Grandich Observation

I spoke about the past Presidential election being only a choice of a “lesser of two evils” and to me, Trump was the lesser by far. But as only the “Don’t Worry, Be Happy” crowd on Wall Street can, they turned him into the “Second Coming” for the stock market and caused many financial advisers and individual investors into “FOMO” mode – Fear Of Missing Out”.

The U.S. stock market has since priced in perfection and while the “Talking Heads” on Wall Street create new illusions of grandeur to sustain this rally built on a house of cards, more and more “party-pooper factors keep rising, the latest being “throw the bum (Trump) out” cries increasing by the day. It appears those cries have at least for the moment, given pause to the FOMO crowd. They should be concern, as the rally was indeed built on Trump bring Nirvana back to the shores of the USA; and you only have to consider the views of one of his previous biggest supporters, to realize Trump may end up the “Joker” in a crumbling house of cards on Wall Street.

My personal investment philosophy is to be a live chicken versus dead duck until further notice.

Meanwhile, my belief, that gold was a much safer and prudent holding, remains entrenched in my belief this is the earliest stage of a mega bull market unfolding in the gold market.

Here is a chart of gold that has witnessed a classic “step-up” pattern of higher lows (A, B, C and D) and higher highs (E,F and G). And during each pullback, the overwhelming number of gold bears roll out their same “anti-gold” propaganda that the financial media loves to spew to their readers.

Don’t ever expect to see these so-called journalists ever ask these gold bears why hasn’t this “relic” folded like they have touted for several years now, but instead is slowly but surely, moving forward in the face of so many factors they claim should have sent gold way below a $1,000 by now?

If my technical observation is correct, gold should run into some resistance at key “Moving Averages” (noted by I), but eventually make a higher high around $1,300 before becoming overbought (noted by H) and another consolidation on the stairway to new, all-time highs before this decade is over.

My two equity holdings remain:

Nevsun Resources (NSU $2.35) – The new CEO was a good choice and should lessen the previous CEO’s dividend blunder (at the end of an other-wise good career at NSU). Unfortunately, there was serious IR damage that would be best served by a new leader in that end, but not likely to occur. Therefore, it will take much longer to re-energized previous support and rally new believers. But in the end, the assets should win out and those who become shareholders at these levels, should be the happiest when its all said and done. I continue to believe NSU is acquired before the first ore is poured at Timok.

Teranga Gold (TGCDD $2.53) – I spoke at great length with Richard Young, CEO and like him, feel the high level of frustration over a depressing current negative, that has zilch to do with the company. This “depressant” days should be numbered. The date of June 12th should be its “high water mark”. That’s when the GDXJ, ETF, is to have completed its rebalancing. Estimates of how much it had to sell, how much is already done, and even if it goes past that date, are all over the mat. But what was obvious and has been since their original announcement, tens of millions of Teranga Gold shares it had to sell. This factor, and the reverse-split announcement, was IMHO (and that of Mr. Young), the  only real culprits to the recent sharp share price decline. With the reverse-split behind us, and a significant amount of shares already sold by the GDXJ, Teranga’s share price should be now in a building process and be freed from a stint in “buyers jail” come June 13th.

I’ve spoken to Mr. Young on several occasions, and this was by far, the most optimistic he has been about the company’s future. I for one, can’t wait for June 13th and beyond. It’s also nice to see the major insider buying again but he’s now close to 19.9% and would need to get board, and shareholder approval, to go above that. Keep in mind, these shares are not likely coming back into the market, making the real float almost 20% smaller than outstanding shares. Meanwhile, the market mover besides gold price and any new major discoveries from exploration, remains the go-ahead on Banfora. If and when that proves to be a go, we should then see much more institutional and Analysts interest.

“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.”  Peter Lynch