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:
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.
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?
a) For daily predictions, ask the High Frequency Traders.
b) For weekly predictions, silver, gold, and the dollar look over-extended and probably are at or near important reversal points.
c) 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.
Gary Christenson
The Deviant Investor
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