Being Prepared is the Key

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If you have been following our commentary on Gold and Silver over the past few months, then you know how rewarding this rally had been for our investor group. Being prepared makes us ready for the action, whereas others were surprised by the rally.  

By now you would have got a fair idea on how we deal with financial markets, being prepared is the key. We believe in covering every important asset class from all time frames, impactful markets across the world, geopolitical actions and actions of major central banks. Whichever asset class gives high conviction and best risk-reward ratio, we like to have a higher allocation towards it till the macroeconomic undercurrent supports the movement and risk-reward ratio is favorable.   

Real time example is our higher allocation to precious metals and global mining stock ETFs’ for last 1 year. However, this week we have reduced it to Zero. The undercurrent of macro factors still favors precious metals and we will see much higher levels. But we believe there will be moments of cooling off and that would reset risk-reward to favorable state.  

We shall spend time and efforts on other asset classes like oil companies, automation companies and other interesting sectors. We are analyzing companies which are in the business of making brain and nervous system for automatic cars. Requires deeper study before we can nail down on an instrument through which we can allocate investments to this theme. But we believe, we have a few years of potential positive returns from these sectors.    

Tracking the news is not important, but reading between the lines and able to estimate next logical macro move and related impact gives us the ability to spell out a strategy and make firm decisions. Genesis is that financial markets are not driven by headlines, but the headlines are designed to fulfill the agenda of large players.  

Just ask if the news is to fuel the greed or fuel the fear if you can answer that clearly then you understood the purpose of the news.  

To know more about it, you should read about The Chandler Brothers: The Greatest Investors You’ve Never Heard of Two secretive brothers from New Zealand have perhaps the best long-term track record in the investing world  

We derive inspiration from Chandler brothers who have proved that right capital allocation to well-researched theme pays off in medium and long term time frames.  

Drop a line to [email protected] seeking assistance in designing your portfolio  

Fortnight Gone by:

Fortnight has been of anticipation for most of the markets. With no major policy announcements it was lackluster for equities but active for precious metals and technology pack.  

  • Gold surpassed lifetime highs in USD terms
  • Silver remains meteoric
  • Dollar Index remains at 2 Year low and below 3 Year MA
  • NASDAQ continues its journey and makes new lifetime high
  • Dow, S&P covered all the lost ground of pandemic fall
  • Nifty hovering around 11000

The stimulus for unemployed is major news which the market has been waiting; hope we have that through in the coming week.   

Market Commentary 

Good news at most of the times is used to unwind long positions. We anticipate that and are prepared with high cash allocation and patiently wait this period. Institutional unwinding may be dirty so no rush to jump into on the first cut in the markets.  


Globally equities managed to stay above their 200-day moving averages. We maintain that current risk-reward is not favorable in the equities so we will wait it out. Lowest allocation to this asset class would be a wise thing to do.


US Dollar Index (DXY) has touched the lowest of levels of last few years, though we believe it is weak in the long term but in short term, it may pep up and spoil some party in emerging markets and precious metals. Next few months we will closely watch USD movement as many of the asset class depend on what happens out on USD. On expected lines, GBP has appreciated and it is time to book out and stay in cash. EURO, on the other hand, has appreciated beyond fundamentals so it is the best currency to go short. As expected USDINR pair did not move much as RBI has the new problem of plenty of USD.

Crude Oil

Oil has shown positive moves but did not sustain, though not showing weakness. We would like to build long positions with full allocation on oil ETFs XOP, XLE, and UCO. Oil and other industrial commodities will remain our favorite long term buy on dips as we believe supply-side shock is unavoidable.

Metals: Gold Silver Copper

Our long term target of Gold $2040 and Silver $26 was comfortably met. Gold came graciously whereas Silver came ferociously. Though we believe we may see gold at $2500 and Silver at $40 but currently it is time to book out and stay in cash and re-build with price correction or time correction. 

Copper and other industrial metals

Copper has met a wall of resistance and started tapering off. In fact, Zinc caught up and reached 6 months high in a swift move in the last few weeks. We had recommended Zinc over Copper in our last few notes and now we cash out as Zinc will also meet resistance points soon.


These are information, views of best of minds, and my humble opinion, take the trade and investment decisions based on your risk profile, objectives and asset allocation. There are times we need to sit on cash and wait for the market to correct and there are times when we have to stay invested and allow the market to move up. So fill up buying orders on asset class where there is a need to allocate funds and reduce priced up assets to keep cash for better times.  

This is a complimentary note and can be circulated with friends and family members. Advisory is always one to one and this note has no relation to the advisory. We may share views but this piece is not to be considered as advisory. A note may have mention of various authors/videos/views, which are sourced from the internet and respective owners own them and have made it available free for all, it is reproduced here for awareness.  

You can drop a mail to [email protected] for blocking time for your queries on taking things forward and working together on any of our core services. 

Written by

Punit Sethia, Aug 09, 2020