Saturday 16 March 2013
So many headlines are saying "$5,000 Gold, or $10,000 Gold; Silver,
The Investment of the Decade," etc, etc, etc. Will that happen? A
history of failed fiat currencies says yes. When will it happen? That is
the question few articles address because they simply have no clue,
beyond their sensationalized headlines.
Who can best answer that question? It is not Who, but What, and
that comes from the market itself, ever the most reliable source. The
answers may not always satisfy, but the market is never wrong. What
can be said with certainty is that before gold and silver, [PMs,
Precious Metals], can go up, they first have to stop going down.
Remember, all the dire headlines about failed currencies and
countries are well-known by controlling market forces, as are all of
the purported PM shortages; the lack of available physical metal to
fulfillfutures/ETFcontact obligations; China, India, and Russia being
huge buyers; Western countries over-hypothecating gold holdings;
empty central bank vaults; tungsten-filled bars being delivered, you
name it. It has all been stated, restated, then stated again, yet the current price of gold and silver do not reflect these "realities."
What is missing is consideration given to those in power and their
ability to hold onto that power, at all costs. The outright lies being fed to the world's public, at least in Europe and the United States,
continue to dominate headlines by the bought-and-paid-for television
and print media. Where is the outrage? What little there is comes from
the relatively small community of "fringe" bloggers, [the best truth-
tellers], and those who have been consistently buying physical gold
and silver, but they are no match for the powerful forces that will
destroy whatever gets in their way, be it a country drowning in debt,
salvaging it with yet more debt, or the debasing of one's own fiat
currency, to keep the lie alive.
For now, the lies are winning. They have to, in order for central
bankers to keep power over everyone and everything else.
Until you start seeing currencies collapse, the Euro, the Federal
Reserve Note, [aka known as the "dollar."], $5,000 or $10,000 gold and $200 or more silver are not in the picture, and the charts are telling
you as much. Yes, price is being manipulated by four primary large
banks each and every day, and some say the exchange prices do not
reflect the realities of the market. This is not true. The reality is, the
manipulators are still in charge, and for as long as they are, the price
of gold and silver will remain where they are. Were it otherwise, you
would see the price of gold and silver considerably higher.
For now, the market is saying the suppression of the price of gold and
silver is alive and well. The operative words are: "For now." Until you
start seeing price move higher, the market is sending the message that PMs are locked into a protracted trading range, [TR].
You be the judge. Do any of these charts even hint of a price panic to the upside? Forget a price panic. Do they look like they are about to
rally strongly, or at all? Sentiment and bias aside, the market is telling
a story that differs from the PM community's beliefs and expectations,
at least for now, and that is reality.
Trading ranges last until they stop, and this one has not yet stopped.
One thing no headline mentions is the possibility that the price of gold
and silver can break out of the TR to the downside! The market is at a critical juncture, and it will provide us with some valuable information
based on how price develops, starting next week.
To the charts, starting with weekly gold:
The lower channel line acts as an oversold indicator. Price is now in its fourth week of being oversold. Remember, oversold is a relative term,
and it can lead to being even more oversold. When you view gold's
performance last week, you see a small range rally. This is the market's message that demand is not very strong. Price closed near the upper
end of the bar, but compare that rally bar with the larger down bars
two, three, and four week's earlier. Ease of movement remains to the
downside, and the burden of proof for change is with the buyers. So
far, they are not meeting that burden, or so it seems.
What may be the most important piece of information on the chart is
the fact that the swing lows of the past few weeks are higher than
those from last May. If gold is to rally from here, next week should see more upside, or at least no further downside. From the February 2012
swing high, near 1800, price declined and then went sideways for 26
weeks, half a year, before breaking out to the upside. The current
decline is in its 23rd week.
The mentioned higher swing low is a positive sign. The two wide range
bars down, 4th and 5th from the far right, had no follow-through
lower. It takes time and effort to turn downside momentum. Demand
may not have been strong, last week, but the higher close also tells us that supply, [sellers], was weaker at an area where sellers should be in control.
The current facts from the market clearly shows price is moving down.
Each level was preceded by a rally that failed to reach the high of the
small TR, just prior to moving to the next lower TR. Are we seeing
another failed rally that will lead to yet another lower level? For now,
the odds say yes.
We do see some indications that current levels can hold. As price
reached the lows in late February, volume was much greater than it
was at the beginning of March, as price held. If we are to see gold
rally, some evidence has to begin next week. The possibility of a failed
swing high is apparent, but it has yet to be confirmed. While the odds
for a rally may seem small, if the current lows of the TR and channel
are to hold, the odds are greater than they appear, but they also have to be confirmed by a rally, and soon.
We did make two attempts to get long gold, twice, last week, but
rallies are not holding, and breaks are sharper and faster. While the
trades were profitable, the activity is not that of market strength.
Buy the physical, but wait on the futures.
Silver still shows a more promising outlook if a rally is going to get
underway from current levels. The clustering of closes can be a resting area, prior to resuming the trend lower, or it can be a turning indicator
that shows the trend down has stopped and buyers are about to take
the upper hand.
Sellers are supposed to be in control as they push price lower, but it
appears they have stalled at an important potential support area, as
we have described in previous articles.
There are beliefs and biases, and then there are observable facts. The expectations for biases and beliefs point higher. The observable facts
are pointing lower. You can see how the rally efforts since the mid-
February lows have been relatively weak, not even able to retrace
back to 50% of the range of the last decline. This is an established
fact. Facts rule over biases and beliefs.
We end on a positive note, "Anything Can Happen!" For all the
negative appearances, the current levels are where there has been
proven support within the larger TR, and the selling volume of the last
three trading days is much less than the volume when a low was made in late February. The market is telling us there is less selling pressure,
and it may still be poised for a rally.
The premiums for buying physical gold and silver are starting to
increase, and that is a very positive sign. The reasons for buying and
holding physical PMs remain as pressing as ever, and the window for
doing so is getting smaller. Do not waste the opportunity the market is offering to add to your holdings, and for those who have been on the
sidelines, start taking action. Get yourself to a coin dealer and buy
what you can without concern for price or premium.
The "dollar" has lost at least 20% of its "value" over the past several
years. If ever a trend were true, it has been the constant decline in
purchasing power of paper fiat since the Federal Reserve took control
of this country's currency. That trend is about to accelerate even
more, eventually reaching the fiat's true value: zero.
The Fed-induced stock market rallies are at all-time highs. The rally in
silver and gold, over the same time span since 2007 are 50% higher
than stocks. This is a fact that should have everyone buying more gold and silver. Markets never lie. Trust them.