Peter Grandich ThoughtsGold –
I’ve been very blessed to have almost no blemishes on my gold forecasting record ever since returning to the bullish camp in 2003. I managed to step aside before the handful of significant corrections and have increased my bullishness at or near important lows. With this in mind, I’m due for a clunker –LOL!
Back in early January, with gold testing the $600 area, I went on ROB-TV and dared suggest the next $100 was up, not down. I urged the host not to have me back if I ended up wrong. While the very small band of Grandich haters have been rooting for $500 ever since, gold has managed to get a little more than half way to my goal (sorry but the goal is not harming the nay sayers – even though I must confess with Lent upon us it has entered my mine once… okay, twice).
Given the fact that gold is up over $325 from where I first turned very bullish, I’m perhaps the most bullish I’ve been since then. Why? For starters, I’m very impressed with its trading patterns, especially accounting for the occasional bear raids that are repelled within hours or days. The day I was on ROB-TV back in early January was a typical raid just like the one we endured yesterday. The fact that the raids marked the lows, not the beginning of a more sustained downside move, is just one of the bullish factors. These down days, unbearable seemingly to some based on emails and phone calls, are actually welcomed by me because they’re classic bull market actions. It is when a market slowly works it ways lower with rallies that get close to a break out only to be taken lower, that are classic in bear markets. Also, years back, talk of IMF gold sales would cause sharp drops that could last for months. The gold market virtually laughed off the most recent IMF exercise.
While supply vs. demand remains constructive, I believe gold is going to become more of a currency-driven and geopolitical vehicle than anything else. I do think we’re going to see the 80 level tested and eventually broken on the U.S. Dollar Index. The world should get a sell signal on the U.S. Dollar and this can only help serve the bullish cause for gold.
Silver –
It remains second fiddle to gold but should have its moment where it leads the way up.
Platinum and Palladium –
I believe we’re on the verge where the spread in prices between the two should shrink in favor of palladium. This shrinkage should be led by a move already underway in the auto industry to favor palladium catalytic converters over platinum. A two-to-one ratio is my target (Palladium $500-$600 vs. Platinum $1,000-$1,200).
Base Metals –
For the most part, the great run-up in base metals prices appears behind us. However, I continue to favor nickel and zinc over copper if I have to pick among the three. I felt copper was due for a counter trend rally and it has indeed kicked in. Eventually, I see it testing $2 before year’s end.
Uranium –
Still in a powerful uptrend, another leg up in the uranium stocks is before us. However, it’s no longer simple “dart-throwing.” We can still see remarkable returns but we’re clearly past the halfway point in this bull market. No need to look for the exits but don’t forget you will eventually need to go though it.
Mining and Exploration Shares –
I believe the record should show I came early to the crowd who foresaw massive M & A within the mining game. *****I also have recently suggested it was going to filter down to the second tier producers and even exploration and development companies.***** Wolfden Resources is the latest example. Don’t be surprised to hear junior exploration companies doing the same.
Despite substantially higher metal prices, on average, mining companies are more challenged now than ever before thanks to an acute skilled labor shortage, lack of drills and qualified personnel to staff them, and a seemingly ever-increasing hostile work environment in many areas of the world. All of this and the potential that we could be reaching a “peak gold” scenario should keep the industry hopping for the foreseeable future.
Grandich Publications, LLC.
P.O. Box 243 • Perrineville, NJ 08535
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email • Peter@Grandich.com
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