Michael Campbell:  Peter Grandich (The Grandich letter) have been saying you should be in gold. You said you were looking for $1,3,00 –  $1,350 mark.  Now that its hit your targets, what are you looking for now?

Peter: Since Gold was little bit above $300. eight years ago, it should be called a roaring bull market. Subject to a few calls for corrections, indeed when we were a few hundred below with bears making claims that once again the market was topping I actually bet $100,000  that we would hit 1,300 without going under 1,000. No one took me up but needless to say you’re only as good a your last call in this business and everybody looks forward looking to see what you think. With that in mind, I think we pretty well are deserving of a respite here now. It would not surprise,  me and quite frankly I would welcome it,  although markets a lot of times don’t do what you like them to do. We’re quite overboard on a lot of my technical indicators. In fact Friday on my blog I noted to some people that it’s time to take some profits. Not that we’re at the end of a move, not that we have to sell off a lot of stuff,  but we moved quite a bit. A lot of reasons still suggest that over the longer term we can go higher, but it’s the time or period where this bull market has shown that it takes one step back after taking two steps forward.

Michael: I know it’s a cliché but nobody went broke taking a profit. Are you saying to take of your money off the table when you’ve hit a target like this?

Peter: We said in our comment brief on Friday that no one’s ever gone hungry having half a loaf of bread. So this is a good time. This is football season and I’m involved in another away very much in football.  Every team tonight is at its meetings and the coaches have made a plan and will do all they can to stick to it. In investing the problem is that many people don’t have a plan, they go on the day to day emotional swing and a lot of that is affected by what they read in the media which is a lot of times just noise. I just think that with Gold it is a difficult game,  particularly when you get to the junior resource market because there it is just pure gambling. It’s a game of survival and you only have a number of chances to hit a ball out of the park. A lot of people have substantial gains and it always looks like it’s going up and can’t stop. My concern at this point of time is Gold is technically overbought. There’s some fluff in the market. There’s a sense of cockiness almost,  even among some bulls and colleagues of mine. Now you’ve got the Bears on the run it looks like it can only keep going up, up and up. After 25 plus years in this business that suggests to me it’s time to take something off the table. It doesn’t mean we’re looking for a large drop, it doesn’t mean you look to trade this.  If you have some profits book some since they’re not really profits if they’re only on paper.

Michael: What’s your take on the silver market right now?

Peter: Well people when they mention precious metals have to remember there’s actually four precious metals that are considered; that’s gold, silver, platinum, palladium. The later two almost never get mentioned and if they do it’s in a very short breath. Silver is not precious in that there is ample supply of it in terms of the production that comes out. In fact much of the silver that is produced is a byproduct of other key metals. Having said all that there’s also been a great argument and I think a very useful and prudent argument that silver has been greatly manipulated in the paper market. There’s a great belief that there is  a tremendous Silver short position, shorter to the point that perhaps even more than the known physical supplies of silver are short at the Comex. In recent weeks those shorts have started to get hammered because of what took place a few months ago at a commodities hearing. There was ample circumstantial evidence presented, and I think a fear amongst the shorts that the commodity futures commission is going to change the rules and regulations on the Comex. That could really squeeze these people. So with all that in mind silver has been leading Gold. It did indeed break out on the charts but it looks a little bit parabolic of late. In those situations there’s usually a significant pull back and a pause. The further we go up here without a pause the harder that pull back will eventually be. So like Gold,  I think that a sideways move now for a few days to a few weeks would be quite healthy and quite encouraging to bulls. A pullback versus a continued straight up move which could be an exhaustion move and cause us a more serious correction than we really needed.

Michael: Thankyou Peter. You can reach Peter Grandich’s work at www.grandich.com.

Michael: Let’s look at the stock side for a second.

Peter: We just spoke about this in the past week at a Toronto at a conference.  I tried to explain how different and how much harder it is to be particularly successful in the junior resource market than it was ten years ago,  despite the dramatic increase of the metal prices themselves. It certainly shows that the further you go down the food chain the less performance we’ve seen. Major’s, while underperforming the metals,  have actually as a whole done better than the junior market. There’s reasons for that. The game has changed there’s not as many people from the retail brokerage side that used to play these Juniors. The regulatory issues,  particularly in the US,  have prevented a lot of people participating in that market than used to. Quite frankly there’s more people interested in bullion and now money that used to go into mining shares,  because they had no other place to go , now go into the physical bullion ETF’s. That’s helped the metal prices, but it’s also helped the mining shares to under perform.

So as you go down to the more junior resource particularly those are that just pure exploration aren’t even in the development stage of a mine. The less performance we’ve seen overall versus the metal. And quite frankly I don’t see anything on the horizon that can change that simply because I believe the game has changed and the number of players have changed. Doesn’t mean you don’t want to own them. But you’re not going to see what I believe would have been much higher prices if the same thing was happening 10 or 15 years ago.

Michael: It’s usual that the seniors would move first,  then the intermediates and the juniors. Is that what we are seeing unfolding at this point?

Peter: I think the majors will continue to actually outperform the juniors cause there just isn’t enough groundswell of interest among junior player participant’s to get them as trade crazy as we used to see 10 or 15 years ago. That’s somewhat healthier in that we don’t have wild swings. But I don’t think we have the buying momentum in the junior market to actually get them to greatly out perform the metal prices. The junior index markets relative to past performance and adjusted for inflation are still substantially lower than they would have been when gold was just $400. So I don’t see that happening, I would love it to happen because I’m so heavily involved in the business and personally invest in the juniors. But I just don’t see that market flying in the way that it used to fly a decade ago.

Michael: What’s your perspective on the overall stock market itself?

Peter: Well Mike my feeling has been that we’ve entered a Japanese style market like what we saw Japan do from 1989 to present. After a rally that took place into the summer my expectation is we are going to go into a long term trading range, and over a several years period of time we’ll work our way lower in that trading range. And in some time we’ll test those March 2009 lows. A couple of weeks ago I noted on our blog that despite very poor fundamental outlook for the market, the market had shown a technical position that was suggesting the market can move back to it’s recent highs a little bit over 11,000 on the Dow. And that’s happening, it’s frustrating a lot of people got shot in this move a lot of, what I would call somewhat inexperienced traders got shot because it looked in their mind that we were slam dunking a fall off the cliff again. And my argument is that the market and the economy is going to go nowhere as fast as the US. So I’m neither long or short I’d lean to the bear side because over time I think the US stock market will greatly under perform other markets including Canada. But more importantly other countries in Asia some in Latin America even a few in Europe. And the US stock market and the economy is no longer the engine that pulls the world around. So you’ll have to get used to the fact that the US market may not be going up. But that doesn’t mean you don’t look elsewhere around the world.

Michael: You know it’s one of my themes has been making this distinction between economics and finance. For example the meltdown was a financial problem that had reverberations in the economy. And I still think that’s a central dynamic whether we are talking the currency moves. You know it might be that the US dollar now becomes the big carry trade where people can borrow or massive organizations can borrow at very low rates in the states and then move that money elsewhere that will catch up too. So I see a financial thing, but one of the simple dynamics I see is that that’s kept the market up Peter and I just want your reflection on it, is that there’s not really a lot of other alternatives. If you are a pension fund looking to make your 7 8% which is probably in the projections of most of them at this point and have been very disappointed. You know you obviously can’t do it in the government bond market as an example. So I think that’s also helped to some degree in keeping the stock market up.

Peter: I think that’s true, I think one of the areas that has; you know people talk about gold in a bubble. I mean the bubble’s the bond market. But in particular the junk bond market it is so much money because people are chasing [you]. Has poured into some very low credit rating type of bonds here particularly corporate US paper that I think is very dangerous down the roads. It’s going to be very difficult for some of those to even pay it off. But nevertheless as you said there is people just chasing cause they have no other alternatives. But that doesn’t mean you have to join them simply because they’re making a bet that they are just making for the sake of a bet. I think the, if people would just look at the US economy and try to understand it from a business stand point they would conclude that we are not going to be able to service our debt. We are not going to be able to pay it off over time. We just don’t kick off enough [discussionary] income to pay it down. So eventually US debt, and that debt also includes on the state and local level which a lot of people don’t realize is maybe even worse percentage wise than the US national debt. Is going to have to be renegotiated forgiven or monetized and I think it’s going to be a combination of all those three. And that’s one of the reasons why we’ve seen the deterioration in the US dollar because people overseas already have recognized that and they are moving away from the US dollar.

Michael: And let me just before you go Peter touch on one quick thing and obviously we won’t be able to cover it in full at all. But I think the other point you’re making is very important for people to hear that when we talk the markets I think we automatically hear the US markets or the Canadian stock market. But of course the opportunities have been elsewhere for much of the last three or four years and we could argue how long that’s been. But I just think people are going to have to broaden their horizons if they want to get better returns. They are not going to be stuck just thinking US you know the Dow the S&P or even in the Canadian terms

Peter: Canadians and Americans still are just so over weighted in just North America. They have very limited exposure out elsewhere yet most of the growth that’s happening in the world is elsewhere. So you just have to do it. You have to get accustomed to it whether you like it or not that you have to have your money particularly outside the United States. You know areas Mike like Shanghai and all of China and India and Brazil and you know even a couple of the European countries that got [whacked]. They are not buyers yet but Ireland is at least doing what is necessary to put itself on good footing again. And eventually that even that market will come attractive where the US just continues to add to the pile of debt and really the terminally ill situation that it sees it’s currency in.

Michael: Well it’s going to be a fascinating time and I really look forward Peter to having you com out October 23rd you’re going to be out in Vancouver. We’ll be talking precious metals that entire day and from literally what the big picture is to write down what are some of the juniors that you should keep an eye on to the mid tier you name it. We are talking all about precious metals October 23rd tickets at 1-877-926-6849 or www.moneytalks.net for your tickets. Peter great chat with you I really look forward to seeing you when you come out here and you better reserve some space for some fine food with me

Peter: Alright Mike it’s always a pleasure and I hope to see many of your listeners and my readers at the show.

Michael: It’ll be terrific Peter Grandich my guest www.grandich.com. I’ll take a break Ozzy Jurock on deck also I’ve got Victor Adair and goofy awards.