Update on the Metals
Grandich
Letter Special Alert
Peter Grandich
Jun 16, 2005
Other than an expectation of
either a pullback or correction, I've maintained a very bullish
stance towards gold and most other metals for two years now.
However, a few weeks ago, my staunch support for gold was severely
tested. Numerous subscribers and the usual "loose-cannon"
anonymous Internet posters were calling into question my reasoning
to believe the Euro's decline would not be the death blow to
the bull market in gold. Everywhere you looked, there were predictions
that gold would break below $400 or even go to $375.
I have contended that $500
gold was not a question of "if?" but "when?"
I said the second leg of the bull market should take us there
and we would know it when gold began to rally against most currencies
(including the U.S. dollar) not just when the Euro rallied. Well,
in case you've been missing for the last couple of weeks, let
me be the first to tell you - The second leg has begun!
When the Euro began to fall
out of bed, many people thought a short gold position was a no-brainer.
The daily mood in the gold pits was that it was only a question
of when gold would break below key support around $410 and then
below $400. However, when gold held above it and even began to
stick its head up despite further erosion in the Euro, the shorts
began to cover. This was followed by reports that physical buying
of gold was very strong, as The World Gold Council (www.gold.org)
reported very strong demand for the first quarter of 2005. The
combination of the short-covering and physical buying gave new
wind to the longs and we have since picked up a head of steam
that appears it can take us to new highs above $454 this summer.
Silver - Key resistance is in the $7.50 area. The commercials
bang the heck out of it when it gets around that level. They
may not be so lucky next time around and we could see a big run
to above $8. I'm not a big silver bull as I do think most metals
will see their highs for 2005 in the next few weeks. However,
it's not going to fall off the cliff, either.
Copper - Has held up surprisingly well given
a belief that an economic slowdown was apparent worldwide. Continuing
low supply and the real estate bubble that hasn't officially
burst yet (signs are already apparent, at least to yours truly)
has lent support to copper. A short squeeze is underway IMHO,
but I'm afraid once it runs its course, the highs for 2005 and
maybe even 2006 should be in place. The upside is $1.75 but the
downside is $1.25. Enjoy it, though, while it lasts.
Platinum and Palladium -
The most consistent
metals in terms of maintaining a tight trading range. And there's
nothing on the immediate horizon to expect otherwise - although
I suspect Palladium could surprise by getting above $200 and
staying there.
Uranium - I've been "hot" on Uranium
for some time (but was bearish on uranium shares until now).
Believe it or not, I'm even more enthralled now. The recent news
of a company going public whose primary purpose is to buy and
sell uranium has, IMHO, opened the door for similar companies
to be formed that can become almost self-fulfilling prophecies
in pushing up uranium prices. I hadn't given much thought of
uranium getting past $50. However, on the belief that hedgefunds
and sophisticated speculators will see Uranium Participation
Corporation (U-TSX-V) has a model to play the uranium bull market,
$100 is now feasible.
Cobalt - This is my sleeper metal. The hybrid car market
may just become the main car market faster than most think. And
the use of cobalt in hybrids can greatly boost its upside potential.
Peter Grandich
Grandich
Publications
P.O. Box 243
Perrineville, NJ 08535
phone: 732-642-3992
email: Peter@Grandich.com
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