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Trading Lessons

Gold And Silver – Knowledge Is Not Of Value. Using It Is

Commodities / Gold and Silver 2013 Jul 13, 2013 - 10:28 AM GMT

By: Michael_Noonan

Commodities

Do markets send messages? Absolutely, and they are there for anyone and everyone to see as they develop. Most people like to read news about increased demand for gold and silver, record purchases for silver eagles, etc, etc, etc. The headlines over the past several months have teemed with such information, raising expectations, but not raising the price either of gold or silver.

More recently, there is “news” about market bottoms, eminent turnarounds, a renewal of where gold and silver can reach, [once the central bankers deplete their gold stocks; once the COMEX fails, and more etcs]. Seems like not as many are paying attention to the most reliable and obvious source of all, the market price itself.


But it’s manipulated and irrelevant. Manipulated? Without question. Irrelevant? Not so sure. If the price of gold and silver, as quoted on the New York and London exchanges is so irrelevant, then why is it still so widely used, and why is the rest of the world going along with the exchange pricing mechanism? Minds are being more manipulated than the markets.

For a while, premiums shot up, but the actual price for the physical did not, at least not for daily buyers that are non-sovereign countries. We do not think physical demand is the issue. The man/woman on the street of any country in the world is buying whatever they can afford. As price declines, people buy more.

China, Russia, India, and others, as countries, are taking whatever is available, so demand from sovereign sources have all their trucks backed up to the loading docks of whatever Western central bank[s] is selling. These buyers are more than happy to see price decline.

The supply issue is two-fold. One is the paper market, which apparently still has a lot of longs remaining: gold funds, primarily. The other issue is the central bankers themselves. They have more political power to use than many think otherwise. Yes, the vaults may be near-depleted, and yes, they cannot make good on any deliveries, but who is going to force them to cry “Uncle?” They also control the money supply, and if anyone wants to play hardball with them, they will play harder and dirtier ball back. Too many continue to underestimate they staying power, no matter how weakly perceived they are.

All we know is that almost all of the precious metals experts and newsletters/videos, etc, have been wrong for the past nearly two years. Gold is not at $5,000 or $10,000, not even $2,000. The same for silver, as it shocked so many when it went back to $18.

Buying gold and silver is like buying a house. Everyone needs a roof over their heads. The price of housing has dropped considerably since the housing bubble burst. Did everyone sell their house because its value dropped? Absolutely not. One still needs a place to live. Precious metals are a form of, let us call it “wealth protection,” without getting into semantics, where one needs to store value. Gold has a history of proven value over centuries. Paper fiat has a proven failure for over centuries, as well.

Which would you rather own?

Have the precious metals decline gone down farther and last longer than most expected? Yes, and yes. Will both gold and silver go back up in value? Without question. So why be concerned where the current price levels are? It is the last bargain of a lifetime, maybe even for generations. Can the price of both still go lower? Based on the charts, yes. Will they? Possibly, but that remains to be seen.

The New World Order, [NWO], is alive and well. It is actively exerting control over smaller European countries, and dictating policy for the entire region. The NWO has been operating under the radar in the bankrupt United States since 1933, so Americans remain willingly oblivious to its stealth forces and continue to believe they live in the “Land of the Free,” despite the Stasi-like conditions.

The point of mentioning the NWO is to let everyone know that it is their intent to enslave the world. How do they do that? By destroying wealth. Prior to the Roosevelt 1933 gold confiscation scam, Americans used to own gold and silver. It was a form of wealth, and as long as they had it, they were not dependent upon the government. Hence, the “turn in your gold [wealth], so we can control you and make you dependent upon the government for your existence. It is no accident that people are dependent upon Social Security, and more households than ever receive food stamps. Destroy wealth; cerate dependency.

Fewer living Americans have ever held a gold coin, let alone own one. Americans live on debt, in the form of fiat and credit cards. They are NWO slaves, just without realizing it.

The other form of wealth? Housing. Back in the 1920s and 1930s, few Americans owned a house. Property owners were farmers. The NWO-manufactured Great Depression saw countless farmers lose their farms to the banks. What did most Americans just go through over the past few years? A massive dislocation of their homes through foreclosure by banks submitting fraudulent complaints and improper assignments.

Of course, this was after bankers created the ability for anyone who could fog a mirror to buy a house. It was planned that way. Who are now the biggest property owners in the country? Banks. Those who lost their property lost their last form of wealth, and now they, too, are dependent upon the NWO government.

So, if you are worried about the [forced] decline in the “value” of gold and silver, would you rather hold worthless fiat and credit card “wealth?” Everyone is free to choose. Well, fewer and fewer people are actually free, except in their captive minds.

Buy gold, buy silver, and hold it yourself. If you do not hold it, you do not own it. Period. If you hold gold and/or silver in paper form, that is what you own…paper. Everyone is free to choose.

Even an atheist should have little trouble keeping the faith in gold and silver, given the highly unreliable alternatives. What about the backing of the “full [misplaced] faith and credit [maxed out several times over] of the government? Ask the city/county pensioners from Detroit or Camden how that is working out? They may not see even a dime of what was “promised” to them.

The charts continue to defy the expectations for higher PM prices, at least for now. They are fully reflective of the actual existing price until proven otherwise:

We show why the odds favor a rally from here, which can still fail to materialize for as long as the “money changers” remain in control. It is too soon to know if PMs have actually bottomed, but they may be in an early bottoming process. Bottoms can be short-lived, or they can take months/years. The market will keep you informed as to which. Maybe not a satisfying answer, but one that deals with reality.

The weekly chart gives more detail on why a bottom, of some degree, may be forming. What makes it difficult to be more definitive is the control central planners still have over the markets, and they want price suppressed, or they lose control, and not just of price.

You can’t get tomorrow’s news today, but you can get market guidance today from future day-by-day activity depicted on a chart. Can you see the value in that? More can “see” “value” in gold and silver than can see the value of following developing market activity. Belief in expectations is far more compelling than believe in reality, which is all a chart is.

What follows is chart detail, but it captures the current character of the market, which is how the future price will develop, according to the clues in price and volume. In the box, note how price declined with such Ease of Downward Movement, [EDM], on the higher volume bar, left side, call it bar 1. The next 3 bars show a weak rally effort.

Weak rallies lead to lower prices, and lower prices followed, in bars 5, 6, and 7. However, there is a distinct change in character. Volume increased on these low bars, and the last of these bars produced a rally on relatively high volume. This is a red flag, a warning for the bears. Buying has become clearly evident for the first time while the rate of descent down from one swing low to the next also shortened.

The 4th bar in July was on increased volume to the downside, but price held above the effort from buyers at the end of June. While gold has rallied back to 1300, note how small the bars are, a more labored rally, and the location of the closes for each. None of the closes are particularly strong, a lack of demand.

The rally of last Thursday had the highest up volume, but the close was mid-range, a draw between buyers and sellers, saying sellers were present at a resistance area. Friday’s lower close was on less volume and a smaller, inside day bar. It could be that sellers failed to take advantage and that leaves the door open for another opportunity to challenge a minor resistance level.

If gold cannot rally above the minor resistance level, price will turn lower and either retest the end of June low, or make a lower low. The how of any rally or decline will tell us what to expect.

What we have yet to see in either gold or silver is a change in trend. Price will continue to work lower, or move sideways until demand shows up, and it has not, contrary to the demand for the physical reported in the news and newsletters. That same unprecedented demand is not showing up in the charts, for a reason, whatever it may be.

As with the daily gold chart, the highest volume occurred at the recent lows, and the volume increase is always dominated by smart money. The rally, since the high volume low at the end of June has not translated into a sustained rally, and that is now of concern.

The last two trading days could be a form of buyers absorbing sellers before rallying above resistance, but that has not been confirmed, obviously. Buyers are back on the defensive, and next week could be very informative.

Keep buying and holding physical gold and silver for reasons unrelated to current prices, although current prices allow you to buy more for your fiat currency. What a deal! Stay away from the long side of the paper market. The number of profitable longs over the past almost two years is less than small. Always respect the trend, and use the knowledge if the charts to your advantage.

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.

© 2013 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

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