Today's Trade & News

Dear Friends,

Here I am putting small part from this week newsletter, I won't able to put any flashnews from this week.

Thanks

Mahendra Sharma

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Dear Members,

Last week we saw British pound showing its true colors. I want to reiterate this concern — I don’t know what will happen to Euro and Pound, and whether they will survive the coming years or not. My stand since last year is very clear: compared to the dollar all other currencies are rather weak because they don’t have the universal acceptance and significant weight in international trades, and therefore any uncertainty could cause USD to skyrocket—something comparable to the nature of the Tulip mania such as the 1990s tech bubbles or 2000s housing bubbles.

I don’t know what is wrong with some economists and analysts—they miss the fundamentals and they think that I am just pro-dollar. They are making mistakes because from 2001 onward throughout my books, interviews and newsletters I kept saying that USD would fall until 2007.

From 2008 I have been talking about the new bull market of USD and this prediction surprised everyone in Wall Street until last July when dollar started moving up sharply, at the same time when most analysts were calling the end of the dollar—almost like now. Once again please meditate on my dollar bull market prediction because a trend of historical proportion is about to develop.

Last week, oil, metals and soft commodities started giving signals that they are uncomfortable at current levels. Stock markets were trading in an uncertain zone, not knowing where to go next.

In the past few updates, I mentioned that fastest falls in history in stocks and metals would likely take place accompanied by the fastest rise in USD. Yes, let’s talk about it in detail because it is very important.

Under current popular rapid trading style, volatilities on both sides have been making short-term traders' lives quite easy, but this trading strategy won’t help when new trends take place in the markets. The coming trend in currencies, stocks and metals can be so huge that short term traders can go broke, and those who always talk about the longer term, buy-and-hold strategy could also get in to serious trouble if they position in the opposite direction. Let’s say if gold fall from $1000 to $550, do you think long term traders can survive? According to me, NO, because of the extremely high leverage in the futures markets. Even 10 long contracts in gold can give you loss of $450,000 in this case, and if you make mistakes by dollar cost averaging down then I see the accounts being wiped out. But of course in same situation if you are on right side of the market then the whole story is different.

Yes, I see some serious corrections in the coming, shorter period which will siphon off all liquidity from traders' hands. I am too concerned about whole situations and this mighty trend can start from either on 29 September, 1 October or, at the latest, with 100% certainty within 48 hours from around the 13^th of October. The most interesting part of this fall is that it will last a very short period of time, with maximum duration of between 5 to 6 weeks but speed of downward trend will be beyond our imagination.

During these 5 or 6 weeks stock markets can fall around 39%, metals can fall around 45%, and the dollar index can rise more than 25%. A few day’s some futures markets can fall limit down, and metals can close limit down in a few straight days, so could some currencies. The whole situation will arrive suddenly like a tsunami or Pearl Harbor, which might wipe out many investors and some sizable financial institutions, will disappear. And from next year again markets will start moving up and gold will start rising to more reasonable levels but before this please save yourself if you are invested in above mentioned area. I am not saying that I will come 100% accurate but, if I come right more than 20% then also magnitude will uncontrollable for everyone.

Also when I write updates, when I change some target numbers that does not mean I feel the trends have changed but means the trend is becoming clear. For example in last week's newsletter we mentioned that oil was moving down soon, and on Wednesday we came out with an updated oil price target of $59.10 because it traded weakly in its strongest days.

Here is this week’s trading strategy from 28 Sep to 2 October

GOLD

This week...