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Michael Noonan Edge Trader Plus Michael Noonan is the driving force behind Edge Trader Plus. He has been in the futures business for 30 years, functioning primarily in an individual capacity. He was the research analyst for the largest investment banker in the South, at one time, and he... More
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  • Silver And Gold - Developing Trend Up. Off To A Strong Start. 0 comments
    Sep 16, 2012 1:47 PM

    Sunday 16 September 2012

    Both silver and gold closed well for the week. There can be myriad reasons for explaining the strength of the metals, but we will stick to the strongest and most reliable source to be found, and that is from
    the market itself, in the form of charts of varying time frames, subscribing to the proverbial, [circa 1914], "A picture is worth a thousand words."

    We have often said to let the market lead, and then follow it. This eliminates guesswork and ego-driven conclusions that reverse this process by taking a position and then expecting the market to follow...a losing proposition, literally.

    When silver had a strong rally, each day four weeks ago, we waited for the end of the week before deciding on taking a position, based on a four week rule which we used as a trigger. [See Silver and Gold-
    Breakout Underway, click on http://bit.ly/ReHImV, third paragraph] Some thought was given to buying a few days earlier, but price was then in the middle of the trading range, and that would not have
    constituted as strong a breakout signal, so we took the more conservative approach. If a true move is to ensue, giving up a little bit of price is not going to materially affect overall results.

    Not waiting for confirmation is such an inexplicable anathema for so many traders/speculators who have a driving need, [ego-driven, from our perspective], to be first out of the block to "catch a move." Margin
    calls and closed out accounts are a sufficient testament to the credibility of that unreliable approach.

    As is noted on the weekly chart, the breakout was very strong.

    (click to enlarge)SIZ W 16 Sep 12

    Did we get the best possible price? Absolutely not! However, we did get a price which confirmed that the breakout was likely real, and the risk exposure was minimal. Wanting or asking for more than that can
    lead to more problems and greater risk trying to be proven right instead of simply doing the right thing.

    Doing the right thing very often leads to more confident and profitable trading. That is our objective. A rather large base had built up over the previous several months, and from it a substantial rally could
    be expected, once a breakout occurred We let the market lead; we are following it, and we expect to be rewarded for seeking harmony with a developing trend. Time will tell.

    (click to enlarge)SIZ D 16 Sep 12

    Gold has been decidedly more bullish than silver, so what applies in the silver analysis is even stronger in application for the gold market. We hesitated a little to buy gold because the rally had been stronger, and
    there is an inherently natural tendency not to want to "pay up" in establishing a long position, so we decided to wait for a pull-back. The risk in that decision, [there is risk in everything], was that there may
    not be a pull-back until from a much higher price level.

    We were fortunate enough to see a small pull-back a few days later, and there was no hesitation to buy it, based on gold being a much stronger market than the one in which a long position in silver had
    already been taken. You can see that the breakout in gold was a day ahead of the similar breakout in silver. From a relative strength consideration, it was an error to not buy gold before buying silver. Again, because it was at the onset of a breakout, this not-always-so-little-nuance did not matter. We point it out because it can make a substantial difference, at times, and doing the right thing is most important, for decision-making purposes.

    As an aside, monthly results for September on our web site do not reflect open positions, only the results from closed out positions.

    The rally has been relatively steep, and what that indicates is strength in buyers positioning themselves and making it more difficult for new buyers to enter the market. We also know that since mid-August, the
    number of profitable shorts is less than negligible.

    It could be that Friday's small range near the high of a rally can be stopping action. We do not know. It could be an indication that buyers were spent and need a breather. It could be that sellers were in the market, keeping a lid on the rally, but volume dropped, and there is zero evidence of supply entering to stop or reverse the rally. We will let the market make that call and not presume to know the answer,
    for if we did know the answer, we would have acted upon it.

    We see gold and silver as undergoing a change of price behavior to the upside. The goal now is to look for opportunities to buy more on pull-backs. We applaud those smart enough to continually purchase the
    physical metals during the past few months. Results speak for themselves, and owning gold and silver is the best antidote for the Fed's unabated destruction of its fiat debt instruments, deceitfully labeled as "dollars" when they are not.

    The 1800 area remains as obvious potential resistance, and we can expect to see some baking and filling as price advances, which is normal activity in all markets. It will be the nature and character of how any corrections develop that will provide on-going clues to the resuming move up.

    Always remember: the price of silver and gold is not going up, rather, it now takes more and more of the worth[less] fiat currency[s] to purchase the same ounce, whether it be gold or silver. It is the value[less] of the fiats that continue to go to their destination...the par value of the paper on which it is printed.

    Here is another picture worth more than a thousand words. It is from a website we know nothing about, but its content has merit on this page alone. Let us remind you once more, even though the graph makes
    reference to the Federal Reserve Note as the"U S Dollar," it is NOT a dollar as defined by the original Constitution. A Federal Reserve Note is a debt instrument issued by a private banking organization which is NOT a part of the corporate United States government. A lie is a lie is a lie.

    "Paper is poverty,... it is only the ghost of money, and not money itself."~Thomas Jefferson in a Letter to Edward Carrington, 1788. Now, take a look at the "value" of what the government has "sold" you.

    http://www.jesus-is-savior.com/Evils%20in%20Government/Federal%20Reserve%20Scam/quotes_on_the_federal_reserve.htm

    Own gold and silver!

    (click to enlarge)GCZ D 16 Sep 12

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