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Today's Trade & News

This week newsletter for free - We are approaching toward a great volatile time - BULL SHOULD WATCH THEIR TRADE..

Dear Members,

Last week, the US Dollar hit a new low, while gold hit a new high; oil gave up its recent gains while grains strongly moved up. I am also happy to see that predictions on oil and grains are finally coming back on track.


Gulf markets hit new lows last week, including Saudi, Kuwait, Oman and UAE, but the USA Dow index hit a new all-time high.


With commodity prices on the rise, traders and investment houses are worried about their investment strategy. Surprisingly, many economists don’t seem too concerned about inflation. Similarly, interest rates are on the rise, the US deficit is at an all time high and we sense the approach of a dangerous imbalance in the currency market. Furthermore, property prices are still high and going higher in many places, while the Iran issue is still unresolved. With so much happening in the world today, we all seem to be waiting for something to happen and it is especially interesting that financial market investors and institutions seemingly continue to ignore these issues.


Is this a sign of collapse for the world economy and economic system? What is apparent is that only the rich are becoming wealthier, while the middle and lower classes seem to be sliding into increasing difficulties. While it is true that President George Bush did a great job in cracking down on terrorists and we must congratulate for his aggressive move, but he also committed a historic mistake in attacking Iraq in hurry. UN taking a similar step against Iran could be catastrophic. Indeed, not even the Iranian President will evade his share of responsibility if uncertainty befalls this beautiful planet. He is showing too aggression and that looks scary.


Let it suffice to say that there are troubled times ahead and a cloud of uncertainty hangs over the world. We need to ask God to grant wisdom to our leaders and policy makers so that they can lead the world towards peace and harmony, not conflict.





Tom and Harry are now saying that gold is going to the roof; even my driver said that “Sir, gold will go to $1000”. Many new analysts and forecasters have started speaking of the might of gold, but where were they when gold was sitting at $270? This is actually similar to Technology: After giving tips to buy tech stocks and the subsequent stocks’ rise of up to 20%, many who ignored the tech boom felt that they missed one of the greatest opportunities by not buying. However, they were the ones laughing after March 2000 while tech investors were frantic to find support levels, which came after three years.


I am in no way suggesting that gold shouldn’t go up. Not at all! However, many immature investors are jumping into it as though there will be no tomorrow, with rises fuelled by news of Iran and a weak dollar. If only four years are spent out of a 52 year bull market, 48 still remain and at this rate, it would mean that an ounce could eventually rise to $10000! Well I shall not belabour the point, but prudence is definitely called for.  


Anyhow, my warning still stands for the short-term period for gold. On Monday evening, the Moon will be changing houses and this should bring a short-term side way price movement for gold on Tuesday and Wednesday.


On Thursday and Friday gold will move up though metal investors will experience severe volatility, which will put many buyers and sellers in to a major dilemma whether to hold metals or not.


A wait and watch policy in metals will be the right one.


Short term – Volatility


Medium term – SIDE WAY OR DOWN


Long term – UP


Some negative news for gold:

For the last one month gold is trading against the dollar’s moves. Last year I predicted that “gold and the dollar would move up together and that would surprise everyone in the metal market”. Well we saw this last year, but that relationship has now broken, which means that gold’s upward trend may be damaged if the dollar starts moving up.


Metals have moved up quite sharply, which is a dangerous sign as some institutions are in a hurry and feel that a downward trend may pull out many investors from around the globe who are everyday jumping to buy. This is therefore a dangerous speculation period, and true believers in gold should just buy physical gold.


Gold and other metals are moving up following negative news of accidents at mines or strikes in other areas, especially copper, while there is also the Iran issue.


All this is not encouraging for as you may recall, since 2001 I have been saying that gold would move up by its own strength.


As it is, my answer will come after 18 May as there is a six week negative period which is on the cards.



For now, silver prices will follow gold prices. Any weak trend in gold could be disastrous for silver as it will fall sharply percentage-wise, as in gold.


Silver trading will be similar to the gold prediction. Weak trend will start on Monday so trade accordingly.



These are all following gold but one thing each investor should remember is that these are all thinly traded commodities. A weak trend in metals will therefore sharply bring down these commodities.


Copper is trading at $350, Platinum at $1190 and Palladium $380. I am scared that a fall in the metal market will upset many new comers in this area as they may lose everything that they have gained in the last three months of a bull market.



Last weak oil went down as I predicted and I feel good that I am coming back on track on oil predictions. This week oil will trade weak and prices could fall more than five percent. Gasoline, heating and crude will remain weak from Monday to Thursday and we may see some recovery on Friday.


The longer term bull market is very near to its end (by December of 2006).


Short Term - Down

Medium Term – Up

Long term – Down



I am changing my short-term view on the USA market only. I am still very negative on all other markets as money will flow into the USA from all other stock markets, resulting in weak trends in ASIA and Europe. All major Middle East markets crashed sharply though oil has reached new highs and with mind boggling development activity going on.


This week the US stock market will move up towards a new high till Wednesday.


European and Asian markets will end the rally this week. These indexes could be a great short.


Any weak trend in European and Asian markets (like India) will bring a major downward trend that will not end for the next few years.



European and Asian Market – Down

South African, Australian and Canadian stock markets could be badly hit if commodity prices fall.



The Dollar remained in a weak trend and the last three weeks have been disastrous for its holders. The Euro is trading near a year high and the Canadian dollar also went up. The Chinese Yuan is playing a hide and seek game in the currency market. The Chinese are also worried about a too big foreign reserve and special holding of USA debts. Big players are looking at diversifying holding of assets.


It will be very interesting to watch this week’s trend in currencies as Fed may surprise everyone by not only raising rates a quarter percent, but also keeping their statement open for future raising. That will be a concern to many people as it will be hard to analyze where we are heading to.


This week all currencies will move side way, the dollar will try to stabilize after the slid of the last three weeks. I see a sharp upward trend in the dollar from Tuesday, and it will keep rising for the rest of the week.


Once you see a weak trend in commodities, then you must sell the Australian dollar and the South African rand. The Rand has not hit new highs but it is near.


The Euro and Pound will fall sharply from Wednesday but sure from next week.


The Yen will move side way this week.




Short term - Turn around for dollar from Monday.



Last week grains gained quite handsomely and I am expect that they will trade higher and higher, therefore hold position.


Wednesday and Thursday will be mixed days for grains. Monday and Friday will be positive days for Soybean and wheat. In addition, corn will trade side way but rise sharply on Friday.



Thirty year bonds will rise from Monday to Half of Thursday and then remain weak on Friday. For the next to weeks, I see volatility in bond prices, but for the long-term, I am optimistic.



I see a long-term bull market starting for coffee, so the current level is a great opportunity to buy. However, don’t expect prices to rise immediately but they will certainly rise from the last week of May. Indeed, coffee could touch a new high in June.


I also expect some negative news in relation to weather in the last week of May and June.



Last week I recommended buying cotton aggressively and my prediction remains as it was. Buy cotton at current prices and you will see a four to five percent rise during this week.


This year, I have not been right on metals and currencies, but I am hoping that it is time for a turn-around for me and my predictions.




Thanks & God Bless

Mahendra 7th May