Update on A Crash in Progress


Dear Investor

I last wrote in Feb predicting virtual downside in every market barring Dollar and China.

We are witnessing exactly the same being played out. Virtually everything is falling, may they be Asian markets, European markets, commodities or bullions or crude against dollar.

Yes, China has not risen as per my expectation. But, I am yet not bearish on China and would like to remain invested. Shanghai Composite has formed some important bullish pattern, which should mark bottom on it.

What I expect in near term?

With every rise, sell opportunity arises. I remain bearish on all markets except dollar and china. You will have further fall in Silver and Gold in time to come. Commodities will correct further and Real Estate in India would be next driver for further downside.

Europe and US markets can correct further and with that weakness will persist in Indian and Asian markets, too. Policymakers are in dilemma , if they do not support the recovery which is hugely paid for, economies will sink in red again. The first qtr GDP of US dived down to 1.8% from 3.1% and that is the reason , you hear any policymaker from any nation, they continue to stay on their stance, that recovery is still fragile and view is cautious with downside bias. Scenario is very much same for all nations. India and China also lowered their growth targets for this fiscal.

And, If policymakers continue to support economy, it leads to higher to hyper inflation as witnessed by us in last 2 years.

Next 2 years are the policy adjustment years. Policy adjustment is very similar to adjustment of tectonic plates beneath the earth. It causes tsunami, earthquake and volcano eruption.

Hence, be ready for rides on both the sides of market.

Policymakers have said often in last 3 years that measures of this magnitude have never been tried and hence outcome of measures remain uncertain and unknown. Like, policymakers not anticipated that recovery will bring hyper inflation when recovery is still weak and fragile, Which has complicated policy actions.

Therefore, in next 2 years, policymakers will increase policy rates and then will wait for dilution of effect and will again raise and so on will continue…

During tightening period markets will remain soft and during waiting period markets will recover.

Where to invest in next 1 year?

Best instrument in such environment is Fixed Deposits. Do not risk your money in riskier assets. Yes, SIP(Systematic Investment Plan) can be done through Mutual Fund.

I had been warning that do not try silver, it will correct severely. It corrected 25% in a week. And, that is reason I had never asked you to buy Silver and instead I remained cling on Gold.

Silver is world’s most manipulated metal. Manipulators are mainly Newyork bankers and they have blessings of regulators. They buy futures in Newyork and then choose to take delivery instead squaring off positions. Delivery of silver is then sent to Switzerland and London creating artificial shortage in market. And, in end game those massive reserves are dumped on market creating havoc.

I also recommend to start investing in Indian Infrastructure stocks. I firmly believe that next rally in Indices will be led by infrastructure companies.

Until next time


Dhaval Shah

Blog: https://investmentacademy.wordpress.com/


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