Gold, Silver, Fish Lines, and Rhino Horns

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&P500 is topping, even though I don’t see a rhino horn pattern.)

Note the following weekly charts:

Dollar Index – Weekly

Gold Prices – Weekly

Silver Prices Weekly

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 Prices – Daily

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.

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For more information on gold, read my book:  “Gold Value and Gold Prices From 1971 – 2021.”  It is available here and here.

Gary Christenson

The Deviant Investor