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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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  • Gold And Silver - Fundamentals Do N.ot Matter 1 comment
    Nov 2, 2013 3:45 AM

    Saturday 2 November 2013

    If fundamentals mattered, gold and silver prices would be substantiallyhigher. They are not, and for a reason. It is not hard to define what factors are influencing price, for they are political, even
    criminal under normal circumstances. These factors are, in two words:
    central bankers. The money changers still have a stranglehold on the
    financial system, and nowhere it is more evident than in the price of

    Will it end? Yes, but as has been the biggest mystery, no one knows
    when?! While the golden grip continues, it is inexorably loosening.
    The United States, and by extension, the United Kingdom, is fast
    becoming more and more isolated. First, it was the natural
    opposition, Russia, China, morphing into the BRICS. Unable to sustain
    their no longer warranted arrogance, the Western alliances are now
    falling apart. Note the cover from Die Zeit, symbolic of the growing
    attitude of the rest of the world toward the US:

    Die Zeit

    It was not enough to give the stiff arm to Germany when its
    representatives came to inspect its own gold, purportedly held in New
    York. "Nein, nein, Sie konnen nicht es sehen." "You cannot see it, but not to worry, we will deliver half your gold in seven years," the
    Germans were told, after the insulting rebuke. This is evidence of the
    growing in- fighting going on, and the revelation of NSA spying has
    driven a wedge even further.

    It is paramount for Western central bankers to keep the façade of
    owning tonnes of gold alive, for once it gives way, all control is lost. The unilateral actions on the part of the US ensures the eventual
    collapse of the existing fragile unity. Of course, the core reason lies
    in the massive creation of digital "dollars" that are now being rejected
    en masse by the largest creditors holding Federal Reserve [soon to be
    junk] bonds. The world is finally rejecting the US exporting its
    destructive inflation, via the Federal Reserve "dollar."

    Continuing stories of one country or another increasing its gold
    imports has not been of significance, relative to the current price of
    gold. It may make for attention-grabbing articles, but the impact is
    nil. The direction for price is solely in the diminishing control of the
    New World Order via Basel down through the IMF and then central

    If ever a picture were worth a thousand words, it is this one of the
    dwindling registered gold stocks, the top graph, and the clincher graph below it showing the number of claims, almost 56 paper "owners" laying claim for each ounce of gold. This Gordian Knot cannot be resolved.
    It does not require much imagination to guess what will happen when
    56 claims are made for each ounce.

    If ever you want to see a simple graphic of supply v demand, this one
    encapsulates it all.

    Gold Paper Claims On Physical Oz

    However unrealistic one may view the charts of the bogus paper
    pricing mechanism viewed on the COMEX, they still function as a loose
    barometer for the current direction of gold and silver, and by default,
    they will act as the weather vane until displaced by some other basis
    of reality.

    No matter how bullishly one reads the ample news, in support of thedemand for gold, it is not being translated into higher prices, as
    evidenced by the charts. This is why we see little value in parroting
    the same kinds of positive developments in the news. What is not
    being recognized sufficiently is the reality of the central banks
    maintaining control, even as it slips away, little by little.

    October paints a more positive picture in the fight to rally price
    higher. After an attempt to decline under August and September, a
    rally did ensue. The negative aspect to the last bar is how sellers kept the range relatively small, proof that buyers are not able to wrest
    control away.

    The ability to sustain the October performance is tenuous, going into
    November. Bulls have another month to demonstrate that the demand factors are going to translate into higher prices.

    1GC M 2 Nov 13

    The takeaway from last week's negative outside range bar is that
    buyers have a few weeks to defend the swing low, at 2, and then
    create a higher swing high, above 1, and change the trend to the
    upside. Buyers are still not meeting this burden, but points 1 and 2
    are a show of effort.

    GC W 2 Nov 13

    D/S = Demand over Supply on the rally bar attended by the highest
    green volume bar since mid-August. This is the kind of bar you will see buyers defend, on a retest. Three TDs later, [Trading Days], there
    was another relatively strong rally bar, and the low of that bar is minor support. It also coincides with a half-way retracement of the October
    swing low to late October swing high.

    Friday's close was mid-range the bar, indicating balance between buys and sellers. Given that Friday was the third day of decline, it is a
    minor plus that buyers showed up to keep price from declining any

    What is common to all three charts is the necessity for buyers to meet the burden of proof in shifting the trend from down to up. There is a
    degree of effort seen in the daily chart by virtue of a sideways trend.
    This is a first step in stopping a down trend that could possibly lead to an up trend. Time and price will tell.

    GCZ D 2 Nov 13

    The relatively smaller range of October, combined with a neutral close and following a decline month for September, fits into the context of
    the strong, wide range rally of August, making the last two months a
    weak retest of that rally.

    Again, fundamental news is not driving price directionally for PMs.
    The fact that India is on track to purchase 6,000 tonnes of silver, this
    year, compared to just 2,000 tonnes for all of 2012, is a clear sign that overtly bullish news is not impacting the market, at least not for now.
    Ultimately, it will, but for now, the charts ain't buying it.

    SI M 2 Nov 13

    For as long as the sideways TR, shown in the box, remains intact,
    holding above the TR at the lows from June/July, this has bullish
    connotations. That may be all well and good, for the present, but
    buyers need to step up their game. It is that simple.

    SI W 2 Nov 13

    What matters on the daily chart are the last three bars. We already know price is languishing at these lower levels. What is to happen for
    the near term, moving forward?

    Price has been in a TR since early September. 23.50 is the upper
    bound, 20.50 is the lower bound. Wednesday's rally, 3rd bar from the
    end, was on high volume, ostensibly bullish as price rallied into recent
    high ground for October. Next day, price opened much lower, erasing
    the positive volume, and actually making it negative, for it trapped all
    those who were on the buy side of that volume.

    Thursday's bar, 2nd from end, was even wider range down with a poor
    close and on equally high volume. Clearly, sellers took control, but in a trading range, it may not be as meaningful.

    How to read Friday's small range bar? On the one hand, what
    happened to the sellers' momentum carrying price lower? It stopped,
    cold. On the other hand, the small range at the lower end of the bar
    tells us buyers were unable to rally price and extend the range
    higher, beyond the positive aspect of stopping the selling activity.

    The mid-range close on the bar, and just about unchanged from the
    previous close, tells us buys and sellers were in balance. That gives
    a tenuous edge to buyers for showing an ability to halt the sell-off.
    No one knows how it will develop by Monday's opening, but we know
    if buyers do not show up, sellers will have another easy time pushing
    price lower.

    The entire discussion has been focused on paper futures. We always
    add that continual buying of the physical metals should be an ongoing
    habit. It is impossible to know when instability will take over and align
    price with the reality of well known demand factors. When that does
    occur, the availability, not just of these great prices but for the metals
    themselves, may disappear overnight, for some period of time.

    Keep accumulating physical gold and silver, and make sure you
    maintain physical control, as well. Do not, under any circumstances,
    trust banks, and for sure, not safety deposit boxes.

    SIZ D 2 nov 13

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Comments (1)
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  • theshareminator
    , contributor
    Comments (16) | Send Message
    Thanks for sharing your analysis. From what I can gather the emphasis is on the buyer to pick up their game. But surely the sellers play an equally important role. My point being given the record number of reductions in ETFs this year, specifically in Q2 are there enough willing sellers going forward to significantly impact the price of gold? I think dynamics are changing regardless of buyer demand but an increase would be most welcome.
    1 Dec 2013, 10:20 PM Reply Like
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