Gold and Silver – Back Story v Charts; Charts Are Superior.

By Michael Noonan
http://edgetraderplus.com

Saturday  19 October 2013

Almost everybody wants a back story, some information to explain what is going on with
gold and silver, mostly looking for some kind of psychological calm as prices decline, or
a ray of hope to reinforce why price may reach the sun and the moon.  Is there anything
that has not been presented, repackaged and represented that has not already been more
than fully covered to justify much higher price levels?  Have any of them achieved what
was promised?

Instead of exceptionally higher prices, as a counter to the exceptionally dire reports of
the demise of central banks, their [lack of] gold holdings, the precipitously low COMEX
and LBMA inventories for the metals, the inability to make good on deliveries over the
past few months, etc, etc, prices continue to probe the recent lower levels without any
signs of a turnaround.  Guess those valid “fundamental” reasons were insufficient to lift
prices up.

What about the state of the United States?  It’s broke, and broken.  The acknowledged
national debt is around $17 trillion, or about $53,000 for every man woman and child in
the country.  The real debt is more like $125 trillion, and that equates to about $360,000
that every man, woman, and child is responsible for paying.  Are you willing to pay that
amount, the one your government has run up for you with the prodding of the NWO’s
Federal Reserve central bank?  Is the world’s “richest” [richest in terms of debt] country
that has not been paying its bills enough of an impetus to send gold and silver higher?

Apparently not.

What about King Draghi?  As bad a shape as the US is in, Europe is worse. Last week, he
just informed the world that steps would be needed to “recapitalize” the banks.  Does
anyone not stop and demand accountability for the previous capital the banks lost?  And
why are bank depositors responsible for bailing-outs through bail-ins?  Why aren’t the
bankers making up for their own losses, or going out of business like an non-banking
entity would do when faced with insurmountable losses?

Back to Draghi.  He and his other unelected band of thieves that form the EU in Brussels
have decided:

“The effectiveness of this exercise will depend on the availability of necessary arrangements for recapitalizing banks … including through the provision of a public backstop,” Mario Draghi explained on Friday to set the mood for today’s meetings. “These arrangements must be in place before we conclude our assessment.”

The “assessment” under consideration is just how severely broke and illiquid the already
failed banks are and how much will be required, how did he express it?  Yes,  ”through the provision of a public backstop.”  Be prepared for more financial rape and pillaging, for it
is sure to come.

The most reliable current story is found in the charts.  Why is this so?  Like we say, do not
listen to what people are saying about the markets, listen to what the markets are saying
about the people.

The higher the time frame, the more controlling the information because it takes a lot
more effort over time to evince a change.  Price has been put into a context between the
current important current levels of resistance and support.  Once price broke the 1525
area, last April, that support became resistance, and the market announced to the world
that sellers were now in total control.

The overall trend, since 2008 and earlier, is up but weakened on the monthly time frame.
April is when the central bank/JP Morgan moved to force price lower.  Artificially or just
plain manipulation does not matter, for the effort succeeded, despite all the positive news,
you know, those things people were saying about the market.  The market had a different
message.

In May, on the same level of high volume as the previous month, the bar narrowed
significantly.  Buyers were meeting the effort of sellers, which is why that bar did not
extend lower.  However, the fact that the location of the bar was at the lower half of the
April range, and the close was well under April’s, told us that buyers won that battle, but
the war was not over, as the next month clearly showed.

June saw another central bank-sponsored “intervention” to suppress the price of gold, [in
order to keep the fiat Federal Reserve Note propped up].  Price closed poorly on another
wide range down bar.  The decline continues.

Well, not in July, [4th bar from right].  Not only was there no further downside, the exact
opposite of reasonable expectations, the volume increased and price closed near the high.
Clearly, buyers won another battle.  The terms “battle” and within a “war” are apt, because
what we are seeing now is a struggle between buyers and sellers which is in contrast to
sellers having previously been in total control.

As was said, it takes more effort and time to effect a change on this higher time frame,
and what you see, since the June decline, are overlapping bars within the June range,
a sign of struggle between the forces of supply and demand.

The August rally, 3rd bar from right, had a decrease in volume which meant less buyers,
even though price closed higher, again, but stopped at the June range high, evidence of
ongoing resistance.  However, we may be seeing a subtle change in behavior.  The last
two bars have narrowed while in a relatively slight decline mode, October still in progress.

While August showed a decrease in volume and the rally stopped at the June high, the last
two months’ total volume is much great than that of August, yet two months of effort to get
price lower has not worked.  Recall the most recent assault on gold, a 2,000,000 ounce sell
order at one time.  It does not even register on the chart, unlike the similar blatant sells in
April and June.

The monthly chart is telling us the downside momentum has lost momentum.  This can
change in the next few days or few weeks, but the future has not yet happened, so we can
only deal with what is known, at this point in time.  With this context, we look to the lower
weekly and daily time frames to see if a clearer message emerges.

GCZ M 19 Oct 13

The lines connecting the recent swing highs and lows shows how the momentum has
slowed.  The net decline at “D” is far less than the decline from “A” to “B.”  Notice the two
bars leading into the lows at “B” and “D,” both wide range with little to no overlap.   The
current decline into “F,” [? = may or may not be over], has overlapping bars, the opposite
of previous lows and in keeping with the small sign of potential change evidenced on the
monthly chart.  What is lacking in both time frames is confirmation of an actual change.

GC W 19 Oct 13

The comments on the daily shows the interchange of past behavior being somewhat
determinative of future behavior.  The development on the left side of the chart, A, B, C, D,
gave reason for why the recent activity unfolded as it did, on the right side of the chart.

After the failed probe lower, [4th bar from right], an indication that sellers failed to show
up when it was opportune to drive price lower, [like a 2 million oz order was not enough],
we get confirmation of sellers being AWOL with Friday’s strong rally, strong close, and
increased volume.  Just as one swallow does not a summer make, one bar, especially on
this lower time frame, does not a bull market make, but it is a sign of change.

The rally did stop at/below two small failed rally highs.  What will be key is how price
corrects Thursday’s rally bar.  Maybe we should have labeled it D/S, Demand over Supply,
for it is warranted by that show of activity.  If it is real, we should see smaller bars and less
volume on any retest of the bar, classically.  If volume does increase, the largest increase
should occur at/near the low of the correction.  Time will tell.

GCZ D 19 Oct 13

The analysis for gold facilitates an easier read for silver, under similar circumstances, but
silver still showing a greater propensity to hold its recent lows.  The lows can still give way,
but sellers will have to show up with greater sway that is being evidenced by buyers.

The level of support is at a stronger support level than for gold.  Keep in mind, however,
the fact that gold has not declined as far into a past support range makes a greater bullish
statement for that very reason.

The August rally, [3rd bar from right], is being retested by smaller ranges, what one would
expect to see if a retest of a recent rally bar is to successfully hold.  October has not yet
finished, so the reservation of anything can happen remains in play, for the upside as well
as the downside.
SI M 19 Oct 13

We deemed the breakout gap important when it happened, and while the gap was filled,
one can count the fill in minutes before price rallied back higher, so it remains significant.

The clustering of closes is usually consolidation before price resumes the previous trend,
OR it can signify a turnaround.  The tight closes and overlapping of bars for the past six
weeks lets us know of the balance, [still viewed as a battle with no declared winner, yet],
and from balance comes unbalance.  The farther price moves along the RHS [Right Hand
Side] of any trading range, the closer is the resolve.  The fact that last week was a KR one,
[Key Reversal], and the highest close of the past six weeks, speaks to buyers attempting to
wrest control from sellers.

SI W 19 Oct 13

Previously, we said price needs to get above 22 and demonstrate an ability to hold.  It is
close, and you can also see 22.50 creates the same agenda of proof.  The daily trend has
weakened, from a sellers perspective.  The burden of proof for change remain with buyers.

Expect to always see evidence of change in the charts, first.  On that you can rely.

Continue, maybe even with a far greater sense of urgency, to buy and personally hold,
both physical metals, gold and silver.  No one can accurately measure when central
bankers will lose total control, but the signs are building.  When the ultimate pressure is
too great to contain, price will explode upside, leaving behind those who thought they were
smart enough to get a better price or “see” more evidence of the obvious.

SIZ D 19 Oct 13

 

– See more at: http://edgetraderplus.com/market-commentaries/gold-and-silver-back-story-v-charts-charts-are-superior#sthash.JVP24eO8.dpuf

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