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Old 01-06-2013, 08:32 PM   #1
Mote in the Fed's eye
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Peter Grandich explains why he's sticking with gold

FED comments and the usual selling seen around the monthly employment numbers caused a short-term swoon in gold. I responded early Friday morning (6:30AM) with this commentary. Gold rebounded nicely and in the aftermarket both silver and major mining shares actually finished higher for the day.

I received the usual emails questioning my support for gold and this crazy one that keeps repeating that Nadler was right and I was wrong on gold (proving we now know where all the “White-out” for old typewriters went and who’s been breathing far too much of it… it actually could be Nadler himself but we’ll save them for another time). We also once again had to endure Dennis Gartman throwing so-called Goldbugs under the bus for the umpteen time (which if history is any indication shall once again prove to actually be a buy signal).

Michael Pento, a money manager who is everything and then some that Gartman is not, sent this to me Friday:

“The Fed just started QE IV on January 2nd ! Then the minutes were released one day later that showed some dissent on the Fed; in that, some may want to reduce the $85 billion each month of monetization because of the mistaken view that economic growth rate will accelerate in 2013. What a farce. I say, the Fed has an unshrinkable balance sheet and even if they just announced that they will start selling their trillions of MBS and Treasuries the game would be over.

The biggest joke of all is that the Fed, Wall Street and D.C. all believe that interest rates can normalize without sending real estate, banks, consumers, economy and the very solvency of the country into the toilet. Unfortunately, a very rude awakening is in store.”

I urge you to avail yourself of Michael’s free weekly podcast and do some serious due diligence on the man, starting with his website.

The U.S. stock market hit its highest level since 2007. I said this in my New Year’s newsletter:

“…I’ve not suggested many moves when it comes to the U.S. stock market. In late 2007, I concluded the worst-ever bear market would begin. In March 2009, I then concluded the biggest bear market rally ever was about to start. While certainly no roaring bull by any stretch of the imagination, I suggested throughout 2012 that the surprises should be on the upside and a marginal new, all-time high could be reach by the spring of 2013. Such an outcome was not a reason to back up the truck and load up on equities but it did prevent me from shorting the market as so many of my colleagues and readers have continued to urge since turning bullish back in March 2009.

I operate on the belief that a “Don’t Worry, Be Happy” crowd roams Wall Street. Most financial advisers and/or the firms they work for are tilted to their camp. I see the vast majority of people who provide so-called financial advice like I see most Realtors: you can toss them off the top of the Empire State Building and all the way down they say the same thing, so far so good.

Because of this, I don’t ever expect them to see the cup as anything but half-full (nor do I expect to see many in the hard asset camp ever bullish on general equities and bearish on gold).

The scenario I most favor continues to be a move to a new, all-time high in the stock market (which I’ve said all along is just a countertrend rally in a secular bear market that began in 2007), followed by a decline that over time shall retest the lows of 2009.

The December 2nd edition of had a piece written by money manager Robert McHugh that was very much like my thoughts. Ideally, it would be best to make a new, all-time high and then look for a spot to start going short or wind down general equity positions to a very low percentage. Many will ask what about mining shares at that point? We will need to first get there before being able to decide. General equities outside of the U.S. would likely be the preferred way, but there, too, we need to wait to see how this plays out in 2013.

It’s critical to work with a mindset that as good as general equities were for over 30 years, all good things come to an end. Sometime in 2013 a bell will ring. Here’s hoping I can hear it…”

I think my view that U.S. bonds can be the worse investment for the next decade speaks for itself.

Finally, before anyone decides to join the inmates running the asylum known as Congress and thinks all that is happening economically, politically and socially is actually good for the U.S. Dollar, I strongly suggest gazing at this chart:

It has been making lower highs since the start of the new millennium. Ironically, gold has gone up 600% since then yet the dollar is still called a “safe-haven” .

This week should even be more fun and if gold can somehow managed to get above $1,700 this month, the boys who used the Crimenex as their personal manipulation machine are in real trouble.
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Old 01-07-2013, 07:49 AM   #2
Golden Cockroach
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In other words, nothing fundamental has changed except people's willingness to submit to illusion and hopium.
The journey of a thousand miles begins with a single step. - Lao Tzu

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Old 01-09-2013, 07:19 AM   #3
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Theres also great interview with Grandich below, re: junior miners stocks potential in 2013. It is rather long and at times a little too technical for me, but for all you more experienced traders here, I think it might be a valuable reading:
“...the issue which has swept down the centuries and will have to be fought sooner or later is the People versus the Banks.
Lord Acton

Last edited by bushi; 01-09-2013 at 07:24 AM.
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