|
The comments I’m about to make are certainly
not going to be to everyone’s fancy and some will
end up calling me something far worse than a party-pooper.
Unfortunately (or fortunately, depending on how important
honesty is to you), I think it’s real close to another
one of those “steps back” in the “two
steps up, one step back” mode I’ve often spoken
about in describing the price rise in this secular bull
market in metals. In addition to the caution, I’m
now going to wave my first red flag (NASCAR fans will understand
the difference between a yellow and red flag) on any metal
since turning bullish on them back in the spring of 2003.
I only hope you will still love and respect me in the morning.
Overview
It’s been nothing short of a sensational
ride I’ve enjoyed since returning to the metals arena
in the spring of 2003. My history will show that when it
comes to precious metals (gold, silver and PGMs) I’ve
managed to correctly foresee every major up and down move.
The same was true for base metals until a year ago when
I first chose to suggest overweighting in precious metals.
While that proved to be okay thanks to spectacular rises
in the precious metals, the fact is I became far too cautious
on copper prematurely. Now, I’m going even one step
further in daring to suggest it’s time to be actually
bearish (assume prices are actually going to decline over
time) on copper.
I’ve operated on the assumption that
the great bear market in commodities in the 90s, especially
in the metals, allowed a “once-in-a-lifetime”
buying opportunity to occur and I think up until now I’ve
done a good job in taking advantage of it. The bad news
is- the easy money is now gone. The world has finally woken
up to the fact and they are all rushing through a rather
narrow door to get their share of the “new world order”.
This stampede can continue for a period but I’m never
happy being in a boat that was once nearly empty and is
now standing room only.
Some will view the following as pure sarcasm,
some as distaste, but those who know me will realize it’s
neither. It’s the truth as I see it: TOUT-TV (CNBC-TV)
has once again missed almost an entire move and, during
the dramatic rise in commodities, had mostly “bearish”
forecasters on the air. A case in point that clearly shows
the 180 degree turn around they have now made in order to
give the appearance that they are indeed the “world
leader in business reporting”, was seen a few days
ago. On the “home for lunatics” broadcast they
call “Mad Money,” mad man Jim Cramer stated
how he now loves base metals and devoted nearly a whole
show to it. So why does this mean anything? Well, unlike
my neighbors to the north, who are blessed with a “real”
balanced and unbiased business network like Canada’s
ROB-TV, I only have TOUT-TV for most of the day. And, for
what was at least many months, if not more than a year,
CNBC ran a commercial for “Mad Money” where
you would hear Cramer stated on an actual show “Commodities
are Dead.” (Ah, I can hear many readers silently in
their hearts recalling this). So, now, after 200%, 500%
1,000% increases, TOUT-TV’s number one Market “Guru”
now loves base metals. Makes you warm and comfy, no? What’s
worse is the fact that the stocks he mentions are going
through the roof. Please, that’s not envy but a realization
that when crowds are willing to pay just about anything
from someone whose history in that area leaves much to be
desired, the froth is clear and the inevitable fall is never
too far down the road.
I’m traveling out of the country and
upon my return mid next week, I will then be out if the
office for a few days in celebration of both making it to
the age of 50 and my wife putting up with me for 25 years.
Therefore, I’m likely a little early on the caution
side but wanted you to at least know what was in my heart
and mind.
Gold
The danger in secular bull markets is trying
to time and profit from the blips of profit-taking or the
corrections to very overbought conditions. If you’re
strictly a long-term player (one assumes that means your
time horizon is more than the time to boil an egg or even
a calendar year), then you shouldn’t be overly concerned
about corrections. I do think we will end up substantially
higher from here, but before then, a significant correction
is likely on the way to $700. It is likely to come out of
left field, be vicious, and if the past is any indication,
should bring out what’s left of the bears pronouncing
the end of the bull market-again! Hopefully, I will once
again receive a rash of nervous-nellie emails and even those
nasty vulgar ones. They always reassure me I did the right
thing. My concern would be total complacency.
Silver
Here too, prices should eventually be substantially
higher before it’s all said and done. But even more
so than gold, silver is subject to a sharp correction that
could scare the weak and faint of heart.
PGMs
I have written often about platinum and palladium
being the most balanced of all the metals and that the spread
between platinum and palladium should narrow in favor of
palladium. It has narrowed by palladium rising over 70%
while platinum has risen by about half that. I don’t
see any sharp corrections here and I continue to favor the
small minority of companies that specialize in exploring,
developing and producing these metals.
Copper
At $3 a pound, I can no longer “Not”
be bearish longer term. Yes, I recently stated we could
see a parabolic rise to as high as $3 but felt it was the
end of something, not the beginning. The feeding frenzy
could even overshoot $3 but in my heart of hearts, I couldn’t
put any new money into copper now. Again, this doesn’t
mean sell all your copper stocks, but I myself am going
to make sure I’m seriously underweighted going forward.
I guess my red flag now makes me a copper bear. Who just
shouted “off with his head”?
Uranium
It’s best to just use a phrase I often
used to describe my opinion on it – LOVE IT!
Oil
I think oil should be a guest on the show
“Fear Factor” as it’s the fear of a disruption
of oil supplies, not the current supply-versus-demand factors
that are driving prices. The Iraqi situation is a loss now,
even if we actually end up achieving what was set out to
reach, because the costs of lives and dollars have been
far too great. But Iran is the real flash point going forward
and as long as sable rattling is in the news on a daily
basis, the fact that the current supply of oil is at a nearly-10-year
high is not going to have a major impact any time soon.
I am by no means an oil bull but since I paid dearly in
the past trying to catch a falling sword, I’ll stand
aside for now.
U.S. Dollar
Read my recent special alert The
King is Dead! The only people who don’t know are
the Larry Kudlow’s of the world and the sheep who
follow them.
GRANDICH PUBLICATIONS, LLC.
P.O. Box 243 o Perrineville, NJ 08535
www.Grandich.com
phone o 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.
| 
