlying metal prices appear to be at an extreme. But, this is the third year that I have said this… maybe the third time’s a charm?

Peter Grandich is the founder and managing member of Grandich Publications, LLC. (www.Grandich.com), which publishes The Grandich Letter. First published in 1984, The Grandich Letter provides commentary on the mining and metals markets, discusses the Canadian economy and investments from an American point of view, and provides commentary on the world's markets and economies. Grandich Publications also provides a variety of services to publicly-held corporations on a compensation basis. He is also the founder and managing member of Trinity Financial, Sports & Entertainment Management Co., LLC, a firm with a Christian perspective, which serves the public-at-large and has a unique Pro Sports Division that assists athletes and entertainers. Grandich is quoted regularly in the financial media and speaks at major investment conference worldwide.

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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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