Grandich on the Dollar, Precious and Base Metals, Oil and Bonds

Posted by Peter Grandich - Agora Small Cap Epicenter

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On Major Moves, Grandich has been very right and not only saved many investors fortunes, but expanded them dramatically. On November 3, 2007 at the MoneyTalks Survival Conference, Peter Grandich of the Grandich Letter warned that “an unprecedented economic tsunami will hit American beginning in 2008”.   Peter advised publicly to short the US market two days from the top in October, 2007 and stayed short until the last week of October, 2008. He began to buy stocks in March 7th,  2009. He also bought oil and oil related investments near the lows after the dive from $147.
….go to visit Peter’s Website.


U.S. Dollar – This is the one market that can most influence others for the foreseeable future.

There were two sayings I often repeated to drive home my incredible bearishness in late 2007 and they were:

“America has been robbing Peter to pay Paul, but Peter is tapped out.”
“The only party that doesn’t know the U.S. Dollar is dead is the U.S. Dollar.”
Both of those sayings are as true today as they were then. The only difference is nothing goes in a straight line in markets and, after a near-universal bearish belief on the dollar late last year we’re witnessing a countertrend rally that can take the U.S Dollar back to the mid-80s basis the U.S. Dollar Index. Such a belief doesn’t change my long-term stance. In fact, such a correction of the downtrend is a necessary evil.

But be advised it’s not my wish to partake on this “pimple” up move since I already have ordered flowers for the wake and play this song whenever someone asks me about the long-term future of the U.S. Dollar.

Precious Metals – First off, I remain rip-roaring bullish on gold and silver. The very fact that bearishness is now the prevailing view among the majority makes me even more enthusiastic (if that’s possible). When you consider how widespread bullishness was in early December and just a 10% correction from the all-time high has led to widespread bearishness of bubbles bursting and $500 gold forecasts, you have to realize this is what has occurred all the way up from under $300. The gold perma-bears, who have a worse record than the New Jersey Nets, have misled the masses all the way up. It would be truly sad if it weren’t so comical how these naysayers can say it’s a bubble or grossly overvalued when nowhere in their track record does it ever show them to have been at least constructive on the gold price. Exactly when was gold ever worthwhile in their book?

I continue to believe $1,300+ is a worthy target for 2010 and there’s not even a hint of a major top. Therefore, I want to stay focused on precious metals with gold, then silver, then platinum and palladium in order of attractiveness for me. Yes, gold can correct some more and (perish the thought) can still decline $50 or so from here. But, with several hundred dollars as upside potential, I’m not sweating the $50 possibility. And, besides, despite the gold perma-bears praying to the U.S. Dollar god to somehow rally enough to kill gold, I that believe in the end gold shall surprise many (again) and show good relative strength against the dollar.

Base Metals – I remain constructively bullish on most base metals but don’t see substantial upside from here. I continue to suggest exposure to base metals but to overweight with gold and silver.

Oil and Gas – Right now I would sooner watch paint dry than be involved long or short on oil and natural gas. This can change but not any time soon.

U.S. Bonds – I remain a growling bear on 10yr. and out Treasuries and would avoid most types of bonds with maturities past a couple of years.