Many junior mining investors have run off with their tails between their legs. And who can blame them when even the portfolios of market veterans like Peter Grandich, publisher and editor of The Grandich Letter, have taken a beating? But before you cash in, you might want to read why Grandich still has hope for $2,000/oz gold, and which companies he believes have the mojo to make it through this trough in this interview with The Gold Report.
The Gold Report: Peter, the last time we talked you said that the success of your marriage was resting on the performance of your junior resource equity portfolio. You are still married, so is your portfolio performing or is your wife an extremely patient woman?
Peter Grandich: Living in the doghouse isn't that bad once you get used to it. It's wise during this horrific bear market not to let your wife see your monthly brokerage statements.
TGR: A reader of yours apparently suggested that you should have a "kennel portfolio" for some of your dog stocks.
PG: And that was one of the kinder comments that came in recently. I would be better off running a kennel than speaking about my junior resource clients.
TGR: Tell us about what has happened and what you're expecting for your portfolio.
PG: This has been the worst junior resource market in the 30 years that I've been on Wall Street. It may not be the largest percentage decline, but at least there were legitimate reasons for previous bear markets. It's hard to justify the most recent gold takedown. Nevertheless, it happened. I just can't seem to find any particular reasons to justify where we went.
TGR: You're not alone. There are people who took positions in these stocks when they thought the market had bottomed and they're still sitting with them in their portfolio. What are you doing with these stocks?
PG: These stocks have sunk way too low. Yet, I believe that this will be like the last dozen or so bear markets. There will be an inevitable bull market rally that will follow. The only justification to be a seller is that the mental stress and anguish has become so acute so that you literally can't take another day of it. In fact, I think that's what we've seen of late.
TGR: Are you still holding?
PG: I believe we've gone way past that level. I know inevitably a bull market will be onboard, but I don't know if that bull market will make us whole. This was so devastating and widespread. Prices should eventually rise higher than they are now, but it will take months.
TGR: In early April, gold bears were out in force after a lengthy hibernation. Are you less bullish on gold than you were a year ago?
PG: A year ago, the technical picture suggested that the market was coming to a major change that could have been several hundred dollars up or down. My brain said it could be down, but my heart said up and I stuck with my heart.
Even after this takedown, I still don't believe that the secular bull market that's been ongoing for 12 years has come to an end. I still believe we'll have a two in front of the gold price before it ends. We're going to have to get to $2,000/ounce ($2,000/oz) before there's any decision on my part about the end of the bull run.