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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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  • Silver And Gold - Friday = Qrtly, Mthly, Wkly Closes For Review. Starting Anew For Second Half 2012. 0 comments
    Jul 1, 2012 8:04 PM

    Sunday Evening 1 July 2012

    Last Friday was a converging close for the Quarterly, monthly and weekly charts. We have not included any Qrtly charts for there is ample information to be gleaned from the others. It is always best to start from observable facts, less subject to interpretation, as opposed to opinions that always have a sliding scale of reliability. The bullish spacing deserves front seat because it has lasted for so long, since the last swing high of 2008. This factor has been mentioned on several occasions. it is an important piece of information because it tells us buyers are stepping into the market without waiting to see if the last swing high will be retested. Four years and several attempts to smash the silver market down and the spacing is still there.

    Comment has also been made about how it has taken sellers twice as long to retest the two month effort from the buyer's rally off support, in December 2011. This tells us that sellers are taking twice as long to retest the gains previously made, and in a downward environment. It does not speak well of those efforts.

    Then we have the size of the range for the month of June, the second smallest range in a year and a half. This tells us that buyers have been more than willing to meet, and offset, the efforts of the sellers, thus preventing the range from extending lower, a fact. To that, we can add that the close was just marginally lower than the close of May, and the net downward progress since last December has been nil, another fact. Both tell us that in what appears to be a downward environment, sellers are not faring so well.

    While we conclude that there is no conclusion to be drawn in our is-the-glass-half-empty-or-half-full analysis, implicit in the observable facts are positive factors that belie that silver may be in trouble. Still, we must acknowledge that the edge remains with the sellers. Can they keep it, is the issue.

    (click to enlarge)SIA M 30 Jun 12

    Little more can be learned from the more detailed weekly chart, but sellers cannot escape being more vulnerable after a labored effort to get price under such obvious support. Price continues to move farther along toward the end of the wedge formation, and after the clustering of closes, [a resting spell for more downside or a turn in direction], we see a break lower. Sellers have buyers on the proverbial ropes, but wait. There is no further downside. In fact, price holds and closes up for the next week. What happened to the selling effort?

    You often read us saying to wait for confirmation, and this is a great example of why. Just as it appeared that silver was going still lower, the market held and reversed course, at least for now. New shorts and weak longs from last week now have a problem. The daily chart gives a better picture.

    (click to enlarge)SIA W 30 Jun 12

    We always say the singlemost important piece of information is the trend, and the trend is clearly down on the daily chart. It is also an aging trend, showing signs of weakening...not over, but weakening. Do not lose sight of that point. But we have an acknowledged bias, so onward we go.

    Could this be a bear trap? Price closed on the low. Volume was very high. The best conclusion was that sellers were in control. Then comes Friday. Price rallies without looking back, trapping new sellers and saying sayanora to weak longs getting stopped out. [Can't say we didn't warn bottom-pickers, last week].

    Given the observations from the higher time frames, and the activity from Thursday and Friday, we could be seeing a potential stopping to the downside. We definitely need to see confirmation, but buyers of the physical metal need not wait...just keep accumulating more.

    Haven't we been saying this for months? Yes. And hasn't silver corrected almost 50% from the highs? Yes, again. Buyers and holders of silver and gold have a different mindset. There will come
    a point in time when the tsunami-issuing of digital fiat, by a handful of people making these unaccountable for decisions, calling all the shots, will eventually destroy all fiat, [we contend that is the intent], and the price for gold and silver will not look back.

    Governments around the world lie, lie, lie, and cheat, cheat, cheat. This is done on a global scale, where countries drowning in debt are being FORCED to take on MORE debt. We hardly need to point out that this is like throwing more water on a person who is drowning, but people are not fighting back against what the moneychangers are doing to all the countries. "THE EMPORER IS NOT WEARING ANY CLOTHES!"

    Remember what happened to the accounts at MFGlobal. Gone! This is how bankers now work, and they are "working" with impunity. If anyone thinks MF Global was a one-time fluke, think again, but
    don't just think. Act and protect yourself. Which is better, holding physical metal that may have declined a bit on value, or paper that has been PROVEN to be WORTHLESS, except in the minds of those who continue to "believe" paper "assets" have some value. You can lead a horse to water...

    Once the moneychangers are done bilking the world and fleecing as much of the public as they can, the holding or gold and silver may become more difficult to buy without intense government scrutiny, and even outlawed, turning those who would protect themselves from the pillaging of governments into criminals for daring to see the truth and take action. So yes, the mindset for buying gold and silver, AND keeping it in your control, [certainly NOT in some banking institution or brokerage house].

    Buy the futures? Not for now. More work needs to be done before it can be said that the decline is over. We cannot deny that the number of people long and owning silver that are profitable since the highs are negligible, but given the economic and political environment, we are not sure how important that is, but it is an acknowledged reality.

    (click to enlarge)SIU D 30 Jun 12

    We have showed the same 2008 high in gold, the last swing high in silver, to compare the better performance of gold relative to silver. Gold did make another, higher swing high, but the bullish spacing
    is still much healthier. The overall structure of the gold chart remains quite bullish.

    Inside months provide little information. Evidence of that is seen in the historically widest ever monthly range in September of last year. The following nine months have all been inside that bar, and June has been inside the month of May. We could see more of the same. After all, there is an election coming up, and the powers that be will NOT accept any market showing evidence of the reality of a global currency implosion.

    (click to enlarge)GCA M 30 Jun 12

    We say the outlook from the chart is indecisive. That does not mean we view things in a vacuum. We can get the most important information from the best and most reliable source, the market itself. HOW a market reacts/responds to support/resistance areas gives us key information.

    EVERYBODY see the important support in both gold and silver. Silver reached and, so far, has held its obvious 26 support level. Gold did not even reach its equivalent support area, the 1540 area. It came
    close, but buyers stepped in, without waiting to see if support would hold if tested. That buyers are not willing to wait and see says something about their confidence level. That sellers were unable to push price just a bit lower speaks to their inability to control the market, at this level.

    All of that can change, but we have to deal with what is, and not what may or may not happen, and to date, the market put in a pretty good showing, for the bulls.

    (click to enlarge)GCA W 30 Jun 12

    Friday's rally in gold erased the previous six days selling effort, and was even able to erase a wide-range, high volume down day, 6th bar from the end. Silver did not accomplish as much, but put in a good showing for itslef, relativelt speaking. Both probes lower failed to uncover more willing sellers. There is a messge there.

    You can see the potential bear trap ore clearly here, AND, there was also a higher swing low, another positive indicator. Gold remains the better perfomer, but if a change in direction is to come about, it will need more time. Now is not the time to be long the futures.

    Patience remains the order of the day, along side the standing order to keep buying and accumulating the physical metals. We are reminded of the quote from Thomas Jefferson in a letter to his friend, Edward Carrington, back in 1788: "Paper is poverty...it is only the ghost of money and not money itself."

    (click to enlarge)GCQ D 30 Jun 12

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