Grandich Observations

I remain hesitant to speak at any real length about financial markets because:

1 – I don’t want to fool myself (as I did for three decades) that I, or anyone else for that matter, truly knows the future.

2 –I hear the Book of James loud and clear in my ear – “Well now, you who say, ‘Today or tomorrow, we are off to this or that town; we are going to spend a year there, trading, and make some money.’ You never know what will happen tomorrow: you are no more than a mist that appears for a little while and then disappears. Instead of this, you should say, ‘If it is the Lord’s will, we shall still be alive to do this or that.’ But as it is, how boastful and loud — mouthed you are! Boasting of this kind is always wrong. Everyone who knows what is the right thing to do and does not do it commits a sin.”  James 4:13-17

Please treat the following strictly as observations from a “former” Whiz Kid, who not only puts his pants legs on one leg of a time too, but has stumble, fumble and fallen enough times on matters of finance to last multiple lifetimes.

I remain overall quite comfortable in my foxhole. I suggested the great bond rally of well over three decades – ended several months ago. Having seen credit expansion worldwide go from 1 trillion in 1971, to well over 70 trillion now, and to know for every percentage of GDP growth, four times as much credit has been created at the same time, I know the punch bowl will run dry before most have the opportunity to be fully prepared to live and prosper.

Today’s employment report will be “milked” by the “Don’t Worry, Be Happy” crowd on Wall Street; but as I’ve stated before, given the amount of money creation the FED allowed, economic growth remains subpar (and the type of jobs being created don’t demand high wages, hence the continuing weak wage growth).

First quarter GDP is already anticipated to be well below 2%; and like it or not, the Trump bump has all but run its course.

I maintain my U.S. equity short position.

“All of the government’s monetary, economic and political power, as well as its extensive propaganda machinery, will be enlisted in a constant battle to drive down the price of gold — but in the absence of any fundamental change in the nation’s monetary, fiscal, and economic direction, simply regard any major retreat in the price of gold as an unexpected buying opportunity.”   Irwin A. Schiff

I exchanged emails earlier this morning with a well-respected financial advisor I know for over 25 years. We both have watched gold manipulation to the point where we literally send emails to each other, noting a perceived attack on gold- many times just before a drop occurs. It’s become a “sixth” sense for both of us.

Notwithstanding what Mr. Irwin Schiff and others have said about blatant manipulation for decades, I remain very bullish on ownership of gold, especially versus financial assets like general equities and bonds.

 

Having run into its 200-Day M.A. around $1,260, this decline is not surprising. I had looked for a pullback to as low as $1,200 and technically, even $1,180 is possible. Today feels like a bottom, but even if it’s not, I’ll risk my love ones on owning gold for the next few years, versus general equities and bonds.

Another thing I did that I regret, was discussing publicly the two stocks I own personally. It’s all my fault to have chosen to do so. But when I read online emails I sent privately being posted for all to see, it only makes my regret even worse.

Knowing mostly good and decent people care, I will make comment yet again (especially since I want those good and decent people to hear it directly from me, and not some chat forum).

Since the first of the year, I nearly double my family ownership of Nevsun Resources (NSU). While my opinion on their main assets hasn’t changed, I was indeed disenchanted with one of its officers and did write to him, claiming he was “disingenuous” with me, and his cavalier attitude towards NSU investor relations had hurt shareholder valuation IMHO. Finally, I told him and the CEO, I didn’t wish to communicate with them anymore.

Having said that and seeing the share price comeback to its current level, it’s both good and not so good news (depending on who you are). If one hasn’t bought shares yet, Christmas has come early for you if you acquire shares at these levels. If you’re like me, and own shares at much higher levels, the danger now is suitors showing up and truly “stealing” it at a price we already seen the share price trade at within the last year. Management will certainly argue they won’t let that happen, but it’s their poor handling of the dividend that created a distaste that didn’t never have to be in any one’s mouth in the first place!

Yes, it was a good decision to cut the dividend and use the monies to develop a possible world-class asset. But the fact the person I referred to and the current CEO, were so adamant through 2016 and early 2017, that would not come anytime soon, I, and I suspect others, bought shares assuming by the time a dividend cut would occur, Timok would be further along and the share price would be reflecting that (and less likely to dive on a dividend cut).

Unless gold, copper and zinc tank from here, and/or something unforeseen on their asset base occurs, ownership of NSU shares down here are a gift to those fortunate enough to acquire them now.

Teranga Gold (TGCDF) is in its best possible position. Those are the words of their CEO and I can fully appreciate why he feels that way. Here too, a gift for those able to acquire at these levels.

Peace Be With You!

Peter