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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 - All Eyes On China And Gold When Silver Could Be The Tipping Point. 0 comments
    Feb 22, 2014 3:53 PM

    Saturday 22 February 2014

    incense - [noun] an aromatic substance acquired from certain
    resinous trees with
    aromatic biotic materials which release fragrant
    smoke when burned. The odor
    produced from smoke is not the
    incense, but the substance that is burned.

    Fundamentals for gold and silver have become the incense of reality
    for Westerners. The primary focus is on how many tonnes of gold
    China has been importing for the past many years, the depletion of
    available stocks from the central bankers straw men, aka the LMBA
    and COMEX, the number of coins sold by various governments to the
    public, [a relative drop in the bucket, but its reporting has a
    sensation factor], etc, etc.

    We address this via charts as the best source for market pricing information, particularly citing an example in silver. As a note to
    anyone not overly familiar with charts, or even turned off by them
    for lack of understanding or appreciation, we can tell you that the
    markets are full of logic, and we use charts as a reference to explain
    how any market will develop in a logical way, [never random for
    those who mistakenly believe markets are such], and how that logic
    can be put to profitable use.

    All of the collective fundamental factors are important, and they are
    the underpinning for the future performance of the PMs, [Precious
    Metals]. They are the substance, but the smoke they are producing
    is clouding the sense part of the incense. Westerners see all the
    smoke and expect a hand-to-eye coordinated effect in the markets,
    in the form of higher prices, and therein lies the rub.

    For Westerners, and truest of Americans, gold is all about its price.
    Price, price, price. "What is the price of gold, today?" "Where is
    today's price relative to the highs of a few years ago?" Then there
    is the ultimate question, "When are gold and silver going to take

    Gold, in particular, does not have the same sense of importance for
    Westerners as it does for Easterners, mainly China, India, Turkey,
    parts of the Middle East. The elites, born from the Rothschild
    dynasty, through their central banks have manipulated not only the
    price of gold, but also the minds of the masses as they [do not]
    relate to gold.

    Once the moneychangers, [we use various names, but they all reflect back to the always clandestine Rothschild-created group that has
    been in control of the Western world money supply, and by extension, Western governments], once these moneychangers
    bankrupted and gained control of the United States, they directed the
    American proxy-puppetmeister, Franklin Delano Roosevelt, to shut
    down the banking system and reopen it under total control of the

    What came next? The deceitful scheme of confiscating gold from
    Americans, addressed in previous Commentaries, [See NWO
    "Problem-Reaction" Ploy
    , paragraphs 1 - 4, and 13 - 15, as a recent
    example]. Consequently, the central bankers removed gold from the
    public both physically and psychologically. Most Americans alive
    today have never even held or touched a gold coin, so it has no value as a money-related substance. "Mission Accomplished" for the elites
    in ridding its only competition to its paper fiat Ponzi scheme.

    For Easterners, gold has always been a part of their lives, and they
    respect PMs as a store of value when all else fails. The price of gold
    for Easterners? It does not matter. Owning it is all that counts, and
    they keep buying and holding gold irrespective of price. Families
    are known to keep it for generations.

    The point to be made is Western focus is on the smoke produced
    by the incense, and that, in turn, affects the common sense in
    recognizing the importance of owning, holding, and the ongoing
    acquisition of PMs, not because of its price, but for its historical
    relevance as the most effective antidote to fiat currencies, every
    one of which has totally failed.

    The foreign-owned Federal Reserve central bank issues fiat Federal
    Reserve Notes, [FRN], which the Fed deceitfully calls "dollars. FRN
    are commercial debt instruments, in law. If you know nothing else
    about money, know this: debt can never be money, yet Americans,
    indeed the world, has been tricked into the belief that FRN are
    money. A belief about reality does not mean the belief is true.

    It is difficult to stay on point when there has been so much deception
    by the elites over every aspect of life in the Western world. Making
    one point, the importance of gold for example, has so much
    deceptive background about which few Americans are aware, some
    of what if said does not make sense unless and until one becomes
    aware of the deception that has been ongoing, not just recently, but
    since the time when America gained, [what almost all do not know
    was temporary] independence.

    If more people realized the importance of owning physical gold and
    silver, relative to holding worthless fiat paper, they would be better off, but that is not going to happen. Even within the PM community,
    the focus is on how much one paid for their gold and or silver,
    relative to what the price is today.

    The price is where it is today because it has been purposefully
    suppressed by Western central bankers to keep the "dollar" alive as
    the world's reserve currency. Destroy that, and gold and silver do,
    which is why PM are so despised by central banks, competing
    against their paper enslavement scheme, and the Western banking
    system collapses. The central bankers will not allow that to happen
    until they have destroyed every fiat currency, first, and along with
    that destruction, the "value" of whatever people hold in paper form:
    cash, stocks, bonds, pensions, etc. It is in process of happening and
    has been for decades. Right now, events are leading up to the final
    phase of the dollar to undergo severe devaluation.

    People are focusing on the price of PMs, treating gold and silver as
    vehicles for increasing in price relative to their cost of purchase. It is
    the reason for buying and holding gold and silver that matters. As a
    consequence, attention is paid to what people think should happen to the price of gold and silver, and not on the reality of what the
    artificially suppressed market is showing.

    For that reality, we turn to the charts because the very legitimate
    fundamentals that will ultimately drive the price of gold and silver
    are not a barometer for the timing of any future price increases.
    Plain and simple, gold and silver will not increase in price until the
    socialist/fascist central planners and their puppet governments have
    confiscated as much wealth as possible from the masses, leaving
    many destitute.

    Know this: It does not matter what you pay/paid for owning physical
    gold and silver. Price is temporary; physical is permanent.

    We caught an early portion of the rally in silver and gold but exited
    prior to the larger gains of the past week, or so. It has been
    frustrating to be on the sidelines, but it never pays to "chase" a
    market. The results from Trade Recommendations for February have
    been great, so far, and none this month's recommendations were
    derived from trying to catch a rally already underway, as in gold and

    No matter what phase a market is in, there will always be set-up
    opportunities that offer limited risk and a higher probability for a
    successful outcome, and that will also happen for gold and silver.
    As ongoing buyers of the physical, we are not too concerned about
    missing a rally or two in a down trending paper market. It is critical
    to know that one should always make decisions about the reality of
    a current market and not what one may think will happen in any
    given market.

    The weekly gold chart is a simple one. A red flag is in effect based on the increased volume and the very small weekly range that resulted. The message from the market for this specific situation is that the
    increased effort on the part of buyers was met, even overcome, by
    sellers who prevented buyers from extending the range more to the
    upside. The daily shows more detail.

    GC W 22 Feb 14

    Charts are replete with information about past activity and how it can possibly influence present activity. The rectangular box on the left
    shows where price declined quickly from the 1360 level down to the
    1320 area. [Resistance should always be considered as an area and
    not just a specific price.] The current rally in gold stopped, so far, at
    the 1330 area.

    There are two important considerations to keep in mind. The upper
    channel line is a supply line that indicates when a market is in an
    overbought situation. What many fail to appreciate is that
    overbought can become more overbought, so it is not a reason, by
    itself, for making a trade decision.

    The other aspect is the sharp increase in volume, which happened
    to occur at the overbought supply line at the same time. Whenever
    there is a sharp increase in volume, pay attention. It is the earmark
    of "smart money" stepping up activity. Smart money buys low, sells
    high. That is axiomatic.

    Up until last Tuesday, the high volume day, gold made 12 successive
    higher lows. The increase in volume came at the high. Would you
    surmise smart money was buying or selling at that high day? The
    logic, to which we referenced earlier for those not too familiar with
    charts as we use them, would say smart money was selling.

    Consider the facts taken directly from the chart. Price was in an area
    where it declined previously, last October, early November 2013.
    Price was also at an overbought condition, converging with these
    other two factual observations, as volume had a sharp increase. A
    logical conclusion can be drawn from those facts, [vs opinions which
    can be different from one person to another].

    Will a correction develop soon, next week, based upon this
    information? We do not know, nor is it important to know what may
    happen, in advance. We have formulated an idea on what the
    market may do, but we have to wait and see if the market confirms
    the idea.

    If it does confirm a correction is imminent, the next step is to
    prepare for an opportunity to possibly be a buyer.
    This approach to
    the market eliminates guesswork or having to make a prediction.
    Time will tell, starting next week. If the market rallies more,
    instead, we wait again for another opportunity that will develop.
    Markets do not disappoint.

    GC D 22 feb 14

    There is a growing sense that silver, so often overshadowed by gold,
    may be the key for when the PM begin to rally in earnest. For all the
    severe shortage of physical silver and mining issues for more supply, etc, the chart does not reflect any sense of urgency that silver is
    about to launch a major rally.

    The issue of bearish spacing still exists, and the current rally is at the 50% area from the last swing high to low. Whenever a market does
    not rally past a half-way point, it is a general indication of overall
    weakness, emphasis on general.

    Silver shows the same sharp volume increase and very small weekly
    range, relative to the effort expended. It is the daily that shows how
    charts show the way in which a market provides all the information
    one needs to make an informed trading decision.

    SI W 22 Feb 14

    People focus their attention on current market activity, even to the
    extent of using intra day charts as a reference for decision-making.
    There is too much "noise" from an intra day chart to be consistent.
    They are not the most reliable points of reference. It is always better to start with the higher time frames and work down.

    The weekly chart already indicated a red flag alert from the high
    volume and small range bar. We will start with that bar, "B" on the
    chart, but we see that specific day as a point of culmination, based
    upon past market activity. Just as with gold, silver had a failed rally
    at "A," see arrow.

    We can see the market declined from that high, but what makes that high of greater importance is seeing how the market closed on 30
    October. There was a wide range rally and strong close near the
    high. Logically, one would expect upside follow through, next day.
    What happened instead? Price gapped down, opening under the low
    of that rally bar, the exact opposite of expectations.

    Whenever the market does something opposite to obvious
    expectation, that is an important message from the market itself!
    Pay close attention when that happens. The market failed to confirm
    the expectation. This gives greater credence to that area being
    resistance into the future. When we noted that "B" related directly
    to "A," you would not have likely made that pertinent observation.

    Further, "A" relates back to "C," which we just realized was not
    marked on the chart. "C" is the last failed rally in the middle of
    September, where there was a very wide range bar, followed by
    a small bar, stopping the rally, and price sold off sharply, next
    trading day.

    When you see how "C" acted, it puts "A" into a context that is less
    surprising. It is the combination of "C," "A," and the volume spike
    that strongly suggests "B" may also turn into a decline. By itself, "B"
    is not as strong a case for a potential reaction as when a "story" is
    developed from previous developed market activity.

    While all of the focus is primarily on gold, silver is not in as relatively as strong a position as gold, and it may be a truer roadmap for when the eventual bull market emerges, at some as yet unknown point in
    the future. Whenever that rally starts, it is almost certain that the
    first signs will come from the charts, as described.

    Stay tuned.

    SI D 22 Feb 14

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