It would be poetic justice if true given the fact that the most notorious bears have inaccurately claimed actual weak demand and a rise in gold production. Whether or not we see a squeeze, gold remains in a strong uptrend with $1,200 doable before years-end.

Stay tuned!

A little on the consolidation announced Monday.  Bottom line, it needed to be done in order for them to move forward on their mine financing.  In Formation Metals’ case, a share consolidation is a positive move done to open financing doors and put the company more in line with its mid-tier base metal producer colleagues.   It is more attractive to mine financiers to finance a company with 34 million shares out trading closer to $2.00, than one with 240 million shares out trading under 30 cents.   I applaud their decision.  Their new consolidated share price is expected to start trading on Friday morning, based on seven times the value of Thursday’s closing price.  Their symbol remains the same; FCO.TSX

Now the financing news.  A few major points I read into this:  1)  To start, basically this is a 70:30 debt to equity financing.  This is a favorable ratio in today’s market where many financiers appreciate the fact that resource stock prices are depressed and want as many shares as they can get their hands on.   2) they have structured the financing so that after two years, when they expect to be in production and generating cash flow, they can at their election, re-finance their debt under what is expected to be more favorable terms.  Management was insightful on this one.  The news release, however, is unclear on this point, and does not drive home this critical fact.  3)  At the end of the day it looks like they will still be diluted by close to 100%, which at first glance seems excessive.  However, this could generate on the order of  $275 million dollars that would come with the equity issuance, depending on what the shares and warrants will be priced at, and of course, help facilitate a revenue generating mine. They are not giving them away!  Considering that their current market capitalization is around $60 million, to issue 100% additional shares to generate $275 million puts things in better perspective. 4)  Lastly, the equity portion of this financing will not be set until the debt portion of the financing is completed, or in other words, until they have successfully raised $115 million for the cause.  I would expect that at that point their share price should reflect this  accomplishment and fewer shares may need to be issued to raise the remaining $45 million, which I also note, does not have any warrants attached to it.

I wonder what would have happened if they announced instead that a major mining company was going to fund the entire project for 50% of the cobalt mine.  I suspect the reaction would have been very positive.  Ironically, this is also equivalent to 100% dilution, (giving up 50% of your primary asset) yet in this case you would also give up 50% of all future earnings!  This is not the case here, yet the markets obviously expected something better.  I’m not sure what else management could have done but they are doing exactly what they said they would do – raise the money to build their mine.

I see than Jenning’s Capital Morning comment today still has a $1.20 target price.  That’s an $8.40 target post consolidation.  That at least is what one mining analyst is saying.  While some near term weakness pre/post consolidation is possible, I think the smart thing to do here is to look at 2010 and beyond knowing one owns the only pure cobalt mine in North America.

A good place to start to get a feel for my long-term outlook is my 25th anniversary issue from last month.  I believe two movies available on the Internet are “must-see” views. They are:

• www.iousathemovie.com - I believe it’s the most accurate account of the true fiscal status of the United States. The host of the video is my #1 financial guru, Mr. David Walker.
• “The Third Jihad -Radical Islam’s Vision for America”. The recent horrific incident at Ft. Hood is sadly just a small preview of what this film strongly believes is underway here in the U.S. It’s very politically incorrect, but I believe this is just part of a far bigger event that I’ve called the number one factor for all plans for the future. I wrote about it recently and urge you to watch this video within the report.

A quick summary of my views are as follows:

U.S. Stock Market - A mini melt-up has been underway that’s forcing professional investors in whether they like it or not. While fundamentals are mixed at best, the “Don’t Worry, Be Happy” crowd is in control and appears on track in delivering me a wonderful gift of DJIA 10,500 – 11,000 to get bearish in again. It just may be a white Christmas!

It’s important to note that a renewed bearish stance will not likely be worldwide. I believe the future of the U.S. stock market will look like Japan has for the last twenty years – greatly under-performing most world markets and an economy that sputters along at best.

U.S. Interest Rates – The question you have to ask yourself looking out past the next few months and instead concentrating on the next few years is this:  Are 3%-4% interest rates worth locking in now for the next 10 -30 years? It’s my firm belief that the FED is the sole reason rates remain so low and inevitably the day of reckoning for massive debts, deficits and a terminally ill currency will result in much higher interest rates down the road. Bonds in general are clearly the lesser of two evils but are evil never-the-less.

U.S. Dollar – Back when the U.S. Dollar Index was well above 100 (it’s now around 75), I began pounding the table that the only party that doesn’t know the U.S. Dollar is dead was the U.S. Dollar. I said more and more governments would move away from the dollar as the world’s reserve currency. I constantly stated this would occur because America has been robbing Peter to pay Paul and Peter was tapped out.

Despite being terribly oversold, the U.S. Dollar can’t even mount a bear market rally. A close below 74 should bring on a quick decline to new lows, an event that should lead me to lock in tremendous profits. This may include suggesting those who converted savings in U.S. Dollars into Canadian dollars back when the Loonie was well under 80 to convert back again. Stay tuned.

Precious and Base Metals – I’ve greatly favored over-weighting precious metals over base metals and still believe that’s the way to go. I do think both groups are overextended for the very short-term and a healthy consolidation now versus another leg up now would actually be better for much higher prices in the future. I’m in no way suggesting any sales but instead proposing new buyers not approach these markets with wild abandonment.

Gold continue to be in the mother of all secular bull markets that despite new nominal highs after another, the vast majority of professionals have either missed or worse, bet against. Until such time when these wrong way bears wave the white flag, we at best should only see periods of consolidation and pullbacks limited to 5-10%.

Oil and Natural Gas – I remain dead neutral on both. Oil has been mostly a dollar driven market. I’ve targeted the $85+ area as a possible area to go short so stay tuned. The world is awash in natural gas so I think it’s best to just stand aside in this market.

Summary – Once again, I’d like to thank the members of Maverick Business Adventures for allowing me to speak to you today. While I’m not optimistic about the long-term economic, social, political and spiritual future of America, I still believe there are areas of the world that offer great investment opportunity. Commodities in general remain in a secular bull market. There are dramatic shifts underway worldwide and while one of them may be politically incorrect to speak openly about, it never-the-less will have a major impact on all long-term investments.

Geopolitical concerns worldwide, with special emphasis in the Middle East, appear ready to move to the forefront and should have a big impact on one’s investments as well. Sadly, I believe it’s not a question of if, but when Israel and Iran’s conflict becomes a military event.

The one group of Americans who will be most impacted by all that has happened and what I envision are seniors. This will have major political implications as there are now more Americans over the age of 65 than under 18. Seniors are the single biggest voting block and control most of the wealth in America. Like it or not, they will become a major force in the social, political economic and spiritual battle that is now fully underway in America.

Please visit Trinity Financial, Sports & Entertainment Management Company website

• Keep an eye on this

• My thought too

• World’s #2 economy (soon to fall to third) is a preview IMHO of what’s to come for America

• Sad but true

• Too close for comfort

• Round 2?

• I’ve said American seniors are being more impacted by what’s happening then any other single group. It’s only going to get worse.

• One tough hole.

There has also been a lot of interest in the Raglan area since Jilin Jien Nickel, a major Chinese company, bid on Canadian Royalties, one of the Raglan area players. Many feel that the bid is undervalued because the project is already permitted and is expected to produce 26 million pounds of nickel and 39 million pounds of copper. Renewed interest in the Raglan area is undoubtedly a positive thing for other nickel exploration plays in the region. Minesite.com posted an article Nov. 9^th about how Canada’s Far North opens up for more investment opportunities from the Far East.

Above all, what the Canadian Royalties deal shows the world is how valuable resources in the Raglan region can be. The junior that I use to be engaged by in the Raglan area is Knight Resources (TSXV:KNP), a company in a joint venture nickel/copper project with Anglo American, one of the largest mining companies in the world.

Knight and Anglo have exploration drilling results with high-grade nickel over width like 36.43 metres of 2.66% nickel and 1.10% copper, and 8.80 metres of 4.73% nickel and 1.16% copper. The market paid no attention to announcements of results like this in late 2008 because it was right in the middle of the world financial storm. Granted a lot was going on at that time, but these are still some excellent results and should no longer be overlooked. Anglo’s $3.5 million summer field program has further invigorated the West Raglan Project when they served up a platter with multiple new drill targets that look good, and that’s in addition to the targets from 2008. With a pipeline of drill-ready targets, the Anglo/Knight technical team is recommending a $5M drill program in 2010.

The Chinese are watching nickel and copper in Northern Québec; if Knight and Anglo are going to the West Raglan area together in 2010, we should expect more interest in this valuable region. You can read more about Knight at www.knightresources.ca.

——————————————————————————————————————————————-

My last email to BNN – I’m not surprised as Nadler is the little boy who has cried wolf and someone finally stood up and said liar, liar.

Thank you for the opportunity and tell Howard I love him (and still miss Jim O’Connell very much).

From: Zena Olijnyk [mailto:Zena.Olijnyk@ctv.ca]
Sent: Tuesday, November 10, 2009 10:32 AM
To: Grandich@agoracom.com
Subject: gold debate

Well, thank you for looking into you schedule to see if you accommodate us, but as you see from email from Jon Nadler below, I don’t think it’s going to happen. Too bad, it would have been very interesting.

Dear Zena,

Please inform Mr. Grandich that he will just have to debate my video image from last week’s interview in lieu of me live on the air. We will not give him the opportunity for the free publicity he so sorely craves from such a ‘debate’ – an exchange which would end up being little more than a position statement of one’s platforms and not a real debate.

I stand by what I told your audience, and remind them that I backed it up with accurate facts and figures on the air. But, as I previously said, I do not ‘debate’ bullion bulls. They have their opinions, I have mine. I am also sure that your audience is discerning enough to choose to form its own, based on the content your channel brings them.

If Mr. Grandich so fervently believes gold to be in a true bull market, well, he can just tell your audience why he believes that to be the undeniable case – and I suggest that he is also asked to provide an equal number of solid statistics on each count, as opposed to some personal conviction about why gold might “shoot to the moon” any day now.

Invitation declined. Off to travel. Will be back in Canada in January. Perhaps we can arrange our ‘normal’ market chat via Rob Graham.

Sincerely,

Hell Daniela, I am a producer with BNN’s Headline with Howard Green. I am hoping you can help us arrange a frank and open discussion between Jon Nadler and Peter Grandich by making Mr. Nadler available. This comes following Mr. Nadler’s appearance on BNN last week discussing whether there is a bull market for gold and this open letter from Peter Grandich, which I assume you have seen. I think there are some very valid reasons that BNN viewers would want to see a debate between on this topic between Mr. Nadler and Mr. There are certainly a lot of people following Mr. Grandich’s blog would agree. If you could get back to me to discuss this, I’d very much appreciate it. While we are flexible in terms of timing, we could even do it as early as tomorrow on Headline, which airs 12:30 pm to 1 pm. I am also in touch with Mr. Grandich. Best regards, Zena

Zena Olijnyk

Chase Producer

Business News Network

416-957-8223

First and foremost, I continue to believe the U.S. Stock Market has been in a “mini melt-up” stage, albeit interrupted by a very short correction. I’ve spoken about DJIA 10,500+ for months. Make no mistake about it, I’m no long-term bull nor ever want to be part of the group that’s leading us to this area: the “Don’t Worry, Be Happy” crowd on Wall Street. But, unlike the many bears who stayed bearish all this time, I was truly blessed to turn bullish (if that’s what one could call it) just one day from the bottom in March. My quest for 10,500+ since then has not been so I could be considered one of the card-carrying members of the “happy” crowd, but rather so we could get to a point where I could be comfortable turning aggressively bearish again. I continue to believe that point is somewhere between 10,500 and 11,000. I had thought we wouldn’t see that area until spring of 2010, but I don’t want to look a gift horse in the mouth if we get there sooner. Stay tuned.

It wasn’t that long ago when gold approached $1,000 and the media did its usual “one-day wonder” coverage. As so often happens, the media covers the habitually wrong bears who tell the world for the umpteen time that gold has peaked or worse, is very overpriced, only to see gold pull back and the media leave the scene until the next big run up is at its best. Such is the case yet again as gold has risen $70 just in days after it was supposed to die and go to bubble heaven.

And almost on cue, some in the media wheeled out their perma-bears that not only have amnesia regarding their past wrong forecasts, but suffer that terrible “Fonzie” disease (the inability to say I was wrong). Listen, I’m the first to admit when I’m wrong and I didn’t issue my challenge simply because the other party has been wrong and I’ve been right. I issued my challenge because the party is arrogant, bombastic and quite frankly extremely nasty to the parties who he not only disagrees with, but have greatly outperformed him for years. Former NFL coach Tony Dungy says his mother told him when he wins say little and when he losses to say even less. The fact that the other party IMHO has been terribly wrong for quite some time or has even distorted the facts is not the main reason for my challenge. It’s his ultimate gall to those who dare disagree with him in the face of his horrible performance.

Speaking of gold, we’re due for some consolidation and the sooner the better. The one factor that could really cause us to melt up would be the U.S. Dollar Index breaking below 74 in the near term. I would much prefer some consolidation and correction now versus later, but where it comes isn’t that important since the price over the long term appears still heading much higher.

On the model portfolio front, Continental Minerals is having a much needed consolidation. I continue to look for any real further weakness in Evolving Gold to become even a more aggressive accumulator.

Taking tomorrow off to enjoy some Indian summer on the links.

P

When Is The Last Time CNBC Had This Kind Of Guest Record On Their Show?

Past performance is no guarantee of future performance – but it sure separates the men from the boys.  This is a screen shot of Peter’s appearance on BNN last week.  He may not toot his horn too much – but I sure will.  A lot of people talk the talk and then have selective memories – but the great thing about the web is people will help remind you.

I call this PYMWYMI - Put Your Money Where Your Mouth Is – and nobody does it better than Peter.

Way to go Petey.

Regards,
George

p.s.  I figured you needed a few gentle words now that your Giants are 2 games back of the Cowboys.

The only two ground rules I request are:

• BNN makes available past interviews of both of us on the air and our ability to show some of them and their results.
• The moderator be either Kim Parlee or Howard Green.

I await your response.

Peter Grandich