The U.S. Dollar is showing signs of a doable short- to intermediate-bottom but needs to get above 78 on the U.S. Dollar Index to confirm, IMHO. Such a move could lead to a significant bear market rally so we shall watch closely.

If and when such a dollar rally takes hold, one should not assume it’s curtains for gold (as much as the mortally wounded perma-gold bears are praying for). Gold has so many long-term bullish factors going for it which I hope to discuss as we move closer to year-end. For now, it continues to demonstrate an ability to self-correct intra-day and my target of $1,200 for this year still remains a strong possibility. As I’ve stated often, $1,000 gold has gone from being a ceiling to floor so those looking to buy on weakness should not expect to buy gold again  for three digits for quite some time.

This has to be one of the worst-written articles I’ve ever read. I point this out for a couple of reasons:

• Look at the author’s past articles and you will find a big slant against “goldbugs.” This is not uncommon in financial journalism. Simon Constanable comes to mind as someone who can’t help himself but knock gold and those who believe in it. We all know several commentators on CNBC-TV have over the years “panned” gold whenever they can. BNN, a five star network in my book, also has some gold bear anchors. Frances Hurodelsk and Martin Cej can’t help themselves whenever they have a guest on gold. They always take the-cup-is-half-empty line. As I have said numerous times, gold will never be accepted by the masses as it flies in the face of owning financial assets, a factor most in the financial services industry and financial media need to do okay in order to prosper.
• Gold bears always point back to $850 gold, an event that, by the way, was a one day affair (gold fell quickly back to under $700 so very few people bought at $850). What they fail to do is to point back to the tops in the asset they love and live off of – stocks. The author of the article I refer to fails to note how much worse the masses are who bought stocks at their all-time highs. At least gold is back above its high nominally. Good luck to those who wait for the NASDAQ to hit 5,000 to do the same.

Now here’s a journalist who deserves a medal! If it was up to me, he would get the “John Crudele” medal of honor.

PLEASE NOTE – You must assume my opinions remain the same from my last commentary on a market or stock until such time I publish an update.

In the case of Northern Dynasty Minerals, no change in opinion therefore no new update. However, here’s a copy of a comment on it by me for an upcoming article in a mining publication:

Northern Dynasty Minerals (NAK-NYSE/Alnet, NDM-TSX) – Since acquiring the Pebble Project in 2001, Northern Dynasty has delineated and advanced one of the world’s greatest stores of mineral wealth.

Located on American soil in southwest Alaska, the Pebble deposit is remarkable for both its size and composition. Current estimates indicate a total resource of 5.1 billion tonnes measured and indicated and 4.0 billion tonnes inferred, containing 72 billion lb copper, 94 million oz gold and 4.8 billion lb molybdenum. Quantities of silver, palladium and rhenium also occur in the deposit.

In 2007, a wholly-owned affiliate of Northern Dynasty entered a 50:50 partnership with a wholly-owned subsidiary of Anglo American plc to permit, construct and operate a modern, long-life mine at Pebble. Based on Anglo American’s staged investment of $1.425 to $1.5 billion, both companies share equal ownership, board representation and rights in the Alaska-based Pebble Limited Partnership.

Under the leadership of the Pebble Partnership, the Pebble Project is on a path to development. Key project strengths include:

• a known mineral resource with the tonnes, grade, metallurgy and geometry to support a modern, long-life mine;
• favorable terrain — low elevation;
• a stable and predictable regulatory environment;
• ready human and financial resources; and,
• broad public support for responsible resource development in Alaska.

Theirs is a rather loud anti-pebble crowd that has clearly spooked some investors into believing the project will not be able to even make it to the formal permitting application stage and receive due process of law. While one can never say this crowd can’t win, I remain confident because so far government regulators haven’t shown to be anything but fair and I trust they will allow the process itself to determine whether Pebble can go forward into mine development.

End of update

First and foremost, I continue to believe the U.S. Stock Market has been in a “mini melt-up” stage, albeit interrupted by a very short correction. I’ve spoken about DJIA 10,500+ for months. Make no mistake about it, I’m no long-term bull nor ever want to be part of the group that’s leading us to this area: the “Don’t Worry, Be Happy” crowd on Wall Street. But, unlike the many bears who stayed bearish all this time, I was truly blessed to turn bullish (if that’s what one could call it) just one day from the bottom in March. My quest for 10,500+ since then has not been so I could be considered one of the card-carrying members of the “happy” crowd, but rather so we could get to a point where I could be comfortable turning aggressively bearish again. I continue to believe that point is somewhere between 10,500 and 11,000. I had thought we wouldn’t see that area until spring of 2010, but I don’t want to look a gift horse in the mouth if we get there sooner. Stay tuned.

It wasn’t that long ago when gold approached $1,000 and the media did its usual “one-day wonder” coverage. As so often happens, the media covers the habitually wrong bears who tell the world for the umpteen time that gold has peaked or worse, is very overpriced, only to see gold pull back and the media leave the scene until the next big run up is at its best. Such is the case yet again as gold has risen $70 just in days after it was supposed to die and go to bubble heaven.

And almost on cue, some in the media wheeled out their perma-bears that not only have amnesia regarding their past wrong forecasts, but suffer that terrible “Fonzie” disease (the inability to say I was wrong). Listen, I’m the first to admit when I’m wrong and I didn’t issue my challenge simply because the other party has been wrong and I’ve been right. I issued my challenge because the party is arrogant, bombastic and quite frankly extremely nasty to the parties who he not only disagrees with, but have greatly outperformed him for years. Former NFL coach Tony Dungy says his mother told him when he wins say little and when he losses to say even less. The fact that the other party IMHO has been terribly wrong for quite some time or has even distorted the facts is not the main reason for my challenge. It’s his ultimate gall to those who dare disagree with him in the face of his horrible performance.

Speaking of gold, we’re due for some consolidation and the sooner the better. The one factor that could really cause us to melt up would be the U.S. Dollar Index breaking below 74 in the near term. I would much prefer some consolidation and correction now versus later, but where it comes isn’t that important since the price over the long term appears still heading much higher.

On the model portfolio front, Continental Minerals is having a much needed consolidation. I continue to look for any real further weakness in Evolving Gold to become even a more aggressive accumulator.

Taking tomorrow off to enjoy some Indian summer on the links.

The only two ground rules I request are:

• BNN makes available past interviews of both of us on the air and our ability to show some of them and their results.
• The moderator be either Kim Parlee or Howard Green.

I await your response.

Peter Grandich

Gold – What can I say that I haven’t said already? The J__ N_____ of the world continue to be wrong, wrong, wrong and are the best contrarian indicators money can’t buy. Sure, somewhere out there is consolidation and a correction but as I’ve constantly stated since just above $300, staying long and strong is the best course of action when it comes to gold. Despite one new record nominal high in gold after another, the mood around gold is subdue and the badly beaten up bears continue to be the main voices heard crying wolf to the media. Thankfully, we’ve saw through their empty and wrong views and have sang the following to every line in the sand top they’ve predicted at round number from $400 up to now.

U.S. Dollar – Despite historically low bullish sentiment indicators, terminally ill Uncle Sam can’t even muster up a technical bear market rally. Once again it’s getting slaughtered in the Forex markets. The long-term downtrend remains intact and a test of the low 70s appears in sight.

Special Note - I’ve been truly blessed to enjoy a sports fan dream of dreams by being around professional athletes. I’m always asked who’s your favorite? When it comes to pure fun, a million laughs and being around the biggest heart, one name comes to mind – ex-boxing great Gerry Cooney. You could put Gerry in a room with two groups who hate each other, lock the door and come back in two hours to hear them carrying Gerry around singing for he’s a jolly-good fellow. This is an excellent interview of Gerry.

The more I look at metal prices and Bisha, the more I love Nevsun Resources. Given what metal prices have done of late, I think $3 or under is relatively cheap for NSU shares. Great Basin Gold remains quite cheap given the big bump up in gold prices.

Friday’s employment number is almost certainly IMHO the key to what the U.S. stock market does for the balance of the year. Any real indication that unemployment is easing should give the “Don’t Worry, Be Happy” crowd the ammunition to resume it’s march towards DJIA 10,500+. On the other hand (I never like to hedge but it’s the right choice at the moment), a surprise bump up in unemployment should remove whatever hot air remains under the market and lead to a sharper decline. Friday is key!

The floor I spoke of in gold at four digits is now in. Numerous so-called experts, money managers, investors, etc., were either outright bearish, turned bearish or became weak kneed and looked for a correction when gold was around $1,000. They never got a chance to get back in and now the market has gotten away from them. The natural tendency is to try and talk the gold price back so you can justify not chasing to get back in but that has not been a worthy approach for years in gold. The bears have a gigantic problem. Sorry but I won’t lose any sleep over the anti-gold getting their just dessert.

The U.S. Dollar continues to be long on anticipation of a bear market rally but way short on delivering on it. Again, it needs to get above 78 on the U.S. Dollar Index before we change even our short-term outlook.

I still hope to see oil at $85+ in hopes of getting short again. Natural gas is ho-hum.

I continue to like shorting U.S. Treasuries 10 and 30-yr maturities.

Off to Toronto for BNN tomorrow then Montreal Investment Conference.

Good news for NY Jets fans. They can’t lose this Sunday. Wish I could say the same for NY Giants.

Yankees clinch World Series tonight!

With this in mind, I updated the model portfolio this morning.

In regards to some clients of Grandich Publications:

Formation Capital (FCO-TSX) is so close to finalizing their mine developing package one could taste it. Stay tuned.

Sunridge Gold (SGC-TSX-V) management tells me they’re quite please with their on-going exploration program. The $.60 area appears to be a level those not yet believers can become one at an undervalued entry point.

Timmins Gold (TMM-TSX-V) is perhaps one of the most undervalued companies on my entire list.

Gee, gold options expired today and what do you know gold fell $30+ the last three days. What a coincidence. I suspect we’ll see a bounce in gold followed by some selling to see if the bears can finally do some real damage. Based on their track record up until now, I wouldn’t break into a sweat if you’re long term bullish like me.

The U.S. Dollar is once again trying to get some sort of a counter-trend rally going but needs to get a close above 78 on the U.S. Dollar Index to do so. Even if it does, any rally looks like it should be capped below 84.

I remain neutral on oil and screaming bearish on 10yr. and higher U.S. Treasuries.

I’m going to put a buy again on NSU as this sharp correction from $3.40 just last week seems to have been enough of a correction. I paid up to $2.60 today and will use that as a buy limit.

I’m adding a new recommendation to my model portfolio. Buy East Asia Minerals (EAS-TSX-V $1.78) up to $1.85

Keep a $1.55 buy limit on KMK until further notice. There’s a lot more to this situation than meets the eye so be careful of what you assume is real information from people who may be playing with one or two hands tied behind their backs.

U.S. Stock Market – Yesterday’s late day sell-off was the first of its kind in quite awhile. The market has not had a 10%+ correction since the March lows. We’ll need to watch the next couple of days to see if one has finally arrived. Whether it does or not the market continues to “melt-up” and my target of DJIA 10,500-11,000 remains intact.

U.S. Dollar – In 25 years+ in this business, I can’t recall any single market having such an overwhelming number of bears (95% bears in U.S. Dollar Futures) and not see a reversal of some magnitude. There are just so many legitimate bearish factors continuing to pile up against the U.S. Dollar. The only hope for some counter-trend rally to begin would come IMHO if the U.S. Dollar Index could close above 78. Until such time, the path of least resistance remains down.

Gold – Sorry for the bad language but if you’re a bear you have to be poo-pooing in your pants right about now. Despite widespread bearishness not only from the usual wrong suspects, many former bulls became weak kneed or outright bearish and continue to see the market move away from them. Gold has shown tremendous internal strength by actually self-correcting intra-day by selling off only to come roaring back. Today so far has been no exception. We’re in a secular bull market that has been “stealth-like” and despite being a few dollars from it’s all-time nominal high, gold remains hated and/or ignored by most. I LOVE IT!!!!

Oil - Oil indeed broke out above $76 and has $85+ written all over it. If it can get there with the DJIA also hitting my target, both could become shorts so stay tuned.

U.S. Interest Rates – Going much higher over time!

I’ve met with a few companies so far on my trip and here’s a summary of those meetings as of now:

Effective immediately, I’ve resigned my position with ATW Gold. I’ve said over and over again that management is the key for a junior’s ability to be the one in ten that makes it. While I have considerable personal respect for Graham Harris of ATW Gold, I believe his management team has not done the job. While I believe Graham will try hard to right the ship, the bottom line is they lost the confidence of shareholders, myself and the market in general. I think there are too many others who offer better opportunity at this time and one should recognize this and move on.

I had a terrific meeting with the management of Evolving Gold. Yesterday’s drill results IMHO strongly suggest that they have true home-run potential. I no longer think the question is DO they have something but HOW BIG will it end up? Management agreed with me that they have room for improvement on the corporate communication side of things but don’t let that be a knock against them. Remember, they’re the very same management team which has discovered and is developing what 99% of all other management teams can only dream about. I CONTINUE TO BELIEVE ANYTHING UNDER A BUCK IS AN AGGRESSIVE SPECULATIVE BUY.

Met with Hunter-Dickinson management and had great updates on Farallon, Taseko, Northern Dynasty and Continental Minerals. With great bias I must tell you in all my years associated with HD, I never found them as confident in one of their deals as they are with KMK.

I had an in-depth update on Sunridge Gold. They have all the makings of becoming the next Nevsun. Company is on European road show. I’m told to look forward to lots of news flow.

Must Watch! For all those who make fun of people like me and others that speak openly about the U.S. government’s “Working Group”, I strongly suggest you watch this video.

God Bless!

Peter Grandich today on BNN’s “The Close”  recorded October 20th at 4:15 pm.