Best of the Week
Most Popular
1.BrExit House Prices Crash, Flat or Rally? UK Housing Market Affordability Crisis - Nadeem_Walayat
2.Stocks Bull Market Climbs Wall of Worry, Bubble? When Will it End? - Nadeem_Walayat
3.Gold Price Is Now On Its Way To All-Time Highs - Hubert_Moolman
4.Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - Harry_Dent
5.UK interest Rate PANIC CUT! As Banks Prepare to Steal Customer Deposits - Nadeem_Walayat
6.Gold and Silver Bull Phase 1 : Final Impulse Dead Ahead - Plunger
7.Central Bankers Fighting An Unprecedented Global Economic Slowdown - Gordon_T_Long
8.Putin Hacking Hillary for Trump, Russia's Manchurian Candidate? - Nadeem_Walayat
9.Stock Market Insiders Are Secretly Selling, Cycle Top Next Month - Chris_Vermeulen
10.Gold Sector - Is it time to Back up the Truck? – Mortgage the Farm? - Peter_Degraaf
Free Silver
Last 7 days
Post Yellen = Market Confusion - 28th Aug 16
Theresa May Instructs Police, NHS Gp's, Public Sector To Stop Racial Discrimination in Service Delivery - 28th Aug 16
Ignore Yellen and Buy the Dip in Precious Metals - 27th Aug 16
SPX Downtrend Should be Underway - 27th Aug 16
Unraveling the Secular Economic Stagnation Story - 27th Aug 16
The Precious Metals Sector and the Fed. . . - 27th Aug 16
Stock Market - All Is Calm, All Is Not Right - 27th Aug 16
Gold Junior Stocks Q2 2016 Fundamentals - 26th Aug 16
Buy Gold’s August Dip? Gold’s Monthly Sweet Spot In September - 26th Aug 16
The IMF’s Internal Audit Reveals Its Incompetence and Massive Rule Breaking - 26th Aug 16
Commodities Are the Best Bargain Now—Here’s What to Buy - 26th Aug 16
Why I Left Canada and Became A Citizen of the Dominican Republic - 26th Aug 16
The GLD vs GOLD - 26th Aug 16
Can Stocks Survive Without Stimulus? - 25th Aug 16
Why Putin Might Be on His Way Out - 25th Aug 16
Bond Guru Gary Shilling - The Bond Market Rally of a Lifetime - 25th Aug 16
A Zombie Financial System, Black Swans and a Gold Share Correction - 25th Aug 16
OPEC’s Output Freeze: What Has Changed Since Doha? - 25th Aug 16
Merkel Prepares For a Deliberate Crisis While White House Plans For a Disastrous Succession - 24th Aug 16
Suspicious Reversal in Gold Price - 23rd Aug 16
If Trump Can’t Pull Off a Victory, Expect a Civil War - 23rd Aug 16
Ceding ICANN and Internet Control to Globalists - 23rd Aug 16
How to Spot an Oversold Stock Market - 23rd Aug 16
Gerald Celente Sees Worst Market Crash, New Military Conflict, Gold Spike to $2,000/oz - 23rd Aug 16
EU Olympics Medals Table Propaganda Includes BrExit Britain - 22nd Aug 16
BrExit Win's Britain Olympics Success Freedom Dividend, Economy Next - 22nd Aug 16
Stock Market Top Forming, but Slowly - 22nd Aug 16
(Really) Alternative Banking Systems - 22nd Aug 16
Vauxhall Zafira Fires - Second Recall Issued - Inspection Before Bursting into Flames? - 21st Aug 16
Will the Stock Market Bubble Pop Regardless if the FED Never Raises Rates? - 21st Aug 16
US Government Spending - 3 Big Stories Not Being Covered – Part III - 21st Aug 16
Silver Analysis - 20th Aug 16
SPX New Highs, Correction Next? - 20th Aug 16
Housing Bubble - The Marginal Buyer Holds The Pin That Pops Every Asset Bubble - 20th Aug 16
Gold Miners Q2 2016 Fundamentals - 19th Aug 16
Which Price Ratio Matters Most in a Fiat Ponzi? - 19th Aug 16
Big Policies, Bigger Failures - 19th Aug 16
Higher Crude Oil’s Prices and USD/CAD - 19th Aug 16
Here’s Why You Should Look for Dividend Stocks and How - 19th Aug 16
Deglobalization Already Underway — 4 Technologies That Will Speed It Up - 19th Aug 16
These 6 Charts Show Why the Average American Is Fed Up - 18th Aug 16
SPX Easing Lower - 18th Aug 16
Low / Negative Interst Rate’s Legacy - 18th Aug 16
The 45th Anniversary of The Most Destructive Event In Modern Monetary History - 18th Aug 16
USDU - An Important Perspective on the US Dollar - 17th Aug 16
SPX Completes Wave 1 Decline - 17th Aug 16
How to Quickly Spot Common Fibonacci Ratios on a Chart - 17th Aug 16
When Does a Forecast Become a Trade? - 17th Aug 16
Kondratiev Wave - The Financial Winter Is Nearing! - 17th Aug 16
Learn "The 4 Best Elliott Waves to Trade -- and How to Trade Them" - 16th Aug 16
Stock Market Bears Turning Bullish At New All Time Highs - Time to Get Worried? - 15th Aug 16
Job Seekers Sacrificed to the Inflation Gods - 15th Aug 16
A Look At Commodities and Financial Markets Trading Week Ahead - 15th Aug 16
Stock Market New Top Forming? - 15th Aug 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

How to Trade Elliott Waves

Gold And Silver Very Under-Rated Opposing Forces Into 2013

Commodities / Gold and Silver 2013 Dec 31, 2012 - 10:13 AM GMT

By: Michael_Noonan

Commodities

It is impossible not to read some source, informed or otherwise, touting the “fact” that the price of gold and silver will be  [insert whatever amount you wish, here], “in the coming months”, or safer, “in the next year or two,” etc. Yet, the market does not echo those almost universally held sentiments.

Why not?

Because that is exactly what they are, sentiments.  When it comes to sentiments or opinions, regardless of how close to source or how well reasoned, the market does not care.  One of the better “resolutions” one can make going into 2013 and beyond it to follow the market’s lead, stop trying to lead it, waiting for it to catch up to your trading acumen.


But what about the shortages in silver production v demand?  What about the overly re-re-hypothecated gold leases from central banks that cannot possibly cover actual demands for gold?  What about the possibility that all of Germany’s [and other countries?] gold is gone and so much of it is being transferred to the East?  What about [insert whatever issue you wish discussed, here]?

Yes, well what about it!  That information is and has been known for quite some time, so it is already “priced into the market.”  It does not matter how well-informed your source[s] is.  It does not matter how accurate the figures are for available supply  v demand.  The market is all knowing, and it is ahead of you, and it is responding to forces about which you are not aware, hidden deals, as an example.

It  does not matter how much gold there is, or isn’t.  It does not matter where the gold is, or isn’t, the market is telling you what you all you need to know.

Everything finds its way into the market, and if you would just ignore all else and follow the ultimate known fact, that being the current price of anything, then you have the answer right in front of you.  The problem is, too many cannot reconcile the current price of gold and silver relative to their expectations.  [From the buy side.]

John Keats would have made an excellent technical analyst, for he excelled at drawing out the paradoxical nature of things, leaving us with a few of his most famous lines that apply to the above:

‘Beauty is Truth, Truth Beauty’ — that is all Ye know of earth, and all ye need to know. From ‘Ode On A Grecian Urn’

This is how we see charts.  Everything you need to know is contained within them because they are based on truth.  What truth?  The ultimate decisions to buy or sell made by the collective forces of the marketplace. Anything else that does not get translated directly in the market is simply an opinion, of no factual value because the market only recognizes actual transactions.

That is the truth and the beauty of the markets.  They provide you factual commitments, unadorned by uncommitted interpretive opinions.  That is all ye need to know on earth.  Learn to listen to what the market is saying, and not what others are saying about the market.

This is not to say that markets cannot be manipulated and factors grossly distorted, for even if they are, those manipulation and distortions are what is reflected in current princes, like it or not.

Most who speculate in the markets, to the extent they rely upon charts, look at  daily or intra day time frames.  Smart money, what we call the “controlling forces” of a market, use higher time frames, for they are not concerned with day-to-day activity.  Their positions and influence necessitate that they move over a more extended period of time, and one can get a greater sense of their intent from the higher time frames.

When we talk about collective forces of the marketplace, it includes the most well-informed insiders, central bankers, the largest dealers, with availability to information and research outsiders may never know or learn about, until after the fact, all the way down to investors, fundamentalists, speculators, even the ephemeral day-traders.  What they all have in common is that they are the market, once they make a decision to execute a buy/sell  that influences and determines the price at any given point in time.  Those executed decisions, regardless of how well or ill-informed,  become market facts that comprise  fluctuations, and they show up as the high, low, and close on a chart for any chosen time frame.

Despite the relentless calls for gold and silver “taking off,” which they have not, of late, the elephants in the room, governments, central bankers and major brokers, plus exchanges, have been vastly under-rated in their ability to keep the prices of gold and silver suppressed as much as they have. They are not about to throw in the towel and give up their Wizard of Oz controls.  Ultimately, they are doomed to fail, but when does “ultimately” kick in, and to what degree of damage before it does, remains unknown?

One thing you should know about the opposition, in whatever form it is in, ultimately:  It will not stop.  It will not quit.  It will destroy everything that gets into its way in order to suit its needs.

The charts have been saying as much.  The annual and quarterly charts had to be scanned because most services do not provide any beyond the monthly time frame.  The comments on the charts may be hard to read, so we will put them in italics to make it easier.

If gold and silver are going to go to such high price levels, why are charts saying the opposite?  This end of year’s gold closing, actually Monday, is about mid-range the bar, a draw between the forces of supply and demand, but the range was the smallest in several years.  Neither buyers nor sellers were able to extend the range further in either direction.

Chart comments:

This year’s close is higher, but the entire range is within last year’s.  The bar is one of the smallest annual ranges in five years, and the close is just under the half-bar area.  The conclusion would be neutral to just a touch negative.  The quarterly chart may reveal more.

GCA A 30 Dec 12

The arrow in the chart points to the smallest range in Qtr 2, 2012.  It was an attempt to go lower that failed.  The fact, and keep in mind the focus is on the indisputable facts contained in the charts, that price did not go lower speaks to strong support at that level.

Another observable fact is how the last 5 quarterly bars have been overlapping. Anytime you see bars overlapping, it show a struggle between buyers and sellers trying to exert control.  The poor end of the year close for gold says buyers have not been keeping an upper hand, and sellers are maintaining relentless pressure.

Chart comments:

Comments under the trading range cover expectations going into 2013.  The one positive Qtr was 2nd, 2012, when price tried to go lower but held, and the close was mid-range the bar, a win for buyers with price higher ever since.

Last 5 Qtrs are within range of 3rd Qtr 2011, and the last 4 Qtrs within 4th Q 2011.

Low-end close for 2012 says sellers in control.  Expect more price range activity going into 2013+.

Pie-in-the-sky prices are not in the picture, for now.  A retest of 1520+ area possible.

GCA Q 30 Dec 12

Back to our normal chart.  If we view the rally in August as a breakout from a right triangle pattern, it is taking now 3 months to correct a 2 month rally, and the bars correcting are smaller, telling us there is no downward ease of movement. This suggests sellers are meeting more resistance, but still prevailing.

2013 will be an interesting years, and its start could be signaling more of what we have seen for the past 15 months.  While accumulation of the physical metal is strongly recommended, trading in the paper futures will have to be much more select, buying breaks, not breakouts.

GCA M 30 Dec 12

There is no question that silver remains relatively weaker to gold, as the charts clearly show.  Some think silver may outperform gold, moving forward, and it has, on occasion. That is an opinion that may or may not hold true.  Buying and personally holding the physical is strongly recommended, as was stated for gold.  For now, silver has a very large supply factor hanging over future progress, based upon the closes of 2011 and 2012.

Chart comments:

2011 silver close was bottom-end on very high volume.  This single bar shouts out sellers were totally in control, and everything above the close is where buyers have to overcome seller’s efforts, and that is a pretty large area to regain.

In 2012, the range attempt to go higher was small, and another low end close shows how buyers are failing to overcome sellers, a problem for longs.

SIA A 30 Dec 12

The more detailed Qtrly chart has one positive aspect:  26.20+ area held like a rock. We could see yet another test and possible new low.  That is not a prediction but a point of view not to be dismissed for the year ahead.  As with gold, the overlapping of bars shows the struggle between the forces of sellers and buyers, the edge with sellers.

Chart comments:

The Qtrly chart is more of a mixed message.  There is obviously strong support at the 26 area, and bullish spacing remains a positive. [Bullish spacing is where the current swing low is above the last swing high, indicating buyers not willing to wait to see of the last swing high will be retested.  It reflects a sense of urgency to buy.]  The close at the end of this year says price should make a lower low, at least nominally, [Compared to last Qtr low only].  There are times when a low end close can lead to a reversal.  Not sure that is the case, here. [Just another possibility of which to be aware.]

The fact that silver cannot get and stay above 35 says how much work there is to overcome sellers.  2013 should be more of the same, at least for the first half.

SIA Q 30 Dec 12

As with gold, an unusually large bar most often foretells of a protracted trading range to follow.  Not only did that hold true for silver, the trading range was all under a 50% retracement area, telling us how rally attempts have been weak, and also a signal from the market that $50, $100, $250 silver is not on the immediate horizon.

It does not take a crystal ball, nor a Seer to look ahead into 2013 and know, almost beyond a doubt that silver has its work cut out for the next several months, and one should be very careful when trading futures, while still buying the physical with impunity.

We did not need to know of any “story” behind either precious metal.  The charts are all-knowing, and they present everything known about the price, sans any opinion[s]. Just deal with the facts and plan accordingly.  Trust the markets.  They never lie.

SIA M 30 Dec 12

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2012 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife