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Market Update 10:30AM EST

Posted by Peter Grandich at 10:32 AM on Saturday, August 22nd, 2009

Summer is almost gone and two of the most volatile financial market months will be upon us. While seasonal factors tend to be overblown at times, having respect for what September and October can bring is very worthy both for hurricane and market watchers. Given what world markets have gone through, investors are advised to keep one eye on the weather channel and the other one on Bloomberg, Fox Business or Canada’s Business News Network. As always, red flags fly whenever it comes to CNBC-TV.

Come October, it will be twenty-five years since I first began publishing the Grandich Letter. Despite thankfully being blessed to have foreseen the three biggest market falls in 1987, 2000 and 2007, I don’t ever make the assumption markets are going to act in the manner I believe they should. After all, we all know when we assume we usually end up making an Ass-U-Me. The days of being a legend in my own mind are long gone (thank God) and the mental and financial beatings I endured for that will forever remind me that there are really only three types of investors:

1 – Bulls
2 – Bears
3 – Pigs

The bulls and bears will each have their days but the pigs always end up going to the slaughterhouse.

Having CNBC-TV as the world’s largest slaughtering house for pigs is more than enough.

U.S. Stock Market – The “Don’t Worry, Be Happy” crowd on Wall Street has had a great spring and summer. More importantly, they’ve managed to once again make like the recent past never took place and instead have their followers count “green shoots” when falling asleep. This is always evident whenever you watch that financial network who back at the top of the Internet bubble “boldly” stated in an ad about them that they “apologized for putting investors into a higher tax bracket.”(I’ll bet their video vault has lost those tapes among many others.)

While yours truly “crossed over” to their side in early March (causing my perma-bear friends to “persona-non-grata” me), I now am more like “Switzerland” in that I’m neutral (but will not give up any names to the “happy” people of who joined me).

IMHO, we’re in the eye of a storm that in the end will have forever changed the United States for the worse. The beginning of the end is more than just underway. But, like any good first act, an intermission has come allowing the audience to fully grasp what they just saw. The dimming of the lights that will signal the next act is yet to come. We’ve enjoyed the refreshment break and tucked away many goodies that should get us through what looks to be a much longer, albeit somewhat less pronounced, second act.

I continue to believe there won’t be another similar selling opportunity like we enjoyed in October 2007 until such time as the DJIA hits the 10,500 area. With visions of grandeur again for good economic times ahead, I would make sure your bear suit has been cleaned and pressed as our “curtain” call may come sooner than we think. Stay tuned.

U.S. Dollar – Back when the U.S. Dollar Index traded well north of 100, I began to make a statement that I repeated over and over again. It needs to be said constantly because whenever these little blip up opportunities come from very oversold conditions, the “Don’t Worry, Be Happy” crowd on Wall & Broad will come out like clockwork and declare the U.S. Dollar undervalued. That statement is again worth repeating after yet another short-term interruption in the dollar’s march to oblivion: “The only party that doesn’t know the U.S. Dollar is dead is the U.S. Dollar.”

The dollar has had reasons to rally despite the market turning upside down a long standing factor that was once quite dependable. In the “good old times,” a stronger economy meant rising interest rates which usually coincided with a rising U.S. Dollar. In the “New World Order,” the U.S. Dollar is a lose-lose. Stronger economy means less need for it as a supposed “safe haven” play. Weaker economics mean low interest rates translating into less demand for the dollar.

Poor old Uncle Sam. The glory days are gone. Other than some temporary relief rallies (believe it or not, we just had one), the dollar’s long-term path is a slow march to death. Only one song should come to mind when you think of the dollar long-term.

10 and 30 Year Treasuries – My no-brainer pick for 2009 has given back some of the nice gains but IMHO, as given those not yet on the short side a chance to position themselves. While the “happy” crowd believes in having your cake and eating it too, you can’t have stock markets rising on better days ahead yet interest rates falling making bonds a buy, too.

In addition to being bearish on longer-term treasuries, I’m starting to look at turning bearish on corporate bonds as well. Stay tuned.

Oil – While day-to-day fundamentals beg some sort of bearish call spread(s) and/or short positions in oil, the “happy” crowd has taken hold and fundamentals rarely matter to them. A falling U.S. Dollar and a belief all will be well again economically seemingly are all that matter at the moment. Like 10,500 or so on the DJIA, the $85 area on oil would be a dream-come-true selling opportunity.

Natural Gas – Despite a continuous questioning of why I wasn’t bullish on natural gas, especially when I was aggressively bullish on oil from well under $40, I maintained my bearish position on natural gas until now. Price wise, it was a very good move but natural gas equities rose with the rest of the market making my eventual entry into the bullish camp tougher as many of the equities will be far from undervalued.

Who said this game is as simple as buying low and selling high?

The CFTC is widely expected to introduce stricter position limits for non-physical investors in commodities before the end of 2009. Such an act should seriously curtail one of the driving forces currently lifting oil prices. A combination of this and an oil price $10 or so higher in the next couple of months could present a superb selling opportunity, so let’s put on those CNBC (Can Never Be Cautious) pom-poms and cheer oil on for now.

Precious Metals – In 25 years, I’ve never seen an investment perform as it was intended to yet receive little praise (and much dismay) as gold has. Throughout 2008 and early 2009, many in the media questioned why gold was not performing well given the so-called market conditions for it. Forgive me, but I suspect any and all investors who lost money in the more “touted” plays like stocks would gladly take what gold was up versus their own losses in those great blue chip stocks.

Now gold’s supposed inability to go much higher if not fall dramatically is being bantered about and such talk is not limited to the usual anti-gold crowd. This is music to my ears as after nearly increasing 300% this decade, such a great bull run usually doesn’t end in a whimper but instead a busting of over enthusiasm – something we’re not even remotely close to.

Gold’s seasonally weak period ends in a few weeks. Any and all selling bouts are quickly met with strong physical buying. Central bank sales, once the darling of all carrots dangled by the bears, has little or no impact any more on the price. A tremendously long-term bullish reverse head and shoulders pattern is setting gold up for its next leg up. A four-digit gold price is not a question of if, but when. Not too long after that, the lowest four-digit price should become the floor, not the ceiling.

Base Metals – I believe the time should soon be here again to overweight in precious metals equities over base metals. This is not because I expect a sharp fall in base metal prices but rather the belief we’re about 10% higher from levels that would be fully priced for most base metals IMHO. An example would be $3+ copper. I would greatly limit any new exposure to copper and copper-related investments much north of $3 and would even consider becoming a scale-up seller. That’s still a ways off and we’ll worry about that bridge when we come to it, but not before.

In the meantime, current base metal prices do still offer opportunities in base metal equities but no longer with the wild abandonment they did six to nine months ago.

I was asked on Friday, “If you could buy only one stock, what would it be?” I gave my answer through my mouth, heart and pocket by saying it would be Continental Minerals, symbol KMK on the Toronto Stock Venture Exchange (KMK $1.17 OTC Bulletin Board KMKCF $1.09). It’s now by far my largest holding. The company is managed by the Hunter-Dickinson Group who I believe is the premier junior to emerging-producer management group in the world today. While I don’t presently work for KMK, I do work for other companies managed by HD.

In my heart of hearts, I can’t see them remaining independent much longer. This is a natural for a buy-out whether it’s by a current Chinese company that owns 14% of KMK and/or one or more other Asian-based companies. There have been rumors of such and management is totally mum (really) on this. The deposits are among the best known in the world today and a takeover price of at least twice the current one is not far-fetched.

Special Note of Interest – With the 8th anniversary of the 9/11 attacks nearing, the media will do its usual reporting. Unfortunately, the real story of America’s biggest tragedy will hardly be discussed: the 40,000 Ground Zero First Responders (police, fire, medical, demolition personnel and volunteers) who are now sick, dying or dead because of their 9/11-related illnesses.

I want to invite and encourage you to help me help these true American heroes receive the dignity and support they so much need and deserve by participating and/or supporting the FealGood Charity Ball on September 11th.

As you know, I’ve been truly blessed to work with many current and retired professional athletes through my other business, Trinity Financial Sports & Entertainment Management Company. Several former and current professional athletes will be in attendance at the gala. Attendees will have the once-in-a-lifetime chance to get up close and personal with them, including obtaining autographs and pictures. If you’re not attending but would like to purchase signed footballs from our celebs, send me an email for details on how this can be done.

There’s going to be a very special live auction. As you can see, there are a couple of truly fantastic sports fan items.

Please let me make note of just two:
• NY Yankees pitcher Brian Bruney is a great, down-to-earth young man who I find both humble and sincere. Brian’s normal appearance fee starts around $7,500. For this great auction package, the winner and three friends will have lunch with Brian then be whisked-off by private transportation to watch a Yankee game from Brain’s personal seats. I’m taking bids ahead of time and up to the day before the event. I will bid on the highest bidders behalf at the auction. Right now I have a very low bid of $1,600 for this event with Brian.

• NY Jet Jay Feely, a tremendous golfer who just happened to help lower my golf score this year, will play a round with you and two friends at the exclusive Trump National Golf Club in Colts Neck, NJ. Take the cost of a round for three plus what it’s worth to spend 4+ hours with Jay and make a bid ASAP.

Help turn the 8th anniversary of America’s darkest day into a brighter one.

Left – Grandich and Bruney Right – Grandich and Feely

Tags: Brian Bruney, Jay Feely
Posted in All Posts, Base Metals, Copper, Exploration Shares, Gold, Mining Shares, Natural gas, Nickel, Oil, Precious Metals, Silver, Taseko Mines, U.S. Economy, US Dollar, US Stocks, Vanadium, Zinc, world economy | 23 Comments »

Update 5:30PM EST

Posted by Peter Grandich at 5:34 PM on Wednesday, August 19th, 2009

My model portfolio has been updated.

My trip this past Monday to Atlantic City appeared to have been a most profitable one. I made 12 points, numerous numbers and ended up holding the dice for almost 45 minutes. I also learned at day’s end that my DTO position was sharply up. I had picked a sell/stop early that morning knowing I wouldn’t be looking at a screen throughout the day. Had I been, I likely would’ve sold out my position.

That trip ended up costing me far more than I won on the crap table as I was stopped out of my DTO position today. More in my oil comment.

U.S. Stock Market – Choppy trading through at least Labor Day is expected. While the market has clearly priced in whatever economic rebound we’ve had (if that’s what you can call it), we’re not going straight back down either. Because most retail and low to mid-level so-called professionals use “emotion” as their number one tool, these markets are going to be quite volatile. I find many here are spending far too much time on every single blip up or down and trying to analyze it every which way.

China’s market has broken some key uptrend lines and while a rally back to them is likely, this market bares careful watching. China is not only the engine but the caboose too for the world economy.

U.S. Bonds – Betting against the 10yr. and 30yr. Treasuries has entered a buying zone again (please see model portfolio). I continue to monitor some potential vehicles that bet on the short side of U.S. corporate bonds. Stay tuned.

Gold & Silver – Both have retreated back towards strong support zones. With a few more weeks left to gold’s seasonally weak period, I think any buying of these metals should be limited to periods of further weakness. We’ll take a more in-depth look after we get pass Labor Day.

Base Metals – Hard asset bugs won’t like what I’m about to say but I don’t get all hot and bothered when I read that Chinese farmers are stockpiling copper. It would be far better that China was accumulating copper for future industrial usages. History has shown that when any public-at-large gets heavily into any commodity, it’s closer to the top, not the bottom, of that commodity’s price. Technically, copper has big time resistance around $3 so any rally back towards that price appears to be an opportunity to take profits until further notice. This doesn’t mean sell all your copper stocks. It just means no new buying is wise for most accounts.

U.S. Dollar – Poor Uncle Sam. Even when he’s thrown a bone (technical buy on deeply oversold condition) he can only manage a feeble rally so far. Now we know what walking dead really looks like.

Oil – Today’s inventory drawdown had some special quirks and IMHO is not the start of a mark increase in demand. People who live and breathe oil all say the same thing – there’s ample supply and then some. The weak dollar and visions of grandeur that are presently running through the equities markets is what’s keeping oil prices together.

I’m not going to put any oil ETF in the model portfolio going forward as far too many people have been getting engross in just one little play. I received constant emails and calls asking what’s my latest assessment of the “hour” on oil. This told me far too many people are speculating/gambling who shouldn’t be. And quite frankly, even close friends were hitting me up regularly and there’s more to life than an oil trade-LOL.

Personally, I believe actual fundamentals win out over time so if we have another $2-3 follow through to the upside, I’m likely to go short again. But that’s me – NOT YOU!

Natural Gas – I’m starting to believe we may be presented with an opportunity to go long. I think getting below $3 could be the ticket so stay tuned.

Special Note – AGORACOM tells me we now have tens of thousands of readers. I’ve accepted that not all of them are going to apply for membership in the Peter Grandich fan club and will in fact, make comments that may be unbecoming to some. But as I stated in the past, there’s no need to defend me. I truly believe by doing so you engage these folks and give them a feeling their motive(s) are achieving their goals.

Please don’t confuse these folks with people who give constructive criticism and/or take an opposing view. That’s part of a blog. What you do need to realize is those with other motives could easily just not come here if they wanted. When you see such people continuing to post despite the fact there’s nothing forcing them to be here and could simply just move on, then you have likely found those who have motives other then differences of opinions.

Again, when you engage them you actually give them a sense of credibility they otherwise would not receive. You must remember we’ve tens of thousands of readers now and 99.9% are clearly not of these folks same opinions or else you would hear so. Trust me when I say they show their support privately and that’s absolutely good enough for me!

Finally, to those who write I should go after these people in some fashion, you need to watch this video. It’s just more great advice from the only true authority in the world.

Posted in All Posts, Base Metals, Copper, Exploration Shares, Gold, Mining Shares, Natural gas, Nickel, Oil, Precious Metals, Silver, U.S. Economy, US Dollar, US Stocks, Zinc, world economy | 33 Comments »

Grandich Update 7:00PM EST

Posted by Peter Grandich at 6:50 PM on Thursday, August 13th, 2009

In another few weeks it will be 25 years ago when I published the first Grandich Letter. I was in the financial advisory business a whopping six months and there I was editor and publisher of an investment newsletter. The scariest part is I actually thought I knew what I was talking about. Looking back I can honestly say I actually knew next to nothing (not that I’m that much further along 25 years later).

After enduring what I believe when it’s all said and done will be the worse financial crisis in America’s history, the vast majority of investors are once again buying hook, line and sinker whatever the “Don’t Worry, Be Happy crowd tells them. In a sad irony as we approach the 8th anniversary of the 911 attacks, most Americans act as if the attack and the crisis were just one-time events and life has, and/or will return to the “good old days”.
It’s my belief that we’re in the “eye” of the storm and while both the economy and stock market can improve even from here, such an occurrence is strictly an opportunity for those who stood at the abyss not too long ago to remove themselves from being in such a position again. I would welcome another 10% rise in the stock market as it should give me another opportunity to put on my big bear suit. Thankfully, I took it off just one day from the March lows and had a nice ride up with the “Happy” crowd.

There’s an old saying that I’m sorry to say is highly likely to be said this time next year – “Fool me once, shame on you. Fool me twice, shame on me.”
U.S. Stock Market – While the “Happy” group has their customary full-court press on in the media, mixed economic results are not giving them a clear green light at the moment. The market was severely overbought so they continue to hold the upper hand. I would like nothing better than for the DJIA to go straight to 10,500 area so I could come out of hibernation but I don’t think it will be that easy. Never-the-less, avoiding a bearish stance has been most appropriate and should continue for the foreseeable future.
Oil – Happy Talk and a soft U.S. dollar is really what’s holding up oil. Fundamentals are quite bearish. There’s ample supply of oil and gas and the driving season is now all but completely behind us. The trade wants to sell cruse down but speculators continue to buy the “hope” trade. Having been killed more than once over 25 years betting on fundamentals and against the hope traders, I will continue to hold one bearish position in oil for now (DTO-NYSE Sell stop at $72.50).
Natural Gas – Seemingly everybody and their mother has been calling for or betting on a big natural gas rally that is almost all-wish and no reality. Ironically, if prices broke below $3 now we would all but certain get a fantastic buying opportunity. Natural Gas is now on my watch list for a possible entry point down the road. Stay tuned.
U.S. Dollar – Did you see the rally-LOL The overwhelming long-term bearish factors are currently preventing a technical bullish rally to evolve. While there’s no bigger U.S. Dollar bear than yours truly, I would wait a few more days before concluding the technical’s don’t stand a chance against the fundamentals.
U.S. Bonds – Corporate bonds are entering a bubble-like pattern given where I think the U.S. is heading economically, politically and socially. I’m starting to look at ways to bet against this market. I remain a growling Treasury Notes and Bonds bear.
Gold – If gold can stay above $940 through months end, I think the bears will run to cover so here’s to their shorts being squeezed right up to their necks!
Base Metals – Starting to get frothy here. Prices are beginning to discount a quite strong economic rebound, an event I don’t believe will come true so we need to start watching the exits. I said watch, not run to.
Taseko Mines had a very good earnings report and didn’t have any real “sell on news” momentum. The stock is now on hold only due to its sharp price increase. Longer term I believe it still has a lot further to go on the upside.

Northern Dynasty Minerals – The opposition to Pebble always seems to get the most press despite having every single action on their part stopped short of their goals. Here’s an article that was kind enough to give voice to the group closes to the center.
Continental Minerals made a new 52-week high today. Stay tuned.

A message from our friends at TOUT-TV

Posted in All Posts, Base Metals, Copper, Exploration Shares, Gold, Mining Shares, Natural gas, Nickel, Northern Dynasty, Oil, Precious Metals, Silver, Taseko Mines, U.S. Economy, US Dollar, US Stocks, Uranium, Vanadium, Zinc, world economy | 17 Comments »

Chinese Bid For Canadian Junior – The Fun Has Just Begun

Posted by Peter Grandich at 8:05 AM on Tuesday, August 11th, 2009

It comes as no surprise to me that a Chinese state-control company has made a bid for a Canadian junior resource company. This is an opening salvo and I expect numerous others to come.

One in particular is Continental Minerals (KMK-TSX-V) A major Chinese state-run company holds a significant stake in KMK. It makes great sense for this shareholder and/or other Chinese/Asian companies to go after KMK as the stock is quite undervalued IMHO.

Please note I own a very large stake in KMK and work for other companies that KMK management is engaged by.

Posted in A Grandich Company, All Posts, Base Metals, Copper, Exploration Shares, Gold, Mining Shares, Nickel, Precious Metals, Silver, US Stocks | 18 Comments »

Short Update 4:30PM EST

Posted by Peter Grandich at 4:31 PM on Monday, August 10th, 2009

Not much to add from weekend update. U.S. stocks are overdue for consolidation/correction but nothing too severe for now.

U.S. Dollar rose as we’re on a short-term buy signal while gold did come off after the weak close Friday. It needs to show strength and hold above $940 for the $1,000+ level to become a real target for 2009.

One could have expected more weakness in oil given the strength in the dollar and weakness in equities so I’m go to raise my DTO sell stop to 72.50.

With the weakness in gold, I think any new purchases in NDM should be at $6 or under and NSU $1.40 or under for now. No need to chase if gold is on the defense for the short-term.

Grandich clients KNP and TMM very active. I think KNP has seen large volume on the supposed takeover bid for Canadian Royalties. TMM has been very undervalued given production nearing and I think/hope the share price is finally catching up to fundamentals.

Special Note – People ask me what does it mean when we say Trinity Financial, Sports & Entertainment Management Company is a Christian-based company. Here’s an indication of what I mean:

Posted in All Posts, Base Metals, Copper, Exploration Shares, Gold, Mining Shares, Nickel, Oil, Precious Metals, Silver, Timmins Gold, U.S. Economy, US Dollar, US Stocks, Zinc, world economy | 13 Comments »

Grandich Update 2:30PM EST

Posted by jojo at 2:25 PM on Sunday, August 2nd, 2009

7-30-09-compq

7-30-09spx

7-30-09indu

U.S. Stock Market – I said in my July 17th update the attitude is to “Party on dude” and ignore the real problems for now. In my July 24th commentary, I noted we should not expect any bear sightings until at least the fall. I noted the technical picture had improved as well.

It would be foolish to suggest from a technical outlook that the stock market is not technically strong at the moment. These are quite bullish formations and while they show the markets to be overbought, there’s no argument to be made that they suggest any serious declines for the foreseeable future. Technically, these charts suggest at the moment another 10% higher before any good selling opportunity presents itself. Ideally, it would be great if we went straight up to those levels without any meaningful correction as that would almost certainly become a screaming sell. But markets usually don’t make things easy so I remain on the sideline with mucho cash waiting for a real good opportunity.

I continue to remain on the sidelines resting on my laurels earned during the last two years. The mistake by many is to feel the “need” to be always on the right side up and down. It’s like horseplayers who bet every race not because each race possesses a horse they think should win but because the races are just there. There’s no requirement for anyone to have to be betting on the market all the time, especially when it appears much safer and surer bets are down the road.

Here’s how I think the market can play out down the road.

The “Happy” people are feeling their oats again even though many former followers are in no shape to eat solid food. They long ago mastered the ability to make mountains out of molehills only this time around it’s a roaring economy from green shoots. The beauty of this 21st century version of Jack and the Beanstalk is the overwhelming numbers of investors (who just six months ago saw themselves staring at the abyss) are accepting economic mediocre in lieu of something much worse. For that, they’re willing to bid up share prices based on the belief that kissing the frog always leads to a handsome prince.

If this is your idea of a handsome prince and princess, party on dude. Me? I’ll just bide my time picking away at other markets and individual plays. I’ve yet to see anyone go broke booking profits. No one seems to care where the profits came from.

Foreign markets – I had been suggesting countries like China and India over the U.S. I think China has become quite frothy again and while it can even add to its heights, I would take profits there if you have them. Cash is not a dirty four letter word in my book.

10yr. and 30yr Treasury Notes and Bonds – What a coincidence! The U.S. Dollar sees a very short blip up while gold is hammered during the record treasury auction last week, only to see the dollar tank and gold rise sharply when the auction ends. How sweet!

We continue to hear so much about foreign buyers not buying our debt like they use to. If that’s true, who is?

I believe you can add much higher interest rates to death and taxes as what’s certain in the future.

Oil – You would think investors would purposely avoid being part of the herd knowing the masses never make real money over time. When I turned bearish on oil in early 2008 well north of $100, I received widespread criticism for that decision from readers. They were all caught up in the peak oil/Goldman Sachs $200 a barrel frenzy. Then at the end of 2008 when I turned bullish on oil in the mid $30s, this blog and my emails was full of reasons why such a choice would turn out wrong.

I’ve received triple-digit number of emails and posts about my latest decision to bet on a decline again in oil prices. And like in the past, this decision of mine flies in the face of the conventional wisdom of the time.

Sorry but the fundamentals overall don’t support higher oil prices IMHO. Yes, a weaker U.S. Dollar can be supportive and the inevitable lighting of the match in the Middle East can be a big bullish factor. However, neither of those two reasons are worthy of a long position by itself. We’re awash in crude and the rally back towards $70 presented an opportunity to make some money on a perceived move back towards the $50s. Time will tell.

U.S. Dollar – Please take off your hats and bow your heads.

Precious Metals – Again the herd appears to have taken the wrong trail. Besides a clear significant increase in bearish public sentiment, we also saw professionals seemingly knocking themselves over to either turn bearish or dismiss their previous $1,000+ predictions. As I said earlier this week, this is the type of action one sees in a secular bull market and a new up leg is near. Go Gold!

Base Metals - So long as the “happy” crowd has the ears of investors (they have help them lose many other important body parts) of bigger and better economic times ahead, and with the near certainty that the U.S. Dollar is heading for a new low in the U.S. Dollar Index possibly before years-end, base metals can see some more upside. But caution is now advised as I believe we’re getting into the upper range of prices. Enjoy it for what it’s worth but don’t marry them going forward.

Attention Seniors.

Posted in A Grandich Company, All Posts, Base Metals, Copper, Exploration Shares, Gold, Mining Shares, Nickel, Oil, Precious Metals, Silver, U.S. Economy, US Dollar, US Stocks, Zinc, world economy | 35 Comments »

Update

Posted by Peter Grandich at 9:26 PM on Tuesday, July 28th, 2009

Once again it appears I must tell those who feel a need to defend me for some reason that while I appreciate the thought, it’s not necessary. We’ve 30,000+ readers so know I won’t lose sleep if one or a handful of people choose to use the blog in a manner that appears unbecoming to me. I trust the vast majority of viewers have the ability to judge for themselves and aren’t going to be dependent on a friend or foe of mine to make up their mind.

I do want to note that in very rare cases (I believe just 3 posters since we began the blog), I have had to remove or prevent posts that we believe are not worthy of publication. That’s our right of which thankfully has allow 99.999% of all posts written to be posted.

Gold ($937) – It may sound strange to some but today was a great day for gold. What’s that Peter? Yes, today further the bullish case IMHO. How you ask? Bearishness has now spread to the usual bullish public segment of the market. Even very bullish forecasters like a man I respect greatly have turned bearish or are now looking for a serious correction. All this while gold is at one of its all-time high trading ranges. This is exactly what happens in secular bull markets and just before another major leg up.

To those who say the bull market in gold is over

I updated our model portfolio.

I want to note Taseko Mines had a tremendously bullish technical trading day. Barring a sharp sell-off in the metals and stock market, Taseko looks like its heading much higher.

In regards to Continental Minerals and questions about takeover and merger talk, all I can say at this time is it would come as no surprise to me that a company or companies made a run at KMK and/or looked to buy a significant stake. I purchased more shares today.

More chatter that continues to lead me to believe the Iran/Israel situation is moving close, not further away, from a confrontation.

We’re less than three weeks from our Jersey Shore conference. I look forward to meeting many of you there.

Please Note - Oromin Explorations will no longer be a client of Grandich Publications as of August 1st. I wish them well.

Posted in A Grandich Company, All Posts, Base Metals, Copper, Exploration Shares, Gold, Mining Shares, Nickel, Precious Metals, Silver, Taseko Mines, U.S. Economy, US Dollar, US Stocks, Zinc, world economy | 27 Comments »

Article on Donner Metals

Posted by Peter Grandich at 2:23 PM on Tuesday, July 28th, 2009

Read

Posted in All Posts, Base Metals, Copper, Donner Metals, Exploration Shares, Gold, Mining Shares, Nickel, Precious Metals, Silver, US Stocks, Zinc | 4 Comments »

Hawthorne Gold Commences 2009 Program – Countdown to Production!

Posted by Peter Grandich at 8:01 AM on Monday, July 20th, 2009

Hawthorne Gold Corp. Getting Ready For Production at Cassiar Gold Mine

Hawthorne Gold Corp. recently announced an aggressive exploration and development program at their Cassiar Gold Camp in northern British Columbia, Canada. What we all need to understand about this project is that it appears to have all the merits of a winning strategy to get into production and continue to develop into a solid junior gold company. For those who don’t realize what Hawthorne controls up at the Cassiar Gold Camp, I shall touch on some of the key assets and points that make this a company you need to watch closely.

Management / Mergers & Acquisitions, Infrastructure, Blue Sky Opportunity, Upcoming Production – A winning combination.

The management team over at Hawthorne have a history of building companies, putting mines into production, successfully operating them, and finding new opportunities. The group, to mention just a few, consists of Michael Beley, Richard Barclay, Michael Petrina, John Dadds, and their new Board advisor, Jack McClintock. We all know how the Beley/Barclay team has been successful in putting the pieces together to build solid gold mining companies (co-founding Bema Gold/Eldorado Gold for example). Michael Petrina, their VP Mining, brings a wealth of mine engineering experience Their Exploration Manager, John Dadds, came up from Barrick’s Eskay Creek Gold Mine, right down the highway from the Cassiar Gold Camp, where he acted as their senior geologist. Behind the scenes is Jack McClintock, who joined as a Board Advisor a few months ago with one specific task…assist in advancing their merger and acquisition strategy by identify projects that are undervalued, distressed, offer upside potential. Mr. McClintock mining credentials speak for themselves.

Infrastructure – and lots of it!

Let me make things clear. This is an established mining camp and they own 100%. The camp includes a 300 tpd gravity/flotation mill and tailings impoundment facility that would likely cost $20-$30 million to replace, it is PERMITTED, and they have a solid relationship in place with the local First Nations group. The property consists of 16 miles of underground workings, 13 adits (entrances to the mine), and close to 15 miles of roads throughout their property to gain access for drilling and exploration. There is an available airstrip that staff can fly directly into less than 6 miles from camp and the main highway runs right through their property. This 40 person fully operational exploration camp is not remote by any means!

Blue Sky Opportunity – the drills are turning already and going deep?

After speaking with management, their technical team had a busy winter season putting together a comprehensive geological model that has highlighted some interesting targets directly at the Table Mountain area, regionally across their significant land position (135,000+ acres), and to depth (which it has never been drill tested). This type of consolidation of both the data and camp has never been done before and can bring some excitement to the drill season. I believe this to be an incredible opportunity for the qualified technical team at Hawthorne. This model, combined with geophysics, reconnaissance exploration exercises, and the money to drill targets (30,000+ feet this summer) should open up this camp like it has never been seen before. Of interest is the fact they plan on drilling some targets to depth. Why is this interesting? The Erikson Creek Fault zone, which cuts right through their property and where gold has been found for 40 years, has never been tested below the surface horizon landscape of 650-1000 feet. This camp has seen significant high grade deposits that were mined where some zones had grades of multi-ounce per ton and off the chart. The gold, which mobilized into the camp through the numerous faults and offsetting geological structures, came from some source that has never been found, and indications point to a potential feeder at depth. Management has indicated certain faults and cross-cutting linear structures identified from geophysics in 2008, are expected to be tested up to 2000 feet in depth. The potential for some interesting drill hole results from the camp this year appear good.

And before I forget they still have the Frasergold project. They are currently completing a NI 43-101 Technical Report and Mineral Estimate After two seasons of surface drilling they are looking to define a gold resource along the Main Zone, which lies within a 6 mile mineralized strike length that was historically drilled and where gold was identified. This camp is something you may want to watch closely due to the potential of a significant gold camp rising out of the pine beetle infested woods. If you zoom out about 25 miles to the west, the Spanish Mountain deposit contains a multi-million ounce deposit. This area can become interesting ff Frasergold defines even the beginning of a potential gold resource, as you could have the makings of a gold camp with upside potential that could interest the majors.

Getting ready for Production – looks on schedule!

Yes another reason to like this story – getting ready for production. Hawthorne announced that they will be commencing underground development in the short term to advance the underground workings to the East Bain gold zone to make ready for stope development. Of interest, the infrastructure I discussed above provides the opportunity to be able to access all future discovered zones underground and with minimal capital expenditures. The East Bain zone is about 500 feet from the existing underground workings, thus reducing initial costs to gain access and remove the gold. From what I understand this development would take 60-90 days and could quickly gain access to the gold zone for underground mining in late 2009 / or early 2010.

This can also be a significant advantage if they continue to define new zones at Table Mountain, as with 13 adits or access points already developed, new developed gold pockets can be easily accessed. This should play a key part in keeping costs down per ounce removed. They are also currently defining higher grade zones at surface at their 100% owned Taurus deposit (where currently a lower grade million ounce deposit sits) to use as potential supplemental feed for the permitted mine and mill facility. There are few mining operations that look to get into production this quickly, and for minimal capital expenditure. Based on mill capacity and the compliant resource, it’s not unreasonable to think they could produce 15,000 to 20,000 ounces in the first year, and subsequently increase their production based on potential new gold zones discovered (as the mill can operate up to 100,000 tons per year).

As Hawthorne advances their strategy, one could expect a strong flow of news releases highlighting their drilling, development and corporate activity that can give the followers and shareholders a reason to watch closely each step of the way as the Company rolls out their business plan. They’ve an aggressive bunch of technical mining professionals that seemingly never have a quiet day in their office. Hawthorne has a very busy year ahead of them. I have a high confidence that they can have a great season.

An allotment of $0.30 shares came free trading on June 28^th from a previous financing. As the free trading stock comes into the market, a good opportunity appears to have presented itself.

Posted in A Grandich Company, All Posts, Base Metals, Copper, Exploration Shares, Gold, Hawthorne Gold, Mining Shares, Nickel, Precious Metals, Silver, US Stocks | 5 Comments »

Markets Update 6:00PM DST

Posted by Peter Grandich at 6:01 PM on Friday, July 17th, 2009

For many of us in the Northeast, it doesn’t seem possible to be in the summer doldrums with significantly below average temperatures recently. Never-the-less, the “seasonally” take it easy attitude is upon us as investors rather enjoy the outdoors then deal with the realities of America’s continuing slide to social, political and economic upheaval. So for the very near term – PARTY-ON DUDE!

U.S. Stock Market – Despite an extremely bearish long term outlook, I’ve not recommended any new short positions since two days after the all-time high in the stock market back in October 2007. This has caused some people to question why not?

The main reason is I feel the stock market is going to go into a multi-year trading range between DJIA 6500 and potentially as high as 10,500 (but average around 8500 or below). I don’t expect sharp rises and falls within this perceived trading range and therefore outright puts or calls or long or short ETFs aren’t appealing to me.

A case in point is about two weeks ago. Several readers wrote in to ask why I wasn’t shorting the stock market given I felt the rally towards DJIA 9000 had come to an end? The market was selling off and they thought we were missing a selling opportunity. Within days those inquiries disappeared as we’ve had yet another strong counter-trend rally. I believe this type of whipsawing is going to be here for quite awhile and to try and catch these short but strong moves up and down can only end up being a lost cause.

I do want to suggest as I did when oil hit $70, that when the market gets to the top of my range, implementing bearish call spreads is a worthy consideration for high-risk speculators/gamblers. We’re getting close to that opportunity in the stock market.

Ten and Thirty Year Treasuries – For those who had yet to get short, I do believe we just witnessed a “gift from God’ opportunity the last couple of weeks. For those who continue to think that 1-2% CDs and 3%-4% long term bonds are here to stay for years to come, I’ve a bridge that connects Manhattan and Brooklyn I can sell to you – CHEAP! America is drowning in a sea of debt that continues to rise dramatically. It won’t matter that the economy is weak and therefore bonds are a buy. Interest rates are going to rise sharply due to our enormous borrowing needs and a currency that’s giving “Don’t squeeze the Charmin” a run for its money!

U.S. Dollar – Dead man walking. Watch 78.25 on the U.S. Dollar Index. A close below that level is very bearish. But then again, isn’t everything about poor old Uncle Sam bearish?

Oil – While we did get below $60, the market was deeply oversold and likely now to consolidate above $60 for the near future. The low to mid 50s is still my downsize target for now.

Natural Gas – I’m constantly asked why haven’t I recommended natural gas especially back when I recommended oil in the low 30s? The world is awash in natural gas at the moment. The fundamentals have just not come together for me to do so. Natural gas gets a nice pop every so often as people keep hoping it has to go up sooner or later. I remain neutral.

Precious Metals – Once again gold has hit a wall at the $940 area. But I’ve a feeling this time it’s not going to reverse sharply. I think we’re finally on the threshold of breaking out and a four digit gold price before years-end is more than likely.

I spend extremely little time discussing other forecasters but I can’t help myself in bringing up two who get a lot of press (jealousy is not my reason) but are just simply wrong over and over again. One party writes for a very large bullion dealer and website. The other writes a daily commodities-laden newsletter, spends an awful lot of time in the media, has had his head handed to him again and again when he shorts gold, yet the media calls him a gold authority. Sorry, but the only authority he seems to be is on when not to sell gold. Both these gentlemen are really anti-gold, which in the case of the bullion dealer makes you wonder why they have such an ardent bear as their spokesperson.

Base Metals – I’m truly taken back by copper’s strength. I felt it could trade up to the top of my range of $2.75 but felt that wouldn’t occur until 2010. I won’t look a gift horse in the mouth since my personal portfolio is loaded to the gills with big copper/gold plays.

Geopolitical – I’ve a sneaky suspicion we could see my anticipated Iran/Israel conflict come to the forefront sooner than later. Why? Israel is making a series of military and political moves that I believe is the start of a campaign by them. Iran hardliners meanwhile have found themselves in an internal struggle no one foresaw. You could think that weakens my scenario but I believe it actually strengthens it. A military fight with Israel right now would whip the hardliners up, would be political suicide for Arab countries not to support (although many like Egypt and Saudi Arabia want to see Iran crushed) and would give the Iranian government cover to invoke a major harder crackdown. Unfortunately, stay tuned.

Hear me on radio this weekend

www.kereport.com Live show Saturday at 3:30PM DST

http://www.thefinancialphysician.blogspot.com/ Sunday 11AM DST

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