The BEGINNING of the Large Financial Correction I was Fearing

Dear Friends,

I am writing you to make an update over my exceptional December call to LIQUIDATE all financial assets and move to cash USD, CHF and GOLD. Last two weeks have accelerated the BEGINNING of the large financial correction I was fearing. Some of you have been writing to ask if this is the opportunity to reinvest at cheaper prices. It is mainly for this reason I decided to send this update (For my customers and fund investors I publish a personal weekly Newsletter) which follows February update where I informed that we were increasing short speculative investments, especially in the Crypto market which is the first bubble bursting, ahead of stocks and bond…and real estate.

Before I go ahead let me just say that NO I have no crystal ball that forsees the future, I am surprised and scared as much as you may be by this horrible war. The current events are, in my opinion, only accelerating a large financial crisis that was already unfolding. Prices have been inflated by 12 years of cheap money and a reckless judgement by some Central Banks. I am using Technical, fundamental and behavioural indicators to help me judge the state of the market. And last november these indicators had reached levels of alert beyond the readings of year 2000 and 2007. When we made the same call to liquidate, and to be honest already in December 2020 we was expecting a correction, which was then negated in January 2021 as investors pushed prices higher.

Speaking about numbers: EuroUsd has reached our target of 1.08 faster than imagined, same for Eurchf at parity (1 euro = 1 chf) and gold at 2000. However financial markets assets have not yet witnessed a PANIC SELL, which is usually associated with a sentiment of FEAR and reflects the END of a LARGE price correction. For this reason we have reviewed lower EUR USD, EURCHF targets and much higher GOLD targets. This explains why I attach the EURCHF chart which is a quite reliable indicator when Financial Markets are undergoing a correction. This time a combination of two factors is pushing the CHF higher:

1) Investors Flight to Quality.
2) Investors repaying credits in CHF as many had contracted credits in this currency as rates were negative.

The Central Bank has not yet made a serious intervention to stop the CHF rise (usually done at 1.02) most probably because the wave of CHF purchasing is still too strong for an intervention to have any effect. For that they need to wait that purchasing power becomes only speculative and not a necessity.

This brings us to the chart which is showing an all well known technical Pattern called Head and Shoulders which is clearly pointing to a target of 0.900 CHF for 1 Euro. Implying that the psychological barrier of 1.000 will most likely break. Coincidently GOLD is reaching 2000$ barrier that if broken will push the price of 1 ounce at 2,500$ and finally EUROUSD can only drop to parity. In order to trigger the break of these key levels we believe that it needs a combined sell off in stocks, bonds and Cryptos with the characteristical Panic wave driven by small investor’s fear.
On my last 2 newsletters we increase shorts in Crypto and stocks (via the all well known proshare funds) for our speculative portfolios. While for all our portfolios we remain in cash and wait to see if the above levels break before purchasing any long position in stocks.

The theory of yearly Cycles points out to the second half of March as a possible moment for another SHARP LEG DOWN.

For those who read me since long time you know it pays to wait.

Last but not least. As notified in my Friday’s newsletter we are still watching very closely GAZPROM USD and EUR denominated BONDS for Buy levels. I have seen offers bottom at 30$. We will notify when and if we purchase more Gazprom (80% discount for one if the richest oil companies!), however as you imagine for said investment we rather miss the bottom and buy it 10% higher but with the certainty that they will not default (although highly unlikely). We purchased Gazprom bond today for our very speculative portfolio, our bank’s back office had to book the transaction manually as every trade with Russia is scrutinised.

For everyone, Sail Safe and Best of Luck


Ps: I am happy to answer any questions you may have


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