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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 - Market Activity Will Always Trump News/Events/Fundamentals 0 comments
    Mar 8, 2014 3:49 PM

    Saturday 8 March 2014

    There is something going on in the gold and silver market, and it is
    difficult to ascertain exactly what it is. Perhaps it can best be
    described as a change in market behavior that may be defining a
    potential change in trend. For many, the presumption has been,
    "Gold and silver are going to go to the moon, for the following reason[s]...." What followed was then a litany of the same facts that have
    been widely known for well over a year, and the same types of
    graphs depicting various aspects, [depleted gold stocks, cost of production v current price, etc], very often nicely colored and
    reproduced, but to no practical effect, at least in terms of the
    direction of price for gold and silver which continued lower until
    the end of 2013.

    Consider the latest in an ongoing series of unfolding events:
    Ukraine/Crimea/disruptions in governments there/Russia protecting
    its "turf"/the EU and Obama threatening, [never with any apparent
    way of following through], Putin over how the EU and US "feels" how
    the Ukrainian situation should be resolved as both failing entities see
    fit, naturally in their favor. Obama doing what he does best, reading
    from a teleprompter, and threatening to impose sanctions in an area where the US has no right or justification to be meddling, is
    engaging in yet more misguided international [lack of] diplomacy,
    just like in Syria.

    There is the potential for war, and war of any kind is uppermost on
    Obomba's agenda, yet the stock market and PMs market seems
    nonplussed. War is the last effort for distracting the masses from
    the final stages of the decline of the United States, already well underway into Third World status, but not yet officially recognized.
    War has always been the solution for the elites. It is the Rothschild
    formula for successful domination by financially ruining countries
    that engage in costly, [read profitable for the elites],wars.

    It would be better if we could present something pertinent to add to
    the mix, but everything we read about what is going on, and how it
    will impact gold and silver, all makes for interesting reading, but all
    also way off in terms of market timing that is to launch the next [yet
    to appear] bull market for PMs. 2014 is now THE year for the "big
    breakout." It has to be presented as such because calling 2013 the
    big year will no longer work.

    Will PMs take off in 2014? Maybe. Let us be among the few to
    acknowledge that we do not know. It may or may not occur in 2014.
    The same people calling for 2013 to be the year have just changed
    the digit from a "3" to a "4" and are now parroting the same
    outlook that failed for last year to happen this year, just with a
    greater sense of urgency, or maybe desperation. It is possible that
    a bull market can fail for 2014, too.

    Irrespective of whatever the market does, the one timing factor
    that is of the utmost importance is that of accumulating physical
    possession of gold and silver. The time has been and continues to
    be "do it now!" No one can trust what the elites will do, via all their
    controlled Western governments, with ALL political leaders marching
    to the incessant drum of fiat takeover and destruction of every
    possible nation they can control. Ukraine is an example of such a
    [clumsy and doomed to fail] attempt to bring that strategically important [to Russia] nation into the rotten fold of central banker

    When the collapse of US power and the fast-fading US "dollar" as the
    world's reserve currency falls, in the latter stages of happening, the
    best and most reliable financial saver will be the value of physical
    gold and silver, recognized everywhere in the world,
    except by
    Western central bankers. The inevitable collapse of the fiat Federal
    Reserve Note, [FRN], aka "the dollar," will lead to a Venezuela-type
    devaluation of everything held in the form of paper: currency, bank
    accounts, bonds, stocks, pensions, etc.

    Everyone who chooses to hold any form of paper asset will suffer
    financially and suffer dramatically. Everyone who owns and
    personally holds
    physical gold and silver will survive in much better shape. From our perspective, it does not matter what you
    We bought silver at $40, $45, even $48 for the same reason
    for buying at recently at $21. The same for gold. We paid as high as
    $1700, and recently $1300. The higher prices are what the PMs were
    at the time of planed, routine purchases, as a form of protection
    against the ravages of fiat destruction. Like we said last week, price
    is temporary, possession is permanent.

    At no time was there ever any concern for having overpaid or wasted rearview mirror regret for not having gotten some of the PMs
    cheaper. The focus on price is misplaced. The focus is on financial
    survival, and a year too early is far better than a day too late.

    There are some who believe paying attention to charts that reflect
    the manipulation of exchange-priced gold and silver is a waste of
    time. Some argue the "real price" is higher, as much as $100 or
    $200, at times. This is true, if you are China, Russia, India, Turkey,
    Dubai, and buying by the physical by the tonne. Even under those
    circumstances, their purchase price is still related to the paper price,
    and most of us are buying in considerably lesser quantities. Until
    things change, which they eventually will, the best barometer isthe charts that are available.

    We opened with a sense of some changes going on in the PM
    markets, of late, specifically the uncorrected rallies since 31
    December 2013. The last three weeks in the gold chart show smaller
    ranges, [a lessening of buyer demand, and selling supply, as well],
    but the buyers have been winning the battle, of late.

    Some of the sense of unease with the rally is attributable to the
    punishing corrections that earmarked last year, especially April and
    June. We are seeing some $10 price corrections, but the difference
    now is recovery has been immediate, and holding. What we know
    about market trends that change is that change takes place over
    time, and there has not been much time to say a trend change has
    occurred in gold, at least in weekly and monthly charts.

    The down trend has weakened, and the process of change is better
    monitored on the daily chart, where a trend change has been

    GC W 8 Mar 14

    For consistency and simplicity, we define a trend change to the
    upside as a higher high, a higher low, and another higher high, and
    it is the latter that determines a change has taken place. [This has
    not happened on the weekly chart]. One can define a change in
    any other way, as long as it is consistent.

    There are two things to note on the daily, and let us add that all of
    the developing price activity is unfolding during events all over the
    world, and acknowledging all of the purported shortages on the
    exchanges, depletion numbers, record sales of coins to the public,
    etc, etc, etc. How much of what you consider to be critically
    important to the price of gold is reflected in the charts?

    The first aspect of importance is the thin lines connecting the swing
    highs and lows. If they were not shown, you would not likely notice
    how the rallies since December have been greater in length than the
    rallies prior to December. Same for the corrections. Prior to
    December, they lasted longer and declined more in price. This is a
    potentially significant change in market behavior.

    The second note is where the current rally has stopped: just under
    the October swing high. The rally did not reach the swing high, [It
    may next week, but all we can do is deal with what is known], and
    that could be viewed as a typical indication of a rally in a broader
    down trend. At the same time, price has not declined away from
    that swing high area, either. [It may next week, etc].

    Price reacted lower by $20 on the jobs number, for those who still
    believe in the reliability of those Obama administration-generated
    [fictitious and misleading] numbers. What was interesting was the
    market's ability to recover half the loss, late in the day and before
    the exchange powers decided where the "closing price" would be.

    There is a third point to make, which we did when analyzing the daily silver chart after this one. It is the increase in volume and the
    location of the close. The location of the close, about mid-range the
    bar, indicates buyers were present. The increase in volume says that the strength from the buyers was sufficient to rally price back,
    somewhat. The conclusion is to watch for additional support to enter
    the market.

    It is not important to know what the market will do from one day to
    the next. By seeing the location of the close of any bar, how wide or
    narrow it is, what the volume is, all give clues on what to expect
    could happen. With that information, one can then be prepared to
    take advantage of what the market is telegraphing and gain a market edge for a position.

    Will price correct more next week? The probability is greater for a
    yes than a no. The fact that there was some buying evident on Friday may mean any further correction could be limited. Even if the
    correction extends lower, at least we know there is no reason to buy, at this point. Not being long, the market can correct as low as it will
    go, and there is no risk in watching. If activity shows more evidence
    of buying, being prepared to take action ahead of time eliminates
    being surprised and can lead to a new long position that has less risk
    and a greater probability of a profitable outcome.

    This is the purpose of reading developing market activity. The
    market almost always tips its hand, as it were.

    GC D 8 Mar 14

    Silver continues to be somewhat weaker than gold, but the relatively small bar lower, last week, suggests sellers were not having an easy
    time pushing price lower. That is a piece of information to use when
    viewing the daily chart.

    SI W 8 Mar 14

    Here is where greater detail can pay off. Silver had an obvious
    breakout from the wide trading range to the upside, in February.
    Right now, price is in the process of retesting that breakout. When
    you know that a retest of a significant breakout can lead to a low
    risk trade, you more closely monitor daily, even intra day activity,
    for clues that indicate a decline is ending and a rally is likely to

    The breakout level is the $20.50 area. We drew a line connecting the two smaller swing highs in February and March. A parallel support
    line was then drawn from the February low to create the lower,
    support channel line. We now know, in advance, that price is
    nearing potential support.

    What makes the developing analysis more pertinent is the high
    volume associated with the wide range sell-off on Friday. On its face,
    the sell-off may look negative. When you remember that smart
    money sells high and buys low, the increased volume would not be
    smart money selling; that was more likely 7 bars earlier. However,
    after that increased selling 7 bars earlier, what was the market
    response? It moved sideways, not lower.

    We see this as a more likely change from weak-handed buyers
    selling into stronger-handed buyers. The analysis can always be
    wrong, but no action has yet been taken on it, so there is no risk
    involved. What the observations do is allow for preparation for a
    buy, if and only if there are signs to go long. Those signs would
    depend on what your trading rules are. We know what ours are,
    and if a potential buy opportunity is setting up, we will be
    prepared, base solely on what information the market is sending.

    The number of coins sold this month, last month, last year, or what
    happens in Ukraine will not help anyone time a buying opportunity
    better than what the market advertises on a more reliable time
    frame and with greater clarity. Predicting what a market may or
    may not do is for egos and margin calls. Following market activity
    that leads to a more obvious conclusion, minimizes risk exposure,
    and increases the probability of a profitable outcome is our hands
    down choice.

    SI D 8 Mar 14

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