South Korea Signals the Beginning of the Second Leg of the U.S. Dollar Bear Market
Grandich Letter Special Alert Friday Feb 25, 2005

Peter Grandich
February 25, 2005

According to my Cable Guide, the Comedy Channel is supposed to be channel 50. However, I get more laughs from channel 24-CNBC-TV. While the usual merry men of Wall Street's "Don't Worry, Be Happy" crowd continue to appear daily, the big laughs for me are coming from TOUT-TV's Senior Economist, Mr. Steve Liesman (is it just a coincidence that "Lies" is part of his name?) and their "Five-Star General of Everything is Okay," Mr. Larry Kudlow. Recently, Liesman made a flip- chart presentation of why Bill Gates and Warren Buffet are wrong about their short U.S. dollar position. It was pure humor at its finest. Not to be outdone, General Kudlow appeared with a Wall Street Journal Reporter (who appeared too young to even remember when the D-Mark last traded, let alone be an authority on why the South Korean news was not bad news), who stated that foreign central banks couldn't and wouldn't move away from the U.S. dollar because it hurts them in the end. General Kudlow commended the "rookie" for seeing through what he termed, "ill-founded concerns" about the U.S. dollar.

After I stopped rolling on the floor from laughter, I did what any wise investor should do - I turned the sound off on TOUT-TV (only time it's sure to go on is when the one man who has a brain appears, the gentleman from the bond pits).

We've now heard officials from China, Russia and South Korea openly speak about their belief that the U.S. dollar's days as a world currency reserve are over, and/or a desire to move away from the U.S. dollar. You can only imagine what they're saying privately. Don't let Kudlow's dismissal of the awesome deficits we face in America and the fact that Americans have been robbing Peter to pay Paul (and Peter is tapped out) fool you into thinking the worse is over. We've only seen the opening act!

Gold-
Once again gold has completed a two steps forward and one step back correction and is now likely to challenge its $453 high in the coming weeks. And once again near or at the bottom of the correction, I received several emails from gold bears telling me how the bull market was over and I was a fool to be so openly bullish. Perhaps when the next correction comes and the emails stop, that would be a worthy concern. Like I've said for quite awhile, $500 gold appears to be a question of when, not if. Only when TOUT-TV sends the NASDAQ babe over to the Comex to report daily on gold should we consider the end may be near.

Silver -
Hard to imagine but yours truly became quite favorable towards silver several weeks ago and believes it can run with gold and more than hold its own.

Base Metals -
I've been pleasantly surprised by copper's ability to hover near $1.50. China's demand appears not to have waned as some thought it would by now. I do think, however, that base metals should be only evenly-weighted with precious metals holdings.

Uranium -
I continue to believe it has the best overall fundamentals. Just about anything with uranium is seeing increased interest. Now, if I can only figure out how to get Nortel Networks into Uranium.

Peter Grandich
Grandich Publications
P.O. Box 243
Perrineville, NJ 08535
phone: 732-642-3992
email: Peter@Grandich.com

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