Saturday 19 October 2013
Almost everybody wants a back story, some information to explain
what is going on with gold and silver, mostly looking for some kind of
psychological calm as prices decline, or a ray of hope to reinforce why price may reach the sun and the moon. Is there anything that has not been presented, repackaged and represented that has not already
been more than fully covered to justify much higher price levels? Have any of them achieved what was promised?
Instead of exceptionally higher prices, as a counter to the
exceptionally dire reports of the demise of central banks, their [lack of]
gold holdings, the precipitously low COMEX and LBMA inventories for
the metals, the inability to make good on deliveries over the past few
months, etc, etc, prices continue to probe the recent lower levels
without any signs of a turnaround. Guess those valid "fundamental"
reasons were insufficient to lift prices up.
What about the state of the United States? It's broke, and broken.
The acknowledged national debt is around $17 trillion, or about
$53,000 for every man woman and child in the country. The real debt
is more like $125 trillion, and that equates to about $360,000 that
every man, woman, and child is responsible for paying. Are you willing
to pay that amount, the one your government has run up for you with the prodding of the NWO's Federal Reserve central bank? Is the
world's "richest" [richest in terms of debt] country that has not been
paying its bills enough of an impetus to send gold and silver higher?
What about King Draghi? As bad a shape as the US is in, Europe is
worse. Last week, he just informed the world that steps would be
needed to "recapitalize" the banks. Does anyone not stop and demand accountability for the previous capital the banks lost? And why are
bank depositors responsible for bailing-outs through bail-ins? Why
aren't the bankers making up for their own losses, or going out of
business like an non-banking entity would do when faced with
Back to Draghi. He and his other unelected band of thieves that form
the EU in Brussels have decided:
"The effectiveness of this exercise will depend on the availability of necessary arrangements for recapitalizing banks ... including
through the provision of a public backstop," Mario Draghi
explained on Friday to set the mood for today's meetings.
"These arrangements must be in place before we conclude
The "assessment" under consideration is just how severely broke and
illiquid the already failed banks are and how much will be required, how did he express it? Yes, "through the provision of a public backstop."
Be prepared for more financial rape and pillaging, for it is sure to come.
The most reliable current story is found in the charts. Why is this so?
Like we say, do not listen to what people are saying about the
markets, listen to what the markets are saying about the people.
The higher the time frame, the more controlling the information
because it takes a lot more effort over time to evince a change. Price has been put into a context between the current important current
levels of resistance and support. Once price broke the 1525 area, last April, that support became resistance, and the market announced to
the world that sellers were now in total control.
The overall trend, since 2008 and earlier, is up but weakened on the
monthly time frame. April is when the central bank/JP Morgan moved
to force price lower. Artificially or just plain manipulation does not
matter, for the effort succeeded, despite all the positive news, you
know, those things people were saying about the market. The market had a different message.
In May, on the same level of high volume as the previous month, the bar narrowed significantly. Buyers were meeting the effort of sellers,
which is why that bar did not extend lower. However, the fact that
the location of the bar was at the lower half of the April range, and
the close was well under April's, told us that buyers won that battle,
but the war was not over, as the next month clearly showed.
June saw another central bank-sponsored "intervention" to suppress
the price of gold, [in order to keep the fiat Federal Reserve Note
propped up]. Price closed poorly on another wide range down bar.
The decline continues.
Well, not in July, [4th bar from right]. Not only was there no further
downside, the exact opposite of reasonable expectations, the volume
increased and price closed near the high. Clearly, buyers won another
battle. The terms "battle" and within a "war" are apt, because what
we are seeing now is a struggle between buyers and sellers which is
in contrast to sellers having previously been in total control.
As was said, it takes more effort and time to effect a change on this
higher time frame, and what you see, since the June decline, are
overlapping bars within the June range, a sign of struggle between
the forces of supply and demand.
The August rally, 3rd bar from right, had a decrease in volume which
meant less buyers, even though price closed higher, again, but
stopped at the June range high, evidence of ongoing resistance.
However, we may be seeing a subtle change in behavior. The last
two bars have narrowed while in a relatively slight decline mode,
October still in progress.
While August showed a decrease in volume and the rally stopped at
the June high, the last two months' total volume is much great than that of August, yet two months of effort to get price lower has not
worked. Recall the most recent assault on gold, a 2,000,000 ounce
sell order at one time. It does not even register on the chart, unlike
the similar blatant sells in April and June.
The monthly chart is telling us the downside momentum has lost
momentum. This can change in the next few days or few weeks, but
the future has not yet happened, so we can only deal with what is
known, at this point in time. With this context, we look to the lower
weekly and daily time frames to see if a clearer message emerges.
The lines connecting the recent swing highs and lows shows how the
momentum has slowed. The net decline at "D" is far less than the
decline from "A" to "B." Notice the two bars leading into the lows at
"B" and "D," both wide range with little to no overlap. The current
decline into "F," [? = may or may not be over], has overlapping bars,
the opposite of previous lows and in keeping with the small sign of
potential change evidenced on the monthly chart. What is lacking in
both time frames is confirmation of an actual change.
The comments on the daily shows the interchange of past behavior
being somewhat determinative of future behavior. The development
on the left side of the chart, A, B, C, D, gave reason for why the
recent activity unfolded as it did, on the right side of the chart.
After the failed probe lower, [4th bar from right], an indication that
sellers failed to show up when it was opportune to drive price lower,
[like a 2 million oz order was not enough], we get confirmation of
sellers being AWOL with Friday's strong rally, strong close, and
increased volume. Just as one swallow does not a summer make, one bar, especially on this lower time frame, does not a bull market make,
but it is a sign of change.
The rally did stop at/below two small failed rally highs. What will be
key is how price corrects Thursday's rally bar. Maybe we should have
labeled it D/S, Demand over Supply, for it is warranted by that show of activity. If it is real, we should see smaller bars and less volume on
any retest of the bar, classically. If volume does increase, the largest increase should occur at/near the low of the correction. Time will tell.
The analysis for gold facilitates an easier read for silver, under similar
circumstances, but silver still showing a greater propensity to hold its
recent lows. The lows can still give way, but sellers will have to show
up with greater sway that is being evidenced by buyers.
The level of support is at a stronger support level than for gold. Keep
in mind, however, the fact that gold has not declined as far into a past support range makes a greater bullish statement for that very reason.
The August rally, [3rd bar from right], is being retested by smaller
ranges, what one would expect to see if a retest of a recent rally bar
is to successfully hold. October has not yet finished, so the
reservation of anything can happen remains in play, for the upside as
well as the downside.
We deemed the breakout gap important when it happened, and while
the gap was filled, one can count the fill in minutes before price rallied
back higher, so it remains significant.
The clustering of closes is usually consolidation before price resumes
the previous trend, OR it can signify a turnaround. The tight closes
and overlapping of bars for the past six weeks lets us know of the
balance, [still viewed as a battle with no declared winner, yet], and
from balance comes unbalance. The farther price moves along the
RHS [Right Hand Side] of any trading range, the closer is the resolve.
The fact that last week was a KR one, [Key Reversal], and the highest close of the past six weeks, speaks to buyers attempting to wrest
control from sellers.
Previously, we said price needs to get above 22 and demonstrate an
ability to hold. It is close, and you can also see 22.50 creates the
same agenda of proof. The daily trend has weakened, from a sellers
perspective. The burden of proof for change remain with buyers.
Expect to always see evidence of change in the charts, first. On that
you can rely.
Continue, maybe even with a far greater sense of urgency, to buy and personally hold, both physical metals, gold and silver. No one can
accurately measure when central bankers will lose total control, but
the signs are building. When the ultimate pressure is too great to
contain, price will explode upside, leaving behind those who thought
they were smart enough to get a better price or "see" more evidence
of the obvious.