Stocks – Gold and the US Dollar

Posted by Peter Grandich

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4:25 PM on Monday, December 7th, 2009

It’s been quite hectic on both work fronts for me and I’m only catching up as I type. I do want to thank Stan Bharti of Forbes & Manhattan for an incredible time while in Toronto. Not only was I very impressed by the depth and knowledge of many of his staff but also his down-to-earth manner went a long way with me and Joe Klecko. I didn’t think there was another Hunter-Dickinson type out, there but ND and Forbes & Manhattan clearly have some similar qualities.

U.S. Stock Market – If not for the fact that we’re in the midst of one of the most favorable seasonal periods for equities, I do believe I would’ve already pulled the trigger of putting my bear suit back on. The lower end of my 10,500 – 11,000 DJIA has been hit but I’m holding off in hopes of not being the Grinch (Grandich) that stole Christmas. Stay tuned.


Gold – I’ve said it for over six years now and from just above $300: gold is in its greatest secular bull market ever and there are no real signs of a major top. I’ve also stated all the way up that it’s hated by most in the financial services industry and the financial media and to never expect it to be viewed favorably by most.

As noted in my update the morning of December 1st, I placed most gold-related holdings on hold because my 2009 price objective of $1,200 was reached. The inevitable correction soon followed and with any good fortune, it will last long enough to get gold off the front page again and allow the gold perma-bears a chance to come out from underneath their desks and pound what’s left of their chests.

One note on the perma-bears. I mentioned two by name a couple of months ago. One of them was since fried in the press for his overall poor performance and the other, well, he doesn’t need any help in showing what he really is and isn’t. He is the Andy Smith of the 21st century and when gold gets to $1,500+ in the next 12 – 24 months, he, too will be like Smith when people ask, “whatever happen to….?”

Gold has held the low around $1,130 again and even if it breaks below, I believe the area where India bought its gold on either side of $1,050 is the total risk to the downside. Again, as I’ve said for years, the surprises should mostly be to the upside.

I welcome this correction/consolidation and hope it can last for much of the remainder of 2009. But to those who have high hopes of a gold price with three digits again, I truly believe that can only occur by an event I just can’t fathom at this time. As a forty year NY Jets fan, I’ve learn to fathom the unfathomable-lol.


U.S. Dollar – Despite all sorts of media reports and 24-hour vigils by the gold perma-bears for a dollar rally, the terminally ill Uncle Sam representative still can’t get above 76.50 on the U.S. Dollar Index. It needs to have two consecutive closes above that level before any legitimacy to a bear market rally can take hold. Because we’re going to see conditions get thinner as we draw closer to month and year-end, moves in this and other markets could be exaggerated so we must be careful not to get too caught up until after the New Year.

I believe the sharp decline in oil shows the rise in oil was as I suspected–dollar driven versus improving fundamentals. Natural gas remains uninteresting from either side.


The Model Portfolio has been updated.

Evolving Gold (EVG-TSX-V $1.13) has engaged my services. I’m very optimistic for 2010 and beyond. The stock will remain in my model portfolio because it was a recommendation before becoming a client. I prefer not to give buy and sell on clients but since many people had already bought EVG per my model portfolio, they’re deserving of a continuing opinion.



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.