edgetraderplus'  Instablog

Send Message
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
My company:
My blog:
  • Gold And Silver - Monthly, Weekly, And Daily Closes. The Story. 0 comments
    Jun 1, 2013 1:21 AM

    Saturday 1 June 2013

    The month of May is now on the books. The question is, can anything new be learned from them? Maybe not, but you would have to see
    them to understand why not. One qualifier to be added is, from our
    perspective, charts include all the known factors from those who have
    made a market decision. The basis for the decision-making may be
    fundamental, [including supply and demand], technical, [including
    technical supply and demand factors], a combination of the two, gut-
    trading decisions that may not reflect either and just be ego-driven,
    and finally, the uniformed, who believe otherwise but trade just the

    We make no effort to dazzle anyone with fundamentals. There are
    those who are known to be expert in the field of precious metals who
    provide detailed analysis and reason for asserting why gold and silver
    should be trading at considerably higher levels. Their facts and figures are most impressive, but the current prices of gold and silver present a quarrel with their fundamental information. Our sentiments are with
    them, but our hearts remain with the charts.

    Why? The market is the final arbiter of all available information, again,
    based upon the final decisions of the participants. There are many
    who argue that the price of both gold and silver are being manipulated, [and we are among them, actually standing in the front line of the
    collective accusers]. A few would argue that paper gold and silver
    prices are a sham and emanate from trading exchanges that are
    equally a sham. That may be truer than not, but those who take that
    position provide no meaningful alternative, as a guide.

    We are keenly aware of the unprecedented demand for physical gold and silver, as it is certainly one side of the all-controlling supply and demand equation. Despite the world-wide unprecedented demand
    for the physical, it is the supply part of the equation that is being
    ignored, even if the supply element is being administered in fraud, as many believe to be true. Based on where the prices for gold and silver are trading, one has to accept and deal with what is, and one
    does not have to know what the definition of is is, either.

    Let us assume that the price for gold and silver is being rigged and
    does not reflect a "true" relationship between the forces of supply and
    demand. Then one has to recognize and at least acknowledge that
    whatever is driving supply to keep PM prices low, it is succeeding.
    This is a more important fact of which to be aware until demonstrated
    otherwise. As a reader of charts, we must accept what they show,
    for in the end, that is all that is showing.

    It may well be that central banks have no gold for delivery, and
    defaults are being called something else to provide cover for the lack
    of available PMs, and all deliveries are to be settled by fiat only. Thereis one thing for certain, and the charts reflect this, regardless of what
    anyone believes to be true, or not, the truth is neither gold nor silver
    can mount any sustainable rally. What does that say for all the
    "dazzling" fundamentals and demand?

    Is there a difference between gold and silver prices, as reflected on
    the exchanges, and the price for gold and the price for silver? Yes.
    While we fall into the camp who recommend buying either physical gold or physical silver, or both, [and we say at any price], we also have to
    pay heed to the controlling forces of supply, for that is the dominating
    side right now, from a factual perspective.

    To put it another way, expressed from market wisdom, "Don't fight the

    We hold that the higher time frame charts are more controlling than
    lower time frames. The month of May had a smaller range on increased volume. What this says is that the buyers were meeting the effort of
    the sellers, preventing the range from extending lower. The close,
    about mid-range the month, confirms this observation. That would be the qualified good news.

    The bad news is all of the activity occurred under the close for April.
    Buyers did not have enough power to rally price higher. It takes time
    to stop a trend. So far, there is not enough evidence that the down
    trend has stopped.

    GCA M 31 May 13

    The breaking of the support channel and longer term support line
    show just how much overhead resistance there is before gold can turn
    around. The weak response from last week's feeble rally could be
    problematic. Volume, [effort], increased significantly. For all that
    volume, last week's close was not much higher. Where was the
    payoff for the effort? There was none. Weak rallies almost always
    lead to lower prices as price moves lower to uncover demand.

    GCA W 31 May 13

    We explained the significance of a wide range bar[s] as it relates to
    price, moving forward. [See Markets Provide Us The Best Information,
    http://bit.ly/18pk8yE, 1st paragraph after 1st chart]. While price has
    not traded lower after the semi-selling climax on 15 April, we would
    have expected a stronger rally than has developed.

    The trading range can hold for many more days, even weeks, but the
    trading range from which price just broke was much stronger than the one now developing. The odds of it holding are small, for now. While charts are leaning lower, we add the following:

    The reason[s] for buying physical gold are opposed to current charts,
    and actually opposed to all central banks and government interests,
    but we adamantly maintain the interests of the central bankers and
    corporate government are opposed to the individuals, those being
    "governed." One need only look to events in Cyprus, Greece, Ireland,
    a crippled Spain and Italy to understand why having physical gold
    offers the best financial remedy against those in power who have been abusing and/or misusing that power.

    The power wielded by those who have it are prevailing, and those
    relying upon the demand side "sentiments" are underestimating the
    ability of those so willing to remain in power, at all costs, and those
    costs are being borne by those not in power...the reason to buy gold.
    Rather than repeat this after the silver charts, the same holds for
    those buying silver.

    GCM D 31 May 13
    Unlike gold, silver traded under the April low. However, what deserves attention is the how price traded lower. The range was smaller and
    volume decreased. This tells us that the supply forces were
    [relatively] weak, or a lack of supply. Demand was not there to
    offset weaker supply, so this is not to make a case for no, or limited
    downside from here.

    We would expect more sideways, and generally lower trading until
    there is evidence that the forces of demand can make their presence
    known. Supply has proven itself. Demand has not. It does not get
    any simpler, regardless of sentiments. Stick with the known facts.

    SIA M 31 May 13

    The chart comments capture the weekly activity. When you look at the wide range bar down, seven weeks ago, and then gauge the
    subsequent inability of silver to rally against it, you better see how
    what remains lacking is strong evidence of a turnaround.

    SIA W 31 May 13

    A clustering of closes indicates the forces of supply and demand are in balance. Since the April 12 and 15 sell-off lows, price has clustered,
    as seen in the rectangular box. We await the breakout imbalance that naturally follows.

    The headlines touting much higher gold and silver prices may attract
    attention, but the attention is pandering to the sentiments of those
    who want to hear news supportive of their own belief system[s]. How
    has that been working out, so far?

    Do not buy gold or silver because you think the price will go higher.
    Buy because all fiats are being destroyed, and it takes more and more
    fiat, if one chooses to hold that paper form, to buy the same ounce of
    silver or gold. [That has not been the case for the past 18 months.]
    Cypriots would tell you they would rather have paid much higher
    prices for gold and silver than have kept their fiat powder dry waiting
    for lower prices. Their remaining fiat holdings will not be able to buy
    anywhere near what they can now afford. That is what one has to
    consider as reality, from now on.

    If anyone thinks it will not happen in the United States, or other
    countries still lying in wait, it is like playing a form of Russian roulette.
    The odds are in your favor, until they are not. Then you will know
    what it is like to be a Cypriot bank holder. There are no Black Swans,
    just people unwilling to see the warnings of darkening clouds.

    We have acknowledged the eventual likelihood of much higher prices
    and support the sentiment, which is why our message has been
    constant: Buy either, or both, physical gold and silver, at any price,
    for when the day of reckoning arrives, they may not be 1. available,
    [Never underestimate what the government can/will do], or 2. only at
    prices that are considerably higher. Hence, better a year early than a
    day late.

    At the same time, we have recognized the reality of the charts and
    to not buy futures while the trends are down. It is possible that the paper market may be destroyed before any buying "opportunity"
    presents itself. Paper trading becomes less and less appealing or
    even relevant. Always remember, if you do not hold it, [personally],
    you do not own it.

    Has anything new been learned from the charts? Not much, for the
    trend remains down. A lot can be learned from the fact that they are
    down, relative to the reality of demand, and how that reality does not
    matter, at least for now. That is a powerful message. We see it as
    added reason for the constant buying of the physical.

    Where? At any price.

    SIN D 31 May 13

Back To edgetraderplus' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.