The above chart shows that silver, which has doubled in price from a few months ago, remains inexpensive compared to the price of the S&P 500 Index.
OVER-BOUGHT AND OVER-SOLD?
Average the (14 period) monthly, weekly, and daily RSI (relative strength index) to create a mixed long and short-term indicator of over-bought (OB) and over-sold (OS) conditions. An OB market can become more OB, so tops are likely but not guaranteed. Tesla is an OB stock that has not yet corrected or crashed.
The RSI ranges between 0 and 100. OB is considered 70 or higher. OS is considered 30 or lower. It is a good indicator, but it’s not magic. Form your own conclusions.
Market Mixed 14 period RSI (8/28/2020)
NASDAQ 100 76.8
S&P 500 71.0
Goldman Index 57.7
- Tesla stock entered the stratosphere weeks ago. Its market cap exceeds the sum of GM, Ford, Chrysler, Toyota, and several others. Look out below, but we don’t know when…
- Apple is OB and could fall any time. Nothing new here.
- The NASDAQ 100 Index is OB. The NASDAQ flies higher and falls harder than the S&P. Remember that after the 2000 crash, the NASDAQ 100 fell over 80% from high to low.
- The S&P 500 Index is OB. A correction could begin here, but the Fed and other central banks are pouring trillions of dollars into the market to support stocks.
- Silver is OB, like gold. Prices refuse to collapse, but a correction is possible. Long term, $100 or $200 silver are likely.
- Gold is OB. The QE4ever dollars that boost Apple and Tesla also support gold and silver. I expect a correction, but who knows. Long-term, $10,000 gold is coming.
- The Goldman Sachs Commodity Index is neutral. Commodity prices are rising.
- Silver prices compared to the S&P 500 Index are low and inexpensive. The next major move in that ratio will probably be a correction higher as silver rallies.
- Stocks might hold up for a while longer, but they look dangerous, even with Fed support.
- If the Fed could prevent crashes, what happened in 1987, 2000, 2008, and early 2020?
- Expect much larger gold and silver prices toward the end of 2020 and into 2021.
Buy gold and silver to protect your purchasing power from the predatory actions of non-elected bureaucrats who seek inflation, higher prices, devalued dollars, and more power over individuals.
Vote with your feet, by trusting precious metals, and by expressing skepticism regarding current narratives and election year promises.
Miles Franklin is a trusted dealer in gold and silver, but not Tesla stock. Call them at 1-800-822-8080.