USD/JPY for the past 2 months currently tracks perfectly movements of Silver/ Gold Ratios. Both USD/JPY and Silver / Gold Ratios charted point lower. Alternatively, JPY/USD tracks perfectly movements in Gold / Silver Ratios, both point higher. JPY qualifies perfectly as a hybrid currency. The Gold/Silver Ratio closed Friday at 76.16 and is approaching its 5 year highs at 80.07. The 30 day low is found at 72.47, 60 day at 72.22, 180 day at 69.32 and 1 year at 66.14. Averages from 5 – 20 year lows are found at 32.00 and last seen in 2009 and 1997 /1998. To offer context to Gold / Silver ratio highs, the 10 and 20 year averages are found at 83.86 and 36 year highs at 100.83. Last time Gold / Silver Ratios saw its historic 14.00 lows was 1981 then it bolted 12 years later to its 100.83 highs. Historic averages since the 1600’s ranged between 14 lows to 100.83 highs. To see a Silver resurgence and gold price drop, the Gold / Silver Ratio must break 55.41.
High Gold Silver Ratios informs of the value of Gold to Silver. High Gold Silver ratios informs Gold’s high price relative to Silver, currently 1107 Gold Vs 14.00 Silver based on Friday’s close. Silver is cheap relative to Gold. A dropping Gold price is a rising Silver price as the Gold Silver Ratios ask what is the amount of Silver to buy Gold.
Silver’s cheap price further informs how Silver currencies are cheap. The Euro for example is a classic Silver currency while DXY is a Gold currency. Silver is extraordinarily cheap and probably historically undervalued but then so is the EURO. GBP is a hybrid, caught between DXY Gold and Europe’s Silver Standard.
USD/JPY. Bottom. 120.03. Range break above 121.11 and 121.68, below 120.15 and 119.59. Overbought sell point 120.90 – 121.14. Strategy. Longs above 120.64, Target 121.14.Target at 121.14 then reverse short to 120.89, at 120.90 reverse short to 120.77. Points on the way up, 120.74, 120.90, 121.07, 121.14.
Shorts below 120.63, Target 120.33. Watch for reversal here to 120.63 and higher. Points on the way down, 120.58, 120.55, 120.46, 120.38, 120.03 Bottom. Points 120.33 and 120.31 must cross higher or prices to remain above to see higher prices. Further along the curve, USD/JPY direction is higher. Higher targets include 121.24, 121.55, and 122.06.
Brian Twomey, Inside the Currency Market, btwomey.com