Gold And Silver – For Now, Charts Proving More Reliable Than Fundamentals

Submitted bMichael Noonan

Saturday  5 July 2014

Pick your poison for knowing what news is impacting gold and silver these days.  Both
have been in year-long TRs, [Trading Range], within a broader down trend context.  That
may be in the process of changing, but change takes time to turn a trend.

From our limited point of view, the list of events that are impacting the suppression of
gold and silver all revolve around the NWO [self] destruction of the petrodollar, that fiat
Federal Reserve Note, commonly [mis]called the “dollar,” and soon to lose its status as the
world’s reserve currency.

Almost all the events in the news, these days, reflect the symptoms of Western countries
to hang on to their dwindling-but-still-powerful control over their Ponzi-scheme central
banking system, all totally insolvent, a “secret” they keep from everyone else.  Until that
fully unravels, gold and silver will remain on the defensive.

Instead of trying to “connect-the-dots” from negative news all over the world, the most
important of which is kept undercover, a read of how the markets are reflecting the activity
of all participants shows the indecision of when the elites will lose control of the fiat
dollar and crash the United States economy, in the process.

If you are not buying physical gold and silver, you are playing a dangerous game of
financial Russian roulette.  Do not be concerned about price.  The take-over of most
markets by central planners has destroyed their “free-choice” nature.  It is impossible
to price anything from a rational perspective.  The two markets that have been “immune”
to inflation-adjusted pricing are gold and silver, and that is because the elites will not
let them compete as an alternative to their fiendish fiat control and resulting theft of
everyone’s financial property.

This is going to end badly, and events, while still distorted, are reaching an inevitable
end to the game played out by the elites.  The Western world continues to devolve into
a downward spiral of financial despair.   Corruption is deeply embedded in every Western
nation.  All governmental decisions are being made to stave off their inevitable failure,
and it is all at the expense of those not in government, the people

If you know nothing else, know this:  everything held in banks, pensions, retirement
accounts are all at risk of being confiscated and/or turned into worthless government
bonds in exchange.  If anyone still believes holding paper assets makes sense, over the
accumulation of time-proven hard assets, that game is almost over.

The seeming indecision of events and where they are headed, near term, is reflected in the
charts.  For those whose eyes glaze over at the prospects of reading a chart, it is in your
best interest to view them from a common sense perspective.  For those who have read
our articles for any length of time, you know we place primary consideration on looking
at developing market activity, as best seen in a chart.

What is developing market activity?  When the collective of all decision-makers, from the
most informed to the least informed, from the well-heeled to those barely getting by, and
everyone in between makes a decision to buy or sell in any market, that decision is then
recorded as to price and volume, to reflect the numbers of decisions made at any given
price level on any given day.  The results of these decisions is what creates a high, low, and
closing price for any selected time period.  This is what creates a chart.

What is important to understand is that the collective decision-making process takes in
those with the most access to information, those professionals who have the best and most
reliable facts and data in their research capabilities.  This smaller collective is what moves
any market directionally.  It is what creates a trend.

In addition to the above, there are myriad other participants: those who look at news and
events, those who consider fundamentals, those who employ conventional technical tools,
those who think they can outguess the market, pick tops and bottoms, those who are short
term traders, long-term traders, day traders, and those who may use any combination of
everything available, all with a single objective:  Placing their bet and hoping to win.
Smart money does not rely on hope.  They have specific rules for engagement, and if those
rules are not met, they do not engage.

Developing market activity is the way in which to read what all of the best minds and those
with the best capitalization behind them are doing.  They will not tell you what they are
doing, but you can “see” what they are doing once they make a decision to buy or sell in the
market.  You can “see” where/when they bought/sold and at what price, [volume].  All one
need to is follow the [visible] trail left behind by reading price and volume.

Once you begin to [appreciate and] understand that these observations are “messages”
from the market, as a result of smart money decision-makers, you are now looking at the
most current and most reliable information available for anyone and everyone to “see!”
Sometimes, the best place to hide something is under the brightest light.  People do not
pay attention to it.  Who would believe the best available information to be right under
their nose, [eyes]?

The above is basic but extremely important to grasp in order to understand the important
information that can be gleaned from a chart.  Almost all of the known fundamentals for
gold and silver say the price for both should be higher.  How much higher is subjective, but
the fact that both should be priced higher, for inflation-adjustment alone, says higher.  Yet,
we all know gold and silver remain at recent lows.  This tells you there are other influences
at work.  There are these seemingly exogenous forces that remain unseen that are
impacting the market.

The annual and quarterly prices have been updated onto this monthly chart.  Not very
many traders/investors look at a monthly charts.  Hardly anyone looks at an annual or
quarterly chart.  That they cannot be used for timing is probably the best reason, but rest
assured, smart money uses them in ways few can understand.

When you look at the annual activity, the decline from the 2011 highs, while relatively
large, looks like a correction in an up market, and it is.  When you take a look at the
quarterly, with more detail, the current lows are still well above the last swing high, at
the beginning of that chart.  This would be an example of bullish spacing on this larger,
and more controlling time frame.

What is bullish spacing?  It occurs when the last swing low, just under 1200 on the Qtrly
chart, stays above the last swing high, just above 1,000 at the beginning.  This says that
buyers are willing to buy, [and support], prices without waiting to see a retest of the last
swing high.  Here you have an important piece of market information, a message from
the market, that buyers are willing to buy in without waiting, a bullish indication in the
overall pricing scheme.

Why is this important to know on these rarely looked at, [by the public], larger time
frames?  Because larger time frames are more controlling over smaller time frames, and
it takes more time and effort to change the pattern of a larger time frame.  Where do the
bulk of traders spend their time?  Looking at daily and intra day charts, the smallest time
frames and easiest to change.  These time frames also are where most people lose money
in their decision-making.

Some things never change, and people’s buying/selling patterns never do.  Ever wonder
why?

Despite people’s views on gold and silver being in a down trend, from a larger perspective,
both are in up trends, and that is what the overall news is saying and what everyone
senses: gold and silver should be higher.  Well, they are.  It just depends on your frame
of reference.  From a larger time frame, gold and silver are working higher.  The problem
is people are looking through the wrong prism and making the wrong decisions, as a
consequence.

Most of the activity of the last several quarters has been near the lower end of the wide
range bar down, 4th bar from the end.  Even though the broader picture is bullish, the
current last few quarters are under 50% of the range of the 4th bar, and even lower when
using the range from the all-time high to the recent low.  Conclusion?  Price has not
demonstrated an ability to rally back higher, yet.  We see that more clearly on the lower
time frames.

The monthly chart shows the price in a down trend, and most recently, trading sideways.
Again, the market is sending a message, if you care enough to heed it.  The market, which
we have defined as the collective of all decision-makers, is saying, regardless of what you
read in the news, regardless of your belief that gold and silver should be higher, for
whatever reason, valid or not, the message from participants is: it ain’t ready to go higher,
at this point.

Ignore the message at your own peril.  Forget about those pundits who are saying both
PMs are ready to take off, and they draw a huge arrow point higher.  How has that been
working out?  If you apply a little bit of common sense, and you look at these charts, can
you draw any other conclusion[s]?

Always remember:  Markets never lie.

GC A, Q, M 5 Jul 14

The weekly chart provides an example of the opposite of the bullish spacing discussed
above: bearish spacing.  It is when the most current swing rally high fails to reach the last
swing low, creating a gap between them.  Here, bears are confident enough that the trend
will stay down that they do not need to wait and see how the last swing low will be retested
before selling.  It is a message from the market to expect lower prices.

You can also expect future resistance when price does eventually rally to that level.  These
are pieces of the market puzzle that fall into place when you let the market tell you what
to expect moving forward.  This also presents a conflict between the higher time frames
and the lower ones.  The lower ones are used more for timing.  If you are trying to time a
long position, the market is telling you to wait, for paper futures.

Comments on the charts need not be repeated.  What they do suggest is a lack of clarity
for continuation higher next week, or not.  This is why we state a note of caution should
be observed.  The short-term momentum is up, granted, but within downward pressure
that is still apparent, so one has to respect this cautious tone.

GC W 5 Jul 14

Getting into finer details of the market’s information, what is important to observe is
HOW price responds at resistance.  So far, it has not backed away like it did in mid-April
and near the end of May.  What this rally has going for it is the D/S bar, [Demand
overcoming Supply], a wide range rally and strong close on very high volume, [effort].
We could be seeing a change of behavior where buyers are taking control from sellers.
This cannot be known for certain until confirming evidence shows up.

It is possible that Thursday’s wide range bar may contain price activity over the next
several TDs, [Trading Days].  If so, buyers could be absorbing the efforts of sellers in
preparation to go higher.  If price sells off, next week, how it sells off will matter.  If
the ranges are small and volume is lower, that will indicate a lessening of selling and
buyers can step back in and take price higher and break overhead resistance.

If a sell-off occurs next week on wider ranges down and increased volume, buyers near
last week’s rally will be trapped, depending on how low, if at all, price declines.  There
could be a high volume washout to the downside, similar to Thursday, or that may have
been a washout.  We cannot know for certain until the market confirms the behavior
just described.  You always want to wait for the market to confirm its most recent action
before taking new action.

GC D 5 Jul 14

Silver is showing similar characteristics to gold, as just described.  So far, on the annual
chart, the response for 2014 has been weak, relative to the decline of 2013, but anything
can happen in the next 6 months.  What is known for certain is that silver is struggling,
and possibly basing on the higher time frames.

The monthly chart is more in concert with the quarterly, in that regard.  There are
still layers of overhead resistance and bearish spacing.  Regardless of what one’s
outlook is for silver, current developing market activity is sending a message that
price is nowhere near ready to rally.

That can change next week or next month or sometime after.  We do not know what
next week, month, or longer looks like, for now.  What can be determined with a
high degree of certainty is what the chart message says “right now.”

SI A, Q, M 5 Jul 14

Amplifying the chart comments, the small ranges of the last two weeks make this a not so
clear read.  The small ranges say buyers could not extend each weekly range higher, yet
the closes are both in the upper half of each week’s range, and that says buyers were more
in control than sellers.  Because the overall trend is down, near term, the onus is on buyers
to prove change, and that appears lacking here, or at least questionable.  This is why the
note of caution is given.

Price can continue higher next week, or decline, with no argument.  That makes for very
low probability odds, either way, and reason enough to not participate until odds improve.

 

SI W 5 Jul 14

It can sometimes be difficult to divorce one’s hopes, opinions, or anticipations from
expectations, but if one wants to make money instead of being “right,” one has to go
with the information known and deal with what is.  If anyone missed the recent rally,
and we certainly did, you can see that there will be many opportunities ahead because
of all the resistance waiting at higher price levels.

Do not be distracted by the “noise,” [news/events].  Let the market be your guide.

We had a minor computer time out, last week, and some sites did not receive our article.
You can read it, here, if interested:  Gold and Silver – No Defined Bottom

SI D 5 Jul 14

 http://edgetraderplus.com/market-commentaries/gold-and-silver-for-now-charts-proving-more-reliable-than-fundamentals

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