Warning: Peter Grandich Explains His Massive Short Position

Political divisiveness is so severe that the two major parties cannot cooperate on crisis response as they did in previous major declines, making coordinated fiscal intervention unlikely

“political divisiveness. I I don't think if we had a crisis tomorrow, the two parties can go in a room and begin to work and try to solve it as they did in the previous two large declines.”

More seniors are working jobs that were previously only for youth, not because they enjoy work but because they need to survive, and working becomes much harder at an older age, creating physical and mental strain.

“you're seeing so many more seniors working jobs that years ago was only, you know, for youth. They're not there because they got nothing to do. They're there to to survive. But the problem is becomes much harder at an older age to work. It really does.”

The inevitable government response to fiscal crisis is higher taxes and less service, but two-thirds of Americans are 'taxed out' and unable to pay more, meaning the remaining tax base must pay even more or services must be cut severely

“The inevitable way the government can only choose to go to handle all these issues, higher taxes, less service. Well, twothirds of the people are basically taxed out. Now, what's going to be left is the people that have something left are going to be taxed even more.”

Despite the greatest bull market in bonds in history until a few years ago, most people did not perform well or reach the retirement levels their financial advisers promised, suggesting the retirement crisis is deeper and more structural than simply needing more time in the market.

“I get very aggravated when I see those kind of commercials making it sound like it's very simple cuz think about this. We had the greatest bull market ever and in bonds until a few years ago and still most people did not perform well or you know reach the levels uh that a lot of their financial people claimed they would get to.”

25 states cannot balance their budgets and have structural deficits, in addition to underfunded pension plans and infrastructure cost obligations, creating fiscal crises at the state level that compound the federal debt problem.

“we have 25 states that can't balance their budgets, that have deficits, pension plans that are underfunded, all sorts of infrastructure costs.”

Almost 60% of retired Americans are solely dependent on Social Security, meaning that changes to Social Security would devastate their way of life without alternative income sources.

“we have almost 60% of Americans right now who have retired are solely dependent without social security life as they know it will come to an end”

The fundamental rule for investment holding is: if you cannot put new money into an asset today, you probably shouldn't own it, and the corollary is: if you already own it, maybe you should sell it—this framework means Grandich cannot justify starting or holding a general equity stock portfolio at current valuations and conditions.

“And Lou Eron CR, who's lawn since passed away, said to me one day, Pete, the day you can't take found money that you get to keep or put in the stock market, you can do either one. If you can't put it in the stock market or a particular stock, then maybe you shouldn't own it. And I think that's where we come. I couldn't start, Daryl, for my loved ones, for myself, for clients, a general equity stock portfolio right now. There's just no reason to. The valuations are off the charts. There's all sorts of problems and issues.”

Trump has been raising the possibility of auditing Fort Knox and backing U.S. Treasury bonds with gold, but abruptly stopped this campaign shortly after promising it repeatedly, suggesting someone advised him against revealing the actual state of gold reserves or that a gold-backed currency revaluation is indeed being contemplated.

“Trump is again bringing up Fort Knox and auditing it. Remember last year when he was for about two weeks with him and a must every day we're going there we're going there next week and then suddenly he stopped and my joke to my clients was I think somebody came in the room Mr. president. I don't think he want to go there, you know. But I do think this argument that there may be coming a gold back treasury bond is real and that's why he's going to want to see we have our gold to begin with if we're going to do this because we're going to have to raise some serious money the way the deficits keep going and all.”

Lou Erson was Grandich's financial mentor who later became a great friend after initially being pitted against him on a major television show, and provided Grandich with the principle that guides his investment decisions: 'the day you can't take found money and put it in a stock, maybe you shouldn't own it.'

“And Lou Eron CR, who's lawn since passed away, said to me one day, Pete, the day you can't take found money that you get to keep or put in the stock market, you can do either one. If you can't put it in the stock market or a particular stock, then maybe you shouldn't own it.”

A crisis is developing where younger workers cannot afford to live independently or support children and families, while they must also subsidize aging parents and grandparents, and simultaneously support senior healthcare costs through taxes, creating a system where young people feel trapped and resentful.

“We now have we now a family where they're taking care of elders as well as their children. And we also have like here I live in a 55 and over. We've seen a lot of them have to take in one child either through divorce or issues or whatever. you know, they're an adult now, but they cannot live on their own or support themselves on their own. But here's where the crisis is coming. So peak grand 70, I make it another 10 or 15 years and I want to make it another two or three and Medicare or whatever they're calling it at that point in time allows me to have some multi-million dollar operation that allow me to live another couple years. and some young guy who's still paying into this program that's going to pay me uh to get all this done is going to turn to the government go wait a second I can't even put food on my table pay my rent or ever going to have anything saved for myself and this old giza grand is going to get this no let him die”

Grandich correctly predicted the 1987 crash, the 2000 tech crash, and the 2008 financial crisis by not being involved in them, giving him a track record of market timing or avoidance that supports his current bearish stance.

“you've correctly called the 87 crash uh the 2000's crash as well as the 2008 crash and then I've learned recently that you have been aggressively short the market”

Bullion market manipulation via paper gold trading (historically controlled out of London and New York) has shifted to Asia, and the decentralization of gold price discovery has reduced the ability of paper markets to suppress physical gold prices for extended periods to mere hours or days.

“the bullion dealers uh manipulated the market and all remember this this is another long-term bullish the paper market that used to suppress the physical market controlled out of London and New York those days are gone it's moved to Asia and the more it's moving there, the less the paper hangers can manipulate the gold price for more than maybe a few hours or a day or two. And that's another real long-term bullish factor.”

Trump's proposal to allow retirement funds to be invested in private equity is a warning sign that private equity itself is in financial trouble and facing a liquidity crisis, making it the wrong vehicle for retirement capital.

“And if you remember last August, I think when you and I talked, I said this talk of Trump allowing the retirement money to go into private equity was a signal that private equity was in trouble. And that's the last thing I would want any of our people doing, taking risk on illlquid assets on their retirement dollars.”

Trump's trade policy and isolationist approach (tariffs, combative rhetoric toward allies, withdrawal from multilateral agreements) has alienated key U.S. allies (Taiwan, Philippines, Singapore, Australia) and accelerated geopolitical realignment away from the U.S., increasing de-dollarization and reducing U.S. leverage during future crises.

“I said his trade policy he was take Trump was taking a big stick and he should have took in an olive branch and because of it I said the tariffs would be reversed which they were but more importantly he would alienate our allies and even if he was justified that everything he accused him of being like and all was true instead of going in as a mad man and remember when he said with the bricks I'm going to break your kneecaps and all that kind of stuff.”

Growing co-housing arrangements of non-related people sharing expenses in a house (similar to historic boarding houses) represent a significant and rapidly growing real estate trend, driven by people of all ages who cannot afford to live independently.

“The greatest growth in real estate right now, and it's grown pretty fast, it's still small relative at all, is co-mingling of nonrelative people into a household. So like the old boarding houses like there might have been four or five different people living in a boarding house so to speak except that they all kind of come together and share in expenses and all because they can't afford to live on their own but sharing with others that's a growth industry.”

Retail traders with a peashooter are going up against institutions with missiles, making it nearly impossible for them to be successful in market trading.

“what I tell people that do sit home and want to trade and think by watching a certain network and all you have a peashooter and the people you're trading against have missiles. Good luck.”

Building data centers for AI is facing opposition similar to nuclear power plants, and costs related to data centers are contributing significantly to electricity consumption.

“we're starting to see some people realizing that building all these things, man, you don't want, you know, when they didn't want nuclear power plants by you. Well, they don't want data as sense next year. But not only are the costs and how that's contributing to electricity and all”

Retail investors should use hedged equity vehicles (such as equity index annuities or hedged ETFs) that allow upside participation while protecting downside, rather than holding unhedged equity portfolios or attempting to trade.

“For us, we suggest to clients things like RERS, equity index, annuities, ETFs that mimic them, allows you to participate on the upside, but also protect your downside. Other than that, I would I personally don't own any general equities, not related to metals and mining.”

Silver has been performing better technically than gold in the recent pullback and deserves equal weighting in a precious metals portfolio (not 2-3x more gold as Grandich used to recommend), because industrial demand for silver has grown substantially over 20-30 years and a genuine shortage is developing.

“I actually think it it can lead gold here for the rest of the year. I think it's gone it certainly looks better technically at the moment than gold does and I think that will help with momentum players. But I also think that argument that the long argument of of this this great shortage of it is real and the industrial usage of it now is so much more important than it was 20 or 30 years ago. So I would I would look if I was owning it and this is unique for Pete Grant me saying this I would want to own basically equal amounts. I would not as I used to own two or three times more gold than I would silver. Uh but I think it it deserves to be on the same level as goal right now.”

Copper is trading at all-time highs with fundamentals that have never been better, driven by AI data center buildout and electrification demand, yet Wall Street remains underinvested or has no exposure and is still telling clients to buy AI without owning the copper and aluminum needed to build it, making copper the most likely of the three metals to work higher without requiring an exit.

“The metal that I spoke about since the first time I ever spoke to you that I said was the safest of the three that I said was the absolute turtle versus the rabbit but was the most likely to work higher without ever having to exit was copper. And now we're sitting, as you and I speak today, at all-time highs. The fundamentals have never gotten better than they are now. Wall Street is still completely underinvested or no exposure yet. Yet, they're telling everybody in the world to buy AI and things related to it, but all the things to build what they need, they don't own aluminum, all the other things that make it up at all. So copper to me is uh just just really starting to come into its own. Has the best of the three uh bullish arguments”

Uranium has the best bullish argument among all metals (strong certainty of need for electrification and AI power) but has only a handful of producers (countable on both hands), making most uranium exposure an exploration play with significant execution risk, and therefore Grandich is not yet recommending it despite its fundamental superiority.

“The one that I may put my hat back on and maybe in the early days when we talked I think I was a bull at that time and that's uranium. The problem uranium has is this. It has the best argument of all of them. It has the most certainty of need as much as copper if we're going to have all these things in the world. The problem is we can still count on at maximum both hands the number of producers. Everything else is an expiration play. And so that that's always been the my concern but not yet because I think but but can they all go down like if there's a crash if we have an 87 where suddenly the market's down 20%. You're right. shares and all are are going to go down with it.”

Public interest in gold in North America has been suppressed by competing narratives around Bitcoin, NFTs, and other cryptocurrencies, which diverted capital and attention from the junior resource market; as long as crypto does not crash, it will continue to compete for investment interest.

“the public in general here in North America, particularly in the US, has still not moved towards gold because they had these people tell them these other things, NFTts, memcoins, now the Etherum and all these things they're blowing up. That was competition that was taking away the interest that might have otherwise come into the metals, particularly to the junior resource market. as long as they don't crash and they roll over down, there'll be a segue people seeking these stories.”

If the stock market turns down, Grandich does not see anything else that people will stand behind Trump for, implying that the stock market is the primary prop holding up political support for the current administration.

“So Trump done far more damage than I think even his most adden supporters could imagine. And I think uh the only thing that's kept him afloat at the moment and there may be personal reasons for this is the stock market. If the stock market turns down here, I I I don't see anything else that people will stand behind him for.”

If markets crash 20%, junior mining exploration stocks will decline alongside equities but will not see forced liquidation because they never had major institutional participation in the recent rally and will rebound faster than broader equities once initial panic clears.

“But at the same time, I don't think there's going to be massive liquidation of them. What's not going to happen is this. If you're right and there's a 20% down day, you're not getting this call. Sell all my AI stocks, sell my Treasury bonds, but buy me some junior expiration stock. That's not going to happen. Okay. But at the same time, I don't think there's going to be massive liquidation of them. In fact, if you look at the juniors last week and even today, as you said, when we speak, they're unchanged or ticking up. They're pretty well washed out because they never had a big entrance. There wasn't other than those few weeks where everything went parabolic. So, I don't see a big liquidity need.”

The current market will experience a 'bottle rocket' pop similar to how they went 'parabolic' earlier in the year, and when it does pop, the decline will be 'far worse' than prior crashes because the fundamental supports are much weaker.

“markets are like this. We saw that earlier in the year about metals. They're like bottle rockets. They will pop. Sometimes you have those bottle rockets that go a lot further. I don't know if you remember as a kid, they would go further, almost like a Roman candle, but they pop too. This one will pop. And when it does, it's going to be a lot worse because the fundamentals around it are much worse than before.”