‘It is impossible to soar like an eagle if you are surrounded by turkeys’ Anon

This October will mark the 28^th anniversary of when I first penned my financial and markets thoughts. While a lot has changed in the world since the first edition of The Grandich Letter, sadly, when it comes to the financial services industry and the financial media that follow it, this old saying is more appropriate now than ever: “The more things change the more they stay the same.”

While I discuss this in my new book and have spoken about it often in my writings, public speeches and interviews, it was driving home earlier today as I listened to Bloomberg radio… it made me again realize how truly up against it most investors are.

In the book, I discuss why traditional financial planning is a flawed and often failed process. I also speak about how the playing field is very much tilted against the average investor. However, what I had to endure listening to today was a perfect example of how many in the financial media are knowingly or unknowingly adding to the odds against investors. (For those who may have noticed that I don’t get interviewed in the financial media nearly as much as I used to, know the reason why this has occurred is the fact that I openly speak about this).

Let me say that overall Bloomberg is a far superior network than the home of the “Don’t Worry, Be Happy” crowd, CNBC-TV (TOUT-TV). And, for the record, the absolute best is Fox Business News. Having said that, today on Bloomberg they had an interview with Jeff Christian of the CPM Group. IMHO, Mr. Christian and Tokyo Rose (Jon Nadler) are among the worst forecasters of gold in the last decade. While he may not come across as being as arrogant as Nadler, Mr. Christian has also found ways to mock those he deemed as “crazies” or “religious” when it comes to gold despite an awfully poor actual track record in forecasting gold (but no one I know of takes the cake like Tokyo Rose).

In today’s interview, Mr. Christian said (among other things) that he sees gold averaging $1,200 – $1,300 for the next ten years and he believes the high has already been put in. I have zero problem with the forecast itself except for two reasons:

• He has made several forecasts similar to this all the way up with lower numbers only to be proven wrong again and again.
• And I’ve no problem with someone being wrong multiple times because I myself have enough experience in that area, but the reporter praised Mr. Christian for being RIGHT in the past—praise that would make the average investor believe his current forecast especially worthy. When, in fact, based on past performance, one should at very least exercise caution (unless, of course, you’re a great believer in the broken clock theory).
• From Bill Murphy’s Daily Letter today “The bullish news of the day was The Nitwit’s comrade in arms, Jeff Christian, told a reporter on Bloomberg News that the bull move is over and gold would average $1200/$1300 per ounce over the next decade. What a horse’s ass this guy is. At the Silver Summit two years ago he stated gold would average $946 over the next decade. The price of gold was under $1,000 at the time”

There are others like Dennis Gartman who also have been far more wrong than right on gold yet are perceived by many in the media to be real experts.  In my mind, an “expert” should be more right than wrong and not just being regularly interviewed a qualification. This misguided media reporting is not limited to gold and, as noted before, there are networks where excellent reporting far outweighs the bad.

The point here is two-fold:

• The financial media are not pure, true judges and their objectiveness should not be accepted blindly.
• Those of us who have been on the right side of the greatest bull market of the new millennium, gold, must learn to live what I’ve said for years now – the financial services industry and the media who follow it hate gold and that’s never going to change. Just say to yourself when you see these types of people, “there, but for the Grace of God, go I.”

U.S. Stock Market – While I said on August 12^th that I believed we made a short term low and after a 550-point drop I noted on August 18^th I expected that drop to be bought into, I don’t think we’re remotely close to any significant bear market countertrend rally (unless, of course, you’re locked in a room where the only channel you can watch is TOUT-TV).

My analogy has been summed up many times by stating:

• America has been robbing Peter to pay Paul, but Peter is tapped out.
• I believe our stock market is going to trace out a similar pattern to the Japanese market from 1989 until now.
• President Obama will (if he hasn’t already) cause all the “Jimmy Carter Was the Worst President Ever!” signs to be destroyed.
• The very people who helped get us in this mess—members of Congress—are the ones the “Happy” people tell us can fix the problems.

I continue to suggest that those whose financial situation requires significant equity exposure realize America is no longer the economic engine that pulls the world but instead look at the 21^st century engines like China, India and other select countries.

U.S. Bonds – Shotguns are loaded awaiting a significant crack past a few minutes, hours or days below 2% on the 10-year T-Bond to see if they will need to be fired on or I actually take a short position. Stay tuned.

You will recall I spoke about a highly speculative play on Ireland’s 10-year Treasury bonds when they were as high as 14% yield. To those who did, congrats. Yields are way down and bond prices are nicely higher. I would hold until further notice.

Gold – I was going to write a long overview discussing the numerous factors I’ve spoken about since first entering the bullish side on gold in the spring of 2003 with it just above $300. I would point out how along the way we’ve had more market top (bubble) calls than carter has liver pills. Then I would add to what I said at the start of this post about how the financial world and the media who live off it make their livelihood from financial assets and they will never truly get behind gold because it would effectively say their life blood —stocks and bonds—are not worthy…

A gold chart noting how it got way over extended from key moving averages, a feat that over and over again gets corrected and this time is no different, would be followed by stating as I have at previous corrections how nice it would be to see the perma bears, weak-kneed bulls, and the media who follow them return back to hating and dissing gold….

Instead, I’ll just say what I’ve said for eight years now:  the mother of all bull markets remains and the longer term surprises should continue to be mostly to the upside (although a correction down towards the 50-Day M.A. would be ideal to set us up for a run to $2,000 before years-end).

The 10 worst days for gold, according to data compiled from FactSet Research: Notice how many of them occurred during the “mother” of all gold bull markets (and the same predictions you now hear were heard right after these days too).

Silver – While second in my choices of favorite metals, it too remains in the mother of all bull markets and those who said it will never see above $50 again are going to need erasers and/or amnesia.

Base Metals – Because of a pending world economic slowdown, I lowered my opinion of most base metals and oil a couple of weeks ago. I continue to think they can be bought but only on further sustained weakness.

U.S. Dollar – Anyone who still thinks this is a safe haven play should just look at what has happened in the world and show me where that flight shows up on the chart.

The terminally ill U.S. Dollar is getting close to breaking some key support and a close below 73.40 for two days in a row can bring on acceleration to the downside.

Oil and Natural Gas – As noted, I like oil only at $75 or lower. I continue to like natural gas any time under $4.

Mining Shares – After being able to get past being like Fonzie and admitting I was w-r-o-n-g on the mining shares but drew a line in the sand on August 9^th and said they can finally outperform the metals themselves, we are seeing some early relative strength. Here’s to it becoming a way of life for the foreseeable future.

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Posted in All Posts Base Metals Bonds Canadian Stocks Copper Exploration Shares Gold Mining Shares Natural gas Oil Personal Finances Platinum Political Precious Metals Silver U.S. Economy US Dollar US Stocks Zinc world economy by Peter Grandich