Insights From The 10 Year Gold, Silver And Dollar Chart

Jim Sinclair says to buy “fish lines” and sell “rhino horns.”

Stated another way – buy value when the price has plunged and sell when prices have gone parabolic.

In today’s world that means:

  • Sell the dollar index
  • Buy gold
  • Buy silver
  • (It looks to me like the S&P is topping, even though I don’t see a rhino horn pattern.)

Note the following weekly charts:

dollar_chart_weekly_2004_September_2014

gold_chart_weekly_2004_September_2014

silver_chart_weekly_2004_September_2014

Comments

  • The dollar index has made an impressive rally. Note the extreme “over-bought” condition in the TDI.
  • Gold has fallen hard since August 2011. Note gold’s extreme “over-sold” condition.
  • Silver had been smashed down since a near $50 high in April 2011. Reminder: that rally started from less than $9. Silver is now deeply “over-sold” and sentiment is terrible, which is often an indicator that it is time for a reversal.
  • The Disparity Index (on the weekly charts) shows the price deviation from the 40 week moving average.

silver_chart_daily_2010_September_2014

 

In the above daily chart of silver, note the recent smash-down in silver prices and its deeply over-sold daily status. Current DAILY silver TDI (10,5) reading is the most over-sold since the post 1980 crash.

What is next?

  1. For daily predictions, ask the High Frequency Traders.
  2. For weekly predictions, silver, gold, and the dollar look over-extended and probably are at or near important reversal points.
  3. For long-term investors, gold and silver look like great buys.

Conclusion

  • Buy fish line patterns, sell rhino horn patterns, and trust that politicians and bankers will continue to borrow and spend money that must be “printed” in ever-increasing quantities. Example: Official national debt increased by $1,013,588,000,000 in the one year from Sept. 23, 2013 to Sept. 22, 2014.
  • US Dollar: My expectation is that many more dollars must be created and consequently they will lose value against food, energy, and the commodities we need for daily living.
  • Gold: My expectation is that gold can’t be printed into existence and that it will retain or increase its purchasing power over time.
  • Silver: My expectation is that silver will become both more scarce and yet more essential to our economy, and that it will rally substantially from here.

 

Additional Reading:
Has The Gold Price Drop Run Its Course
BABA Marks the Top
Gold Sentiment
The World’s Largest Subprime Debtor

 

Gary Christenson | The Deviant Investor

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