Sunday 2 December 2012
Okay, we all know there is blatant manipulation going on by central bankers in desperation to cover their untenable fiat printing, and now, even more worrisome is their lack of physical metal to cover demands for repatriation of gold from a growing number of countries who are beginning to realize...eh! That is their problem. Live by the fiat sword and fractional reserve banking legerdemain, die by your own consequences.
Shades of Pat Benatar...Hit Me with Your Best Shot! What else you got, bankers? You all still left quite a lot on the table. Let us take a look at the results. We already know that gold is going higher. History remains on the side of gold against any and all fiats. When, no one knows. High high? No one knows, but the lack of knowing will not be of much concern for anyone wisely holding [literally] physical gold, and silver.
What took place is now past tense, and our concern is always present tense and moving forward. Point "A" held a 50% retracement, and maybe more importantly, also held the lows of 8 November, 5th bar of the month, because that was the 2nd recent highest volume and price held that selling effort.
Point "B" is the highest selling effort that did not penetrate "A," and the close off the low shows there was buying going on. Was it enough? too soon to tell. A second assault on Friday, "C," tested the mettle of the metal, for the near term, and it hold, marginally, and
sometimes, marginally can be a big deal.
What could be key is the extremely high volume. It could well be exhaustion volume. A slightly lower low could occur and price reverse upwards, but how activity will develop starting Sunday evening and going into Monday's trade is unknown, at this point.
This is a great opportunity to buy the physical, and it may become an opportunity to go long the futures, but that depends upon Monday's developing market activity. A clue may be gleaned from how silver held the sell-off assault.
[For a discussion on what standout volume days can mean, see our article, "10 Year Notes And Wheat - How To Find A Trade," click on http://bit.ly/VdKKd3]
Silver has been performing better than gold, recently, and while we pay no attention to fundamentals, at all, [they are woven into the charts, another topic], we are aware of many who see shortages in silver that may not be universally recognized. In any event, a comparison of the two charts shows silver's current rally in an uptrend and at a steeper angle, "A," than gold.
A big tell about last Wednesday's all out attempt to shake out as many weak longs as possible is the position of the close for silver on that day, "B." It was in the upper half of the range. The importance of the close is that it tells us who won the battle between the buyers and the sellers, and clearly, buyers overwhelmed the efforts of sellers, driving price up from the lows to close well.
We do not discount bar "C" entirely, for it is referenced as normal market retesting of a previous price level. It could turn out to be more than that, on Monday, but we can only deal with what is factually known in the present tense. Price could gap higher equally as much as it could gap lower. What matters is, we do not have to know. Instead, we get to deal with the market as it develops in real time.
As an aside, we noted how many metal enthusiasts were trumpeting the "breakout" ten bars ago, as though gold and silver were going to their "final destiny," [that being higher], but that song has been playing for quite some time. This retest, if it holds, could be a more realistic place to go long in futures. Anytime is opportune to buy the physical, no matter which direction price goes, over the near term.
What happened last Wednesday was a good thing. It demonstrates to the world how the Wizard[s] behind the curtain has neither brains, heart, nor courage. The "fear" factor has worn thin.