Tekoa of CIC: We have a 500 point down day in the DOW. What are your reactions here in terms of what we’re seeing out there?
Peter Grandich: Well, I think first of all from a traders standpoint, which I am not, there should be high anxiety. From an investors stand point and in particularly in the market that I focused on, nothing’s really changed for me. For instance I have been in this view Wall Street could run the stock market somewhat higher so I could get a real great shorting opportunity; that’s gone. My overwhelming position has been in gold. The mining shares are backed up and some are actually somewhat lower than they were a few weeks ago when I thought the bottom was in.
One a very good friend that I talk about a lot, Mark Leibovit of the volume reversal theory, in fact put out a recommendation late in the trading day for all of his readers to sell all their mining stocks.
Interview Night between CIC Radio & Peter Grandich. Whole interview including specific mining stocks HERE
I think a lot of things can be derived from this. That the day of reckoning that we have spoken so much about may have arrived. What’s important here in my view is that the ability to kick the can down the road was becoming harder and harder and it appears that the settlement on the debt crisis in the US might be the last kick of the can.
So, there is going to be a tremendous amount of volatility over the next few days. One of the things that we are going to see is big swings. The buyers will be to the down side until further notice and quite frankly unless you’re trader you have to live through it. I don’t see anything on my long term picture that I have presented for a few years now changing. I don’t think you can beat the market trading so I don’t try to do it, but I do think a lot of the long term and it is playing out here, unfortunately.
Tekoa: You’ve told me that you have little bit of the heart of a speculator or a gambler, so when you see today‘s kind of downside action do you get a feeling of hunger or excitement inside or have you been doing this for such a long time that it’s just another day in the markets for you?
Peter: Well, you know it’s interesting, the there was a press conference here today that I attended GATA held which was around 1:30 so what does that make it around 8:30 in morning your time and gold has been trading up and there was no real sign that the stock market was going to be down more than 100 or so points. But as the day wore on we started to see what had unfolded. In fact at the end of the day I was actually bidding and I actually bought some shares. I put stink bids in, bids that if they got hit I would want to own. My last email to my own broker in Vancouver was to make sure you’re there at the opening tomorrow because if things gets mocked down again tomorrow, there are things that I like to buy. But I don’t get too excited about it because I know this is part of the picture that we have looked at and this is part of what certainly American investors are going to grow accustomed to. We have spoken about it, the day may be here now, the day of reckoning could be upon us. It was an interesting day here Europe because the financial media was reporting the European Bank made what some people believed was going to be a supportive move announcing that they were going to step up and buy some of Spain, Greece and some other countries distress bonds. The financial media are all talking about potential meltdowns; they are already showing headlines to one of the London papers that I think read ‘Pension Meltdown.’ So it seems we’re setting up for certainly more pressure to the DOWN side, whether it’s tomorrow or into next week but personally I don’t get too excited about it one way or another because this is a big part of an overall picture that I felt was coming. So I am not shocked.
Am I thrilled? No because my stocks that I own went dow. But you know if I may just make a poin,t while I was sitting in this business centre looking at a computer one of the sponsors at the show here, a significant producer in Canada, talked about how great things were in his company. When I told him what his stock was down like 12% he was befuddled. He couldn’t believe it, said things have never been better for them. I asked if they needed to raise money any time soon, he said no. I said was there anything that price of stock was going to impact the company in some financing or business deal he said no and there was no change what so ever his business outlook. I said well the only thing that is going to cause is imaginary in your investor relations department because obviously people who start losing, start ringing and asking questions. So I take some comfort in it, any of the individual situations I’m in haven’t changed or changed radically because of what’s happened now, or what can happen in a few days. That’s why I am fairly calm as we approach midnight here.
Tekoa: You know Peter your long term forecast on gold has been 2,000 an ounce and if I recall correctly I saw a comment in your blog recently that you were thinking about revising that projection . What are your thoughts here especially as we wind down after the debt ceiling raise with as you said none of these problems solved?
Peter: It would not surprise me if the next $50 move in gold is down and there’s a couple of reasons for that. A) it’s had a big move, B) people tend to sell winning things to average down on losing things. So I can see some people taking some money and profits in gold, putting it into other areas now. If you ask me Pete, let’s look past the next few days then I’d say to you that the picture has never been brighter. In fact, if we replayed some of our interviews or comments that I’ve made this is what we had expected would happen if all these things came together. That goal would be the most beneficial from it. So longer term, you’re right I am beginning to think that there may come reasons as we move into the latter part of this year to raise the target that I’ve had. Despite everything that’s happening there is no flight to gold of speculative nature. The mining shares are coming off but all the things that were there to drive it higher it seem intact. In the very, very near term we see it pull back.