edgetraderplus'  Instablog

Saturday 20 April 2013

Memo To Central Bankers:

How dumb can you be? What better way to expose your naked
short backside than to trash a market with known world-wide
demand? So arrogant, so parochial. The world thanks you. The
bullion dealers than you. The gold/silver buyers thank you.

When there is more and more smoke about the possibility of the
bullion cupboards being bare, the fiat-makers are doing the same
thing to paper gold and silver as they have done to currencies:
destroying them.

Those few banks responsible for the naked shorting in both gold and silver do not have to post any margin, nor do they have the
underlying physical were they required to make delivery. In essence, they are doing what bankers only know how to do: create fiat paper
gold and silver that exists only in the minds of the mis-guided
believers.

People who are following the "yellow brick road" are discovering that the "Wizard behind the curtain" is a collective of the three main
characters: no brain, no heart, a total coward, and most
importantly, no true power! Central bankers are a bunch of
munchkins.

We have frequently stated that those with power will not give it up
without a fight, and that they will stop at nothing to retain it. You
are witnessing an example of the extremes to which the fiat-issuers
will go. We have also frequently warned that when it comes to
markets, Anything Can Happen! You have an example of both, from
last week.

We know from direct experience that the available supply for
physical gold and silver is becoming more problematic, and the
premiums have exploded. Almost all dealers have no supply to meet
the real demand for one ounce gold and silver coins. They stopped selling them, and availability for 10 oz and higher bars has been
delayed for weeks. For this, too, we have been sounding the alarm.

Price is not the ultimate issue, at this stage. Owning and having
possession of the physical is what matters. Silver may be at $23,
and gold at $1,400, but try buying them at those prices! Get what
you can, whatever the price.

In a Commentary from a few weeks ago, [Comex Prices Manipulated? Still "Accurate." http://bit.ly/YYX5HV, if you missed it, and it also
captures the essence of why the physical market is so much more
important than the paper one, relative to what just occurred, last
week], the point was that the charts which reflect New York and
London exchange traded paper is precisely what the central banking cartel wants everyone to "see" and "believe." Their attempt to have
"paper cover rock" scam is tearing apart.

These charts have lost relevancy because they do not reflect the
actual demand for the underlying physical metals, but they do show
some interesting points. The spike lower for April, not yet over,
shows what central bankers want you see and "fear," but what the
chart does not show is that behind that "curtain," demand for the
physical has spiked even more to the upside!

Instead of driving people away from gold and silver by artificially
suppressing the now fiat paper market, the true picture is in the
physical market, and around the world, investors are flocking to
dealers to buy record amounts of gold and silver. Reports from
China, Singapore, Hong Kong, India, Australia indicate long lines of
more than willing buyers to "get while the getting has gotten
better!" Now, it takes less of the trash fiat to buy more of
something with real intrinsic value. Unfortunately, most Americans
are missing the boat, but those who do know are also experiencing
delays, unavailability, and sharply higher premiums.

We often state that exceptionally high volumes are an indication of
a transfer of risk from weak hands into stronger hands. Irony of
ironies, the central bankers are now the weak hands, and their
efforts to suppress PMs has merely fed the voracious appetite
existing for direct ownership of the physical, the undeniably stronger hands.

Central bankers are committing financial suicide and bringing about
consequences that are directly opposite from what they intended.
What should remain uppermost in the minds of the buyers/holders of the physical PMs, [Cheers to you all!], is the time factor. It is
unlikely either market will turn around any time soon.

The assault is not over. Wide range bars, and especially those with
exceptionally high volumes, also tend to lead to trading ranges in
the following weeks or months. It takes time to digest and absorb
the risk transfer.

From wherever the ultimate low of the current down swing will be,
price will trade in that range, as shown below using last week's low
as an example. Patience will now be required. Those who have, and
those still acquiring physical gold and silver can relax and let the
natural order of supply and demand restore itself from its present
distortion, however long it may take.

Can silver still go lower? Yes, it can. Will it? Momentum is to the
downside, at present. No one knows that answer, just as no one
expected what just happened in the manner in which it did. We
drew a potential support line but have no responsible answer as to
where this swing low will end.

As explained in the daily gold chart, you can expect a protracted TR to follow for some time into the near future. It is worth noting that
when "surprises" hit the market, they tend to do so in the direction
of the existing trend.

The trend for futures is down. The trend for demand of the physical
is telling a different story. While we often say, "Charts do not lie,"
sometimes the truth is hidden. There are exceptions to everything.
History is on the side of gold over fiat. If you want to know the
future, look to the past.

We conclude with some interesting charts from a Chris Martenson
article, This Gold Slam Is A Massive Wealth Transfer From Our
Pockets To The Banks." For those who hold/own physical gold and
silver, we say there was no such wealth transfer. Most reports say
that demand for the physical increased sharply. Paper holders got
hurt, but there have been so many warnings not to hold any form of paper that people make choices, and choices come with consequences.

The point of his charts is to see what so many have been saying
about market manipulation. It is alive and well.

(click to enlarge)

The areas circled represent the largest 'dumps' of paper gold contracts that I have ever seen. To reiterate Ross's comments, there is no possible way to explain those except as a concerted effort to drive down the price.

To put this in context, if instead of gold this were corn we were talking about, 128,000,000 tonnes of corn would have been sold during a similar 3 hour window, as that amount represents 15% of the world's yearly harvest. And what would have happened to the price? It would have been driven sharply lower, of course. That's the point, such dumping is designed to accomplish lower prices, period, and that's the very definition of market manipulation.

For a closer-up look at this process, let's turn to Sunday night and with a resolution of about 1 second (the chart above is with 5 minute 'windows' or candles as they are called). Here I want you to see that whomever is trading in the thin overnight market and is responsible for setting the prices is not humans. Humans trade small numbers of contracts and in consistently random amounts.

Here's an example:

Note that the contracts number in the single digits to tens, are randomly distributed, and that the scale on the right tops out at 80, although no single second of trades breaks 20.

Now here are a few patterns that routinely erupted throughout the drops during Sunday night (yes, I was up very late watching it all):

(click to enlarge)

(click to enlarge)

These are just a few of the dozens of examples I captured over a single hour of trading before I lost interest in capturing any more.

Sunday 14 April 2013

What is currently going on in gold and silver is nothing short of a
concerted effort to crush PM advocates. It is a measure of how
desperate the central banking cabal has become. In our last
Commentary, we stated that central planners/bankers would stop
at nothing to further their evil ends: the confiscation of wealth, by
whatever means, and the destruction of the middle class, as the
bankers are moving, stumbling toward their vaunted New World Order.

From Bullish Hopes In Bear Market, Trend Wins:

"If you can keep your head when all around you are losing theirs...
If you can trust yourself when all men doubt..."
Edited from Rudyard Kipling's "If"

The point is to keep a level head in what appears to be turmoil for
the real turmoil is on the other side, the opposition to PMs as a
known alternative to the issue of worthless fiat. We cannot say
nothing has changed, for price just got lower, but the attempt to
destroy whatever opposes fiat debt is obviously a high priority for
central planners, and their message is very clear: they will stop at
nothing to continue their fraud. Nothing." [end]

Everyone personally holding physical gold and silver, as we have
been recommending, has no margin call to meet and no reason to
sell. This is a temporary situation, and it will pass. Now is not the
time to panic, for that is the intent of forcing gold and silver through strong support levels.

Stay the course. To the extent you can, continue buying the
physical metal. The PM ransacking is proof of how fearful central
bankers are. It is the wooden stake into their financial main artery,
for surely they have no heart.

Nothing has changed that would warrant this level of sell-off, and if
there is anything to be learned from this banker raid, it is what we
stated above, "they will stop at nothing to continue their fraud.
Nothing." What central bankers are doing is beyond even what we
imagined.

Bankers are in a state of panic. There is NO stability in anything
they do, and they are circling the wagons. It is them against us. Do
you see a single government coming to the aid/rescue of the
people? No. Governments are the tail of the central banker dog
when most people think it is the other way around. This is a
message that should be sinking in for more and more people who still believe in a benevolent government. All governments have devolved
into wealth-stripping.

The EU is going after bank deposits, and now Germany is talking
about a wealth tax on all property, stocks, bonds. In the United
States, people's wealth has and continues to be "confiscated" via
the invisible inflation tax. For those who choose to remain in the
banking system, it is your choice. That clock is ticking. Cyprus was
the alarm.

You are on your own out there. Stay with what works, and do not
let thieves steer you off a course that has a proven history of
working. Buy silver, buy gold.

The visual confiscation tax in the United States. Is anyone still
thinking of selling their gold or silver?

Chart by Sharelynx

Sunday 14 April 2013

One of the best aspects of reading developing market activity is that it reduces any market to the opposing forces of supply and demand. It can be any organized market, anywhere. The factors of fear and greed universally apply to all investors/traders.

Reading developing market activity, in context with past price
behavior, is a short-hand way to follow what smart money is doing. Smart money represents the controlling influences behind price
movement. We recently did an analysis on the German DAX, [Different Country, Different Culture. People Are People, Charts Are Charts,
http://bit.ly/ZDvxeg]. What held true for that analysis equally holds
true for the FTSE 100.

The starting point for any analysis is defining the trend and doing it on a higher time frame to put a market into a context for decision-making. The market sends out a lot of information, captured in the bar ranges and location of the closes on a bar. The size of the range indicates the level of strength/weakness of price movement. The close tells us who
won the battle for that session, whether it is monthly, weekly, daily, or intra day time frames.

Smart money does not like to let it be known what its intent is when in the market, but their hand can be detected by reading the developing
market activity and the volume behind the effort. Neither the FTSE nor the DAX provide volume, so an important element is eliminated. As with any market, you learn to deal with what is.

The 2007 high is obvious and important. After a labored rally since the
2009 lows, much of which was spent in a sideways movement for three years, there was a strong rally breakout in January, fourth bar from
the right. The last three bars are the focus of attention. We need to
determine if the market is absorbing seller efforts, or if the effort of
sellers is overcoming that of buyers. A look at the more detailed
weekly may provide that answer.

The trend has been up since 2009, already identified as relatively
labored, so we know that buyers have proven themselves, and the
onus for a change in trend is on the sellers. The character of the
weekly chart should also help in determining the quality of the trend.

Right away, it becomes apparent that the quality of the trend is not
strong. Price has moved sideways since the late January breakout. The message from the market also alerts us to a lack of demand bar at 1.
The very small size of the bar tells us there was a decided lack of
demand, demonstrated by the inability to extend the range higher.
Occurring at the high of the rally, and under monthly resistance, the
market is signaling a red flag warning.

Prior to bar 2, six of the previous 8 ranges had weak closes, yet more
factual information provided by the market that speaks to the
character, or quality of the trend. Contrast those bars with the one
labeled 2. It shows Ease of Downward Movement, [EDM], and a
low-end close. That one bar also erases the buying effort of the
February and March, a second red flag warning.

Where are the buyers? An apparent lack of demand is noted by and
invites sellers to step in and take over.

The possible negative tone set by the monthly was reinforced on the
weekly. We can expect to see clearer detail of the same on the daily,
and it does not disappoint. The lack-of-demand March high leads to a
correction, but it stops within the supporting trading range activity
from February. When price fails to rally to new highs, a lower swing
high is created. What follows that high is another warning message.

We see EDM, three wide ranges lower with weak closes, erasing the
past two months' entire buying activity. The ability of price to slice
through so quickly is the market telling us that the buying effort during February and March was of a poor quality. A new swing low follows the lower swing high, and by definition, the daily trend has turned down,
at least for now.

The next rally stops at 2, not quite confirmed, but Friday's lower high,
lower low, and lower close will likely lead to more selling on Monday.

The monthly and weekly time frames remain up, not strongly, but still
up. The lack of strength is attracting sellers to step in and take
control. Temporarily, that control has been wrested away on the daily
chart. There is still some support in the 6150 area, and how price
responds to it, should it be tested, will provide more important
information.

For now, the demonstrated weakness is a sign of caution. One needs
to take an inventory of holdings to see if there are stocks even
weaker, and they should be either sold or have close stops to keep
risk exposure contained. The same would hold true for one's entire
portfolio. Profit-taking may ease potential erosion should the apparent
price weakness show no ability to attract more demand.

An analysis like this makes decision-making more pragmatic, using the
available factual information generated by the market, always the final
arbiter. The emotional element is removed and reduced to dollars and
cents, or pounds and sense. It appears that is what the smart money
is doing.