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Big Al
March 12, 2015

Silver Projection, Dollar Correction

Take the S&P Index and multiply by the US dollar index.  This removes most of the currency variation.  Do the same with silver.  The chart of silver times the dollar looks very much like silver priced in euros.

S&P Times Dollar Index

 Silver Times Dollar

Note the following:

  • The S&P times the $ has been rising since 2002, is now at all-time highs, and is above the top of the trend channel as I have drawn it. The massive increase in debt since 9-11 has created liquidity which has levitated the S&P.
  • Silver times the $ has risen since 2002, is well below its 2011 high(markets correct) and has dropped almost to the support trend line as I have drawn it. The massive increase in debt since 9-11 created liquidity that helped silver spike higher in 2011, but it has since corrected.

Facts and Speculation:

  • Debt is increasing rapidly. Global debt is approximately $200 Trillion and US debt exceeds $18 Trillion.  Unfunded liabilities are much higher.  Deflationary forces threaten central banks, hence they pump dollars, euros, and yen into the system to levitate the bond and stock markets.  Interest rates have been crushed to multi-generational lows to further levitate the bond market and increase bank profitability.  Currently the squeeze on the dollar has pushed it into a parabolic rally, and such rallies always correct.  When the dollar corrects (crashes), silver and gold prices will benefit from the ensuing financial chaos.

Examine the silver times $ graph again with speculation regarding possible values after prices compensate for currencies printed to excess.

Silver Times Dollar

Current:

Silver                             $15.60

Dollar Index                      0.99

Silver times $                  15.47

Zone 1 (perhaps 2017):

          Silver                             $55.00                    or     $62.00

          Dollar Index                      0.90                                 0.80

          Silver times $                  50.00                              50.00 

Zone 2 (perhaps 2019-20):

          Silver                           $125.00                    or   $155.00

          Dollar Index                      0.80                                 0.65

          Silver times $                100.00                            100.00

The above are speculations regarding prices for silver and the dollar index.  What is not speculation are the following: 

  • Markets always correct.
  • Parabolic rises usually crash and burn.
  • Unbacked paper currencies are being printed to excess and they will devalue in purchasing power.
  • Silver and gold have been real money and valuable for thousands of years, in contrast to hundreds of paper currencies that have been inflated into nothingness.
  • I don’t know what will happen to the S&P, but we can be relatively certain the prices for gold and silver will rally substantially as all paper currencies inevitably weaken.

Sadly, most people will continue playing on the Titanic financial system and believe it is unsinkable.

Read:          The U.S. Dollar is Going Parabolic

 Gary Christenson

The Deviant Investor

Discussion
89 Comments
    Mar 12, 2015 12:45 PM

    Another very interesting article. Thanks for posting it!

      Mar 12, 2015 12:58 PM

      Gary is a good guy.

      Thanks Shad!

    R G
    Mar 12, 2015 12:04 PM

    Thanks Gary for your charts and price comparisons. They make perfect sense to me. ————— RG

    CFS
    Mar 12, 2015 12:46 PM

    I am hearing rumors that if Greece is removed from the Euro, it will retaliate by confiscating German-owned property in Greece as war reparations for World War 2.

    This high stakes poker, folks.
    Pretty gutsy for a Greek broken flush!

      Mar 12, 2015 12:48 PM

      Source?

        CFS
        Mar 12, 2015 12:49 PM

        Friends in London, UK. Nothing published.

        Mar 12, 2015 12:50 PM

        Don’t SELL YOUR GOLD AL !

          Mar 12, 2015 12:03 PM

          Day keep Bass metaals UP SO DAY SELL SILVER and GOLD LOWER !

            CFS
            Mar 12, 2015 12:33 PM

            You’re sounding a low note, Franky?

        Mar 12, 2015 12:02 PM

        Here you go Al:

        Greece threatens to seize German property, Berlin refuses to pay WWII reparations

        http://rt.com/news/239593-germany-greece-war-reparations/

          Mar 12, 2015 12:30 PM

          Thanks,Brian

          CFS
          Mar 12, 2015 12:30 PM

          I’m not sure this quite the same threat.

          Is there a difference between “You owe us WW2 reparations and if you don’t pay up, we will sieze German assets”, and “You force us out of the Euro, and we’ll seize German assets, that you owe us for WW2 reparations”.
          Probably not much.
          As pathetic as the Greek armed forces are, the German forces were decimated after WW2 and are still substantially under NATO control, I thought.

    CFS
    Mar 12, 2015 12:10 PM

    http://news.yahoo.com/republicans-stand-iraq-letter-despite-furor-204108876.html

    It really brings out the fact that any agreement with Iran is not a treaty and thus is breakable without consequences.
    I.E. not worth the paper it is not written on.

    Stopping the embargo with Cuba unilaterally, if he does it, by Obama will have consequences.
    For several years now the US has been the biggest supplier of food stuffs to Cuba.
    The embargo has meant that Cuba has had to pay up front for this.
    If the embargo is lifted, Cuba may be given credit.
    Cuba is notorious for not paying its debts.
    But then so is the US.
    Authoritarian dictatorships suck. Both in Cuba and the US.

    CFS
    Mar 12, 2015 12:46 PM

    Hillary claims she used her private email server, because she didn’t want to carry multiple devices.
    The fact is, however, she carries both i-phone and blackberry.

    Both, I believe, are capable of having MULTIPLE email accounts. So she lied.

    Interestingly, clinton.com server used to appear to be in a government building, not in Chapaqua, but in downtown Manhattan.
    Then it was shifted to appeared to originate from Puerto Rico. Now it does not “exist.”
    Some of Clinton’s aides are also reported to have used her server.

    CFS
    Mar 12, 2015 12:50 PM

    Apple admits SIRI data is sent to third parties.

    Mar 12, 2015 12:56 PM

    Apple is the control play day looking you ! https://www.youtube.com/watch?v=KDPdahpbTc8

    Mar 12, 2015 12:10 PM
    Mar 12, 2015 12:29 PM

    Al, I don’t know what is ailing you but if it isn’t too serious drink some Moosehead beer. You will wake up the next day feeling all is right with the World. DT

    Mar 12, 2015 12:03 PM

    SPROTT AND RICK RULE ARE SHEEPLE ! TO THE RULLERS OF DIS WORLD ! DON’T BYE A IDIOTE !

      Mar 12, 2015 12:39 PM

      I don’t really think Eric Sprott or Rick Rule are sheeple. I think Rick Rule is a really intelligent man, with a great deal of industry experience, and while a little over-confident, he is someone I will always hear out and listen to his thoughts. I also like Sprott Inc. and their business model quite a bit. However, maybe I am an idiot Franky : – )

    CFS
    Mar 12, 2015 12:14 PM

    Ever thought it might be interesting to see what NSA has on yourself?

    After all they could hardly deny a FOIA request on grounds of secrecy. You surely know your phone calls and emails.

    But surprise, surprise the Devil Incarnate won’t allow it.
    He has a f’ing pen after all.

    Executive Order 13526 was issued on December 29, 2009 by United States President Barack Obama. It is the latest in a series of executive orders from US Presidents outlining how classified information should be handled. It revokes and replaces the previous Executive Orders in effect for this, which were EO 12958 and EO 13292
    NSA won’t tell you what records they keep on you, because the Devil says they don’t have to.

    The fact that this Executive Order seems in direct conflict with the Freedom of Information Act, and I thought the Constitution requires changes of law to be made by the legislature, does not seem to matter.

      Mar 12, 2015 12:09 PM

      No it does not seem to, Professor! But, so what’s new.

      Mar 13, 2015 13:08 AM

      KIMMEL on abc………..introduces OBAMA…..AS the first Kenyon born, Muslim socialist president, ………some truth is told in comedy.

        Mar 13, 2015 13:13 AM

        I think it is becoming main stream news, and a numbing factor, as people uncover the truth, so that in 20 years, it will become FACT uncovered, and the elites controllers can scoff and say ….”WELL, we told you so”….

      Mar 13, 2015 13:25 AM

      CFS,
      The reason why he can circumvent or change the constitution is because it’s the constitution of ” the US corporation “. That wouldn’t happen if they/WE repeal the act of 1871.

    Mar 13, 2015 13:47 AM

    No, you should be comparing the silver top in 2011 to the one in 1980 and get a more realistic view of when the next silver bull market will be and it is more likely to go high in the 2020s than anytime soon. The dollar breakout is only 8 months old. Look at the dollar in the early 80s and in the late 90s. The up-moves in the dollar lasted up to several years, at least 2-3. anyway.
    So many times we have seen these stupid charts with big up-oves drawn on them. DREAM ON! Bear markets never end like that. NEVER.

      Mar 13, 2015 13:52 AM

      Dave, I totally agree.

        Mar 13, 2015 13:54 AM

        we need to see the washout before any up-move. Then the process will take a decade or more.

          Mar 14, 2015 14:23 AM

          It might Bobby. I think it is possible the dollar bear market will be from around 2017 to 2024. That will be the chance for gold to go to new highs.
          The only problem would be that the dynamics could then be like 1985-1992 dollar bear market where the dollar crashed form 1985-1987 and gold put in a nice 67% rally and rolled over without going to a new high. That would be the most disappointing result for goldbugs, a bear market like the 1980-1999 one. However, the world seems to be a mess financially and things are not as good as in the 1980s. This is the end of a giant credit cycle so the risks are so much more now. So I fancy gold’s chances (and silver’s) of going to new highs once the dollar turns down. Perhaps somewhere around 2020 would be realistic.

      Mar 13, 2015 13:25 AM

      Don’t think so guys. Gold didn’t reach nearly the same levels in 2011 that it reached in 1980 in real terms (relative to debt; the Dow; housing; wages; money supply; etc). There is no way that 2011 was the secular top, but it bodes very well for the sector that so few understand that. The gold bull hasn’t even started…
      http://news.goldseek.com/GoldSeek/1426255380.php

        Mar 13, 2015 13:41 AM

        We are speaking of silver there Mattieboy!

          Mar 13, 2015 13:48 AM

          And?

    Mar 13, 2015 13:24 AM

    You want to hear a crazy thought? It just occurred to me that if the Euro actually broke up and all those heavily indebted countries like Italy, France, Belgium, Spain, Portugal, Greece etc were to go back to their own currencies that the entire Euro zone would explode in a hyperinflationary fireball. Nuts eh? It would not be Germany this time but instead virtually all the other countries living with unsustainable and unrepayable debt. Maybe that is how it will all conclude if the likes of Grillo, LePenne, Tsipras and the other rising political leaders get their way and actually do break with the Union and return to the old currencies. Just something to think about.

    Mar 13, 2015 13:32 AM

    Interesting to watch sugar as it plummets back towards the 2010 low of 10 dollars. But will it bounce or will it fall deeper yet. This is getting interesting. Secondly, crude is just a dollar away from support near 45 and that one will also be telling depending on what it does. Is oil telling us the dollar has topped?

    Mar 13, 2015 13:55 AM

    Now, the third point I want to make this morning is this: ….. please go and take a look at the 30 year bond on a daily chart. While you are there you might also look at the 10 year note too. The thing to notice is that this morning they are both looking like lower highs are being confirmed thus telling us bonds are in decline. Three lower lows on a channel trending down and three lower highs. Anyone can spot this easily. There is a growing belief that the Fed is about to announce its first rate hike in many years and investors are responding by anticipating the move. THAT’s what this is about. The trend is now down at least until the next FOMC on the 18th / 19th of March so careful with the long bets is my motto for today no matter how insistant some are that the Fed will NEVER raise rates. The Fed in fact has a long history of hiking into downturns and recessions and this could also trigger a market sell-off so be on your toes mates.

      Mar 13, 2015 13:24 PM

      Well, I would be highly surprised if the Fed announced on the 18-9th that they were going to raise rates that soon. If they do raise rates 25 or 50 points, it would likely be June or September. Yep…..good ole September.

    Mar 13, 2015 13:23 AM

    Will- fool- insight……….

      Mar 13, 2015 13:29 AM

      +1 J… lol

      Mar 13, 2015 13:33 AM

      A fool and his money are soon parted…………
      the beginning of understanding is wisdom…….
      the debtor is a slave to the lender…………….
      go and own no man…………………………….
      ever heard of no counter part risk……………..
      neither a lender be, ………………………….
      My people are destroyed by the lack of wisdom……he,he

    Mar 13, 2015 13:25 AM

    you are correct bird

      Mar 13, 2015 13:03 AM

      I was momentarily but it has now gone green. We can only watch at this point to see if it does indeed reverse down and confirm a lower high.

    Mar 13, 2015 13:27 AM

    If you consider US $ good, you have to say gold is better. Just look at the 43 years gold price comparing to US dollar since gold since 1971 gold window closed. From $35 to 1155 is 33 times increase!!! It is shocking.

      Mar 13, 2015 13:45 AM

      I read yesterday……….The super wealthy…that pass WEALTH DOWN THUR GENERATIONS…..LIKE 200 -300 YEAR………have this formula for passing the wealth down to the next…
      1/3,1/3,1/3………………..1/3 LAND, 1/3 ART, and 1/3 GOLD.

        Mar 13, 2015 13:48 AM

        it went on to say…..All , stock and bond…have RISK, GOLD has no RISK…long term.

        Mar 13, 2015 13:54 AM

        Jewish has tradition to save by buying gold. All Jewish do it, rich or poor. Unless we feel Jewish are stupid, we cannot say gold is fool’s gold.

          Mar 13, 2015 13:04 AM

          Correct, Lawrence. The cattle class is made of fools. Their comfort and confidence comes from what’s familiar to them and what the rest of the herd thinks.

        Mar 13, 2015 13:56 AM

        Hard to buy real good art but the other two are great. It is stupid to save paper cash.

          Mar 13, 2015 13:02 AM

          ART….is in the eye of the beholder…….The majority of wealthy people have art, it is status.

          Mar 13, 2015 13:03 AM

          you have to have art ,,,to be part of the club.

          Mar 13, 2015 13:01 AM

          That is why I cannot in the club. I have some art but nothing worth a lot. Only valauble ones are those painted by my son

        Mar 13, 2015 13:20 PM

        That sounds like a good generational wealth formula J….the long.

      Mar 13, 2015 13:00 AM

      Lawrence…….33 times shocking to SOME……..not the LONG………..he,he.