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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 - Disconnect Between Fundamentals And Price. Perception Rules.

    Saturday 18 January 2014

    What will it take to turn the gold market around? One would think it
    would be obvious that fundamentals are not the answer, while so many
    believe that fundamentals rule. We are reminded of the
    fundamentalists, especially "value investors" whose financial world was
    literally turned upside down when the stock market crashed in 2008.
    While "value" and "fundamentals" were considered the economic
    bedrock of the stock market, it turns out that everything is really
    steeped in perception, for they changed dramatically.

    The stock market's investment compass was smashed back then, when
    many once considered solid companies lost half their value, some even
    more. The investment community was stunned. But that is "ancient"
    history, as is almost anything that is longer than a few months in
    time. That has been [nearly] forgotten and replaced by the fiat
    euphoria levitating the stock market for the past few years.

    What does this have to do with gold? Like everything else, it is all
    about perception, even in the Precious Metals, [PM]. It gold a
    commodity, it is money? [History proves that only fools consider it a
    "barbaric metal.'] It has been the most consistent barometer of value
    for many centuries. This is but one perception that many in the PM
    camp have forgotten to hold fast, and they only focus on current price
    relative to its peak of a few years ago. A few years out of over 5,000,
    and some wonder about the validity of gold as a safe haven? Oh, ye
    of little faith comes to mind.

    It is a misplaced hand-eye coordinated thought. "All of the
    fundamentals are screaming
    high demand for and a shortage of
    physical gold, but price keeps on dropping."
    Or any close variation that captures price insecurity in the minds of "gold bugs," or as we call them, smart people. If your perception is focused solely on where the
    price of gold is, as opposed to where you think or believe it ought to be, the elites would like to sell you a renewable subscription to their "Fiat Is Better" newsletter.

    Why is gold not at higher price levels?

    An excellent question, and we repeat, the perception that fundamentals should rule is a misplaced one, at least for now. Everyone who is even remotely interested in gold knows that the COMEX and LBMA vaults are
    just about bare. The COMEX has been nursing a default on physical
    delivery for gold and silver since last summer. There have been none.
    Those who stood to take delivery received cash, or rolled forward. This
    is certainly an acknowledgment that there is no gold or silver, yet that
    fact has not translated into a stampede of customers demanding gold.
    Even Deutsche Bank cannot get delivery of their own gold!

    Keep focused on your objectives and the reality of events. Right now,
    people can buy gold coins and bars almost at will. If Deutsche
    Bank has to wait seven years to get just some of its gold back, and
    they are not an isolated example, if the vaults are nearly depleted, and
    you can buy gold coins and gold bars from dealers every day, in light of the whole world recognizing a shortage, everyone should be taking
    advantage of the disconnect between perceived value and the reality of
    current prices and buying as much as they can!

    One thought to keep in mind is, if fundamentals are not what is moving
    the markets, then what is? If the perceived catalyst of fundamentals is
    wrong, then there must be some unseen forces at work. If we can
    perceive what those forces are, we may better understand why PMs are priced where they are. We will have a related article on silver,
    tomorrow, to address that one.

    For right now, there is a 35% off sale going on.

    This is lock-and-load, fire at will, and not a time to be keeping one's
    powder dry. If you know all the available physical gold is being shipped East, primarily to China, and you have immediate access to however
    many ounces you want to buy, why is there any concern over the
    current price of gold? What happens if you cannot buy at any price?!
    Better a year early than a day late.

    The reality is, whatever gold is available is relatively cheap. If you can
    answer the question, for how much longer will you be able to buy it,
    then plan accordingly. If you cannot answer that question, then plan
    accordingly for that event, as well.

    We understand that the charts reflect the bogus COMEX manipulated
    paper price of gold, but that is all that is available, and the physical
    market, measured by tonnes going to a variety of mostly BRICS
    nations, is at a premium to paper. However unreal the COMEX and
    LBMA pricing mechanism may be, it is all that is available, at least
    for now.

    Despite the fact that others who make predictions draws reader
    attention, we do not make them. For one, no one knows how the
    future will develop, just review all of the predictions from 2013 for
    proof. Secondly, there are utterly unnecessary. The market will
    indicate when the trend has changed, and there will be ample
    opportunity to be long paper futures, that is, if there is still a paper
    futures market in the next year.

    The trend remains down. Any predictions you may be reading currently are mostly a regurgitation from the same ones who made predictions
    last year. Is it really necessary to ask how they worked out? One thing we can say about the charts of the market is that they do not mislead.
    They can be misread, at times, but overall, the trend is accurate.

    Will the current 1200 area continue to hold? Odds say no, based only
    on the current down trend, but things can change. However, it is
    always best to wait for confirmation of a change before acting contrary
    to the current trend.

    Compare how quickly price rallied from the late June low, and the wider bar ranges relative to how price has been "hugging" that support line
    for the past several weeks. Also, the ranges are smaller and volume is
    less. The difference is what suggests that price can still go lower, or do more retesting of the 1200 area, at a minimum.

    Can price, or will price rally further into next week? Odds say yes,
    based upon the upper range close, Friday, but how much and for how
    long, given the trend line resistance is not highly promising. This does
    not mean price cannot rally $50 next week, but that we have to make
    judgments based on what is known, at this time.

    Just look at the chart and ask yourself, how many longs are making
    money since 2011? To be clear, this pertains to the futures only. We
    have been constantly advocating the purchase of physical PMs
    throughout the decline, but for a vastly different reason.

    GC W 18 Jan 13

    October and November saw 1260 as support in gold. Once broken, in
    November, 1260 has become resistance. Proof of that was when price
    was rebuffed near mid-December on a retest.

    We saw the small range bars, 2nd and 3rd from the end, as weak
    demand, especially after price declined on a wider range bar, 4th from
    the right. Friday's ability to rally came as a surprise, but the overall
    picture is still one of weakness. Maybe 1260 will be tested again this
    coming week. It will be important to observe how price reacts to get
    an idea of the current strength of weakness for gold futures.

    GC D 18 Jan 14

    Jan 18 3:58 AM | Link | Comment!
  • Gold And Silver - There Are Reasons Greater Than Demand For Owning Them.

    Saturday 11 January 2014

    Here is some very cogent rationale for owning gold and silver. None
    pertain to the ever-ending reasons that demonstrate great demand. Everyone has been hearing about them in a steady stream
    for the past year, and the impact on the market has been nil. Often
    in tandem with the latest news, like record coin sales from...[pick a
    mint or country], is the lament from PM holders on where the current
    price of gold is, at lows for the past two + years, making many question the validity of owning PMs.

    For any self-doubters, especially those who paid for their PMs at 50% to 100% higher in the past year or two, by example, we still hold some
    gold purchased at $1800 the ounce, some silver at $48 the ounce. That
    just happened to be where gold and silver were at the time. We were
    engaged on a consistent plan of purchasing, regardless of price. There
    were specific reasons for wanting to own physical gold and silver, and
    none of those reasons have changed. In fact, they have increased.

    We now live in a financially insane world. The government tells
    everyone that 2 + 2 = 5, consistently, and people continue accept the
    lies. If you listen to the government and the bought-and-paid-for
    mainstream media, all is well in this country, when in reality, we are
    dealing with recession, inflation, joblessness, and general instability.

    The biggest problem is debt. Actually, it is the core issue. Bury people and countries in debt, and demand their hard assets as payment in
    return, aka the Rothschild formula, in use for hundreds of years. The
    debt burden is now so onerous that it is becoming almost impossible to
    keep under control. The elites are so skilled at getting their false
    message out, through governments, that people are more than willing
    to believe the lies.

    Greece was a warning shot for the rest of what passes as a [not so]
    free world. The message? It is mathematically impossible to sustain
    the growing debt burden in any given country with no ability to ever
    pay it back. The United States has become a welfare state for too
    many of its citizens. The largest growth sector in this country is the
    federal government. The government produces nothing. Everything
    it spends has to come from the people, or increased borrowing. It is
    a tapeworm consuming its host

    The Fed has kept the stock market propped up by tapered window
    dressing. Interest rates are artificially being held low to enable the
    government and all the banks to keep the debt Ponzi scheme on life-
    support, which ultimately leads to death, financially.

    Zero rates means keeping the accumulating interest costs of
    government lower. Allowing rates to rise to a more normal 3% - 5%
    would collapse the federal government and all of the insolvent banks
    which are responsible for every financial problem everyone now faces,
    except the privileged 1%.

    No one in the past 100 years, since the Federal Reserve Act was passed and the privately owned Federal Reserve bank usurped the organic
    Constitution and took over issuing this nation's money, has done
    anything to abolish the Fed.

    "Give me control of a nation's money, and I care not who makes the

    -Mayer Amschel Rothschild

    It really is not hard to connect the dots if one truly wants to do so. The information is out there, but few are willing to seek out the truth, and
    instead, prefer dwelling in the [dis]comfort of debt-laden lives.

    There was one person who tried to make a difference: John F Kennedy, when he decided to print billions of silver-backed dollar certificates.
    The world knows that Kennedy was assassinated and replaced by
    Lyndon Baines Johnson. One of Johnson's first official acts, within days
    of being sworn in, was to rescind Kennedy's order to issue the silver-
    backed certificates. The elites have their priorities, and puppet
    presidents must do their bidding.

    Why aren't politicians doing everything possible to get rid of the legal
    [but not lawful] privately owned Federal Reserve Banking system that
    charges the government interest on the purely fiat money the Fed
    issues? Very few people in this country wonder why the U S
    government does not issue its own currency, [as it did prior to the
    Federal Reserve Act of 1913], and not have to pay interest on the
    currency issued.
    One of the largest expenses is the federal government is the debt owned to a foreign entity that controls this country's own
    money. Federal Reserve Notes are not money. They are debt
    instruments. Debt can never be money. Dwell on that thought for a while.

    The elites use the Federal Reserve to entirely control the government
    and used FDR to ban gold ownership in 1933. Previously, gold and
    silver were used exclusively in backing United States Notes and gold
    and silver coins issued by the U S Treasury. Since 1933, gold has been
    absent from the public arena, and 1963 for silver. So many in this
    country are unaware of the important role gold and silver have played.

    Prior to 1933, people used gold and silver in all ways of their daily
    lives. No one used credit cards, and people had no need for socialist
    government services. This is why the elites had gold and silver
    removed from circulation as money. It was accomplished over decades, by design, so people would not notice the change and gradually accept
    the substituted Federal Reserve Note system.

    United States issued Treasury Notes, backed by gold and silver, were
    allowed to circulate along side Federal Reserve Notes, [debt
    instruments], and people began to equate the two as th same. At that
    point, the Federal Reserve began withdrawing all US Treasury Notes
    and had them destroyed.

    You do not need more statistics about the current shortage of gold and
    silver, or more citing on the number of tonnes of gold China continues
    to import. That information has been of little practical use. What you
    need to know is the kind of factual history we just briefly presented in
    order to know that it is incumbent upon your future to take whatever
    measures necessary for surviving the financial time bomb waiting to

    It is not important to know what others are doing, but it is critically
    important to know what others are doing to you, and what you are
    going to do for yourself and your family. It is a proven historical fact
    that every fiat system has failed, utterly. The U S is in that process,
    right now.

    The actions of the government will be your first signs of imminent
    collapse. Anyone who chooses to keep money in the banking system
    is fodder for the banking whores. They will steal your money. It is a
    known fact that all money you deposit into the banking system
    becomes their money, and you, by banking laws, become an unsecured creditor.

    The government will raid private pensions, like Hungary and Poland
    have done. Your pension will likely become nationalized, and you may
    receive a 10 year government bond in return for whatever money you
    have saved. It happened in Argentina just a decade ago. There is
    ample evidence throughout the world of what a government will do to
    survive, at your expense.

    You want a reason to own gold and silver instead of anything paper-
    issued? Forget about statistics and the demand side of the equation.
    All of the events discussed here, and worse, are on the agenda of the
    elites to gain world control over everyone. Without gold and/or silver,
    it will be almost impossible to survive what is to come. No one knows
    when, but when it does, and it is a historical certainty, are you really
    going to care what you paid for your gold and silver?

    We all have choices to make, and we all deal with the consequences of
    these choices. Do not worry if you paid a high price for your gold and
    silver. You do not intend to sell it, so any loss is imagined. Stay true
    to what history has proven. No one knows when the collapse will be
    realized, but one has to continue to prepare for the inevitable in a world
    that makes no sense, financially.

    We were interviewed on this topic, last week, and the audio can be
    found on our site,, under the category "Interview,"
    for anyone interested.

    The charts may be closer to showing signs of bottoming. Here is our
    current read.

    Bearish spacing develops when a low is broken, last April, and the next
    rally swing high, August, fails to reach and retest the previous swing
    low, leaving a space. It indicates a weak market.

    There was a strong rally on Friday, but when seen on the weekly chart,
    the results are less impressive. That observation is amplified when you
    compare the last two bar ranges and respective volume. The second
    bar from the end shows ease of upward movement by a wide range and strong close with volume greater than the previous day.

    On Friday, volume increased sharply compared to day 2, yet the price
    bar range narrowed. Increased effort, volume, yielded less results, a
    smaller range. The reason why the range narrowed was due to sellers
    meeting the increased effort of buyers and preventing the price range
    from extending higher.

    You can expect to see this kind of activity in a down trend where sellers have been in control. From a weekly chart perspective, gold continues
    to struggle, even with a strong rally effort on Friday. This is the way to
    read the "message" of developing market activity.

    GC W 11 Jan 14

    Friday's rally stopped at a minor resistance area, [thin horizontal line].
    Continuation to the upside would be expected on Monday. We will now
    begin to see if gold can develop a sustained upside rally and begin to
    change the trend, from down to at least sideways.

    GC D 11 Jan 14

    The last time silver spent 8 weeks in a TR, June - August, the 9th week
    was a strong rally. There are now 8 weeks completed in the current
    TR, and Monday starts week 9. The last three weeks have a close
    clustering of closes. This reflects balance between sellers and buyers,
    and from balance comes unbalance.

    All three of the last closes are upper range, indicating buyers won the
    battle each week, and it would indicate that buyers are absorbing the
    effort of sellers prior to moving higher. That is the probability read, but the market always has the final say.

    SI W 11 Jan 14

    The daily does not have a similar positive read as the weekly, and as
    we noted on the chart, the increased volume, last bar, did not quite
    generate as wide a price range as occurred 6 bars earlier. Price is still
    within the established TR, moving farther along the Right Hand Side,
    where resolve takes price out of the TR.

    For the moment, momentum is on the buy side.

    The futures still have issues, and one cannot buy into rallies in a down trend. The physical gold and silver metals also have issues, but the
    resolve is going to eventually lead to an explosive upside. Continue to
    buy the physical. These are great prices.

    SI D 11 Jan 14

    Jan 11 10:28 PM | Link | Comment!
  • Gold And Silver - In East V West War On Gold, Both Sides Are Still Winning.

    Saturday 4 January 2013

    China represents the East, as its insatiable demand for buying physical
    gold continues unabated, while in the West, the elite's central banks
    have pretty much depleted their physical holdings. In the war for gold,
    both are still winning, but for vastly different reasons.

    China and every other BRICS nation importing gold have been doing so
    at cheaper and cheaper price levels, as the Western central bankers
    have been conducting a clearance sale. Even the fixtures are being
    sold, like JP Morgan's fire sale of 1 Chase Plaza for $750 million, about
    half of its value. The building also happens to house the world's largest
    gold vault, and it also located across the street from the Federal
    Reserve gold vault. This gives China a "two-fer.". Now it can store the
    gold in Manhattan and save shipping costs, and should the NY central
    bank have any left, it just gets rolled across the underground tunnel.

    The moneychangers have run their centuries old scam of storing private gold and issuing gold receipts, in exchange, making it easier for the
    holders of gold to carry paper, convertible into gold upon demand,
    instead of the physical gold itself. The moneychangers noted that the
    owners did not demand their gold back, preferring to keep the receipts,
    instead. The moneychangers began issuing receipts many times more
    than the actual gold backing the receipts, creating "new money" and
    the assumption of gold backing.

    Paper alchemy was created, and it was highly profitable for the
    moneychangers, which became central banks. It worked quite
    successfully until several years ago when the elite's Ponzi scheme
    began to unravel. Fast forward to 2013, and the central bankers of
    the West are having trouble fulfilling the unprecedented demands of
    physical gold from the East. One thing the Rothschild formula for theft
    did not take into account was an opposing force greater than its fiat
    financial might.

    China loaned Mao's gold to the NY central bank, and it would not [could
    not] return it The gold was gone, loaned out, sold, we will not likely
    know the true story, but it was gone. Paper was the name of the game
    for the West. Physical gold, silver, and natural resources was, and still
    is the name of the game for China and Russia. Both have been
    dumping US Treasury bonds in exchange for gold, silver, and any other
    asset that is not a derivative of paper. Because of the NY central bank
    experience, China is out for revenge.

    Russia has always been a known adversary and is winning against the
    US by default, simply waiting for the US to self-implode, which it is
    doing. Where China holds the majority of physical gold, Russia holds
    energy trump cards over the US and its faltering scheme of the petro-
    dollar. It is fast being replaced by sounder forms of collateral and
    trade outside of the Western fiat scheme. The US has become
    isolated. Russia has vast amounts of natural gas to supply Europe,
    replacing, in part, oil.

    How is the West winning in the war for gold supremacy? By default,
    which is all it knows how to do. The entire Western world remains in
    the financial grip of fiat obligations. Everything is dependent upon the
    central banking system that is close to collapse. The fiat Ponzi scheme
    is being kept afloat by China and Russia not forcing the totally insolvent
    Western banking system to make good on its debts. Instead, China is
    being rewarded by cheap gold prices and cheap New York real estate
    that comes with the added bonus of the largest commercial gold vault.

    We have pretty much stopped announcing "gold news," as in record
    sales for silver and gold coins by the public, record imports of physical
    gold by China and other countries to a much lesser degree,
    disappearing gold reserves by COMEX and LBMA, how the demand
    for physical ounces of gold by paper holders is at its highest number
    ever, etc, etc, etc. All of the very valid demand side numbers that has
    had zero impact on the price of gold.

    Most of this article is presented in generalities, on purpose. There are
    any number of other sites that go to great effort to present graphs,
    details about gold and silver depletion, the number of coins bought and
    sold by various countries, the number of tonnes China has imported,
    guesses on how much gold China owns, predictions on where the price
    of silver and gold will be next week, next month, pick a price, pick a
    time frame, they are all over the place. The graphs are presentable,
    the facts/figures are accurate, but the results are of no practical use
    and have not been for the past two years.

    Despite all of this recognized demand from every possible source, how
    else does one otherwise account for the fact that the price of gold was
    down 28% for the year?

    The greatest, and only impact on the price of gold has been the central
    bankers and their concerted effort to suppress prices, and a very
    successful endeavor for the past few years. In this regard, Western
    central bankers have been winning the paper battle on gold, but they
    are also losing the most important war, economic dominance.

    Because the natural laws of supply and demand does not apply to gold
    and silver, the only way we can track the influence of endless paper
    supply on the market is through the most reliable source, the market
    itself, and the best way to track the market is through charts.

    As an important aside, when we reference charts, we are not talking
    about traditional technical analysis that uses artificial tools like moving
    averages, RSI, endless broken trend lines, Bollinger Bands, whatever.
    Instead, we apply the most important factors that best capture market
    activity: price and volume.

    Both of the larger time frames, the Annual and Quarterly on the left
    side, below, suggest a lower low is more than likely. One does not
    have to happen, but odds favor at least a nominal lower low in 2014.
    The Quarterly chart looks bottom heavy for the past 3 Qtrs, and the
    last Qtr shows a lower high, lower low, and lower close.

    The monthly chart, on the right side, shows a labored decline over the
    past 5 months, and the last 6 months have all been inside June's wide
    range. We often mention how a wide range bar will often contain
    subsequent bars, for whatever time frame, this one monthly. The lower
    end close for December also increased the probability of a lower low,
    next month, January.

    Here are two separate forms of market activity that provide for
    reasonable expectations into the future, not predictions, but
    expectations. The wide range bar of June was the market telling us
    to expect price containment over the next several months, and that
    is what developed for the past half-year.

    There was also a wide range bar in April, when a similar supply of paper
    contracts was dumped onto the market, just as happened in June.
    Price was contained for only 1 month, but the trend carried the market

    The second piece of market information is the location of the close on
    the Annual, the Quarterly, and the monthly. All indicated a higher
    degree of probability for a lower low in the next time period. With this
    information, one would know not to be in a hurry to establish a long
    position in futures because a lower price was likely.

    It does not matter what the fundamentals say. The market is providing a clue or clues in what to expect. It may not always happen, but we
    are dealing in probabilities that tend to be fairly consistent.

    Gold annual returnsGold annual returns

    A, Q, M End 2013

    Price did make a nominal low on the weekly, and it held the support
    area established in June. With the close located in the middle of the
    down channel, while price can still rally, it is unlikely to break upside,
    at this juncture.

    GC W 4 Jan 14

    Last week, given the market structure, we said a nominal low was
    likely. One occurred on both the weekly and daily, but we confined our
    comment to the daily, [See Sharply Higher Prices? Be Careful What
    You Wish For
    , first paragraph after first chart].

    The down channel has been broken on the daily chart, but of all the
    time frames discussed, the higher time frames are more controlling
    than the daily. It could turn out that the daily activity will lead to
    change on the weekly, then from weekly to monthly, etc, but what
    we know most about market trends is that they take time to change

    Friday's bar was the smallest of the last three rally bars, and that tells
    us demand has weakened. With the location of the close near high-end on the bar, sellers were weaker than buyers. What needs to be
    watched closely, next week, is how price reacts on any pullback.

    If the bars are wide range lower on increased volume, expect more
    continuation to the downside. If the bars are relatively narrow in
    range and volume is less, then we have a stronger indication to expect
    the pullback to be brief and lead to another rally attempt.

    We do not have to know ahead of time, nor do we need to predict.
    Instead, knowing how price and volume could develop, day by day,
    we just need to be prepared for how price may develop, and react
    accordingly. The market will give us the information needed on what
    to expect.

    GC D 4 Jan 14

    Silver is a slightly different story, according to the charts. It would not
    be unreasonable to expect a lower low from the annual chart. The last
    Quarter, 2013, was the smallest range in the past 4 years. What
    matters is where it appears: at the lower end of the correction. The
    reason why the range is small is due to lack of sellers, combined with
    buyers meeting the effort of sellers sufficiently to prevent the range
    from extending lower. It does not preclude a lower low, next Quarter,
    but a rally could occur first.

    The monthly shows how labored the decline was relative to the wide
    range August rally. Here, again, we see a wide range that contained the price activity for the next several bars. December was a small range,
    letting us know, just like the Quarterly, selling was weak, and buyers
    were meeting the effort of the sellers. The buyers were able to keep
    the range from extending lower, and also to close just slightly above

    The trend has not changed, but we are seeing little pieces of
    information that alert us to potential change.

    SI A, Q, M, End 2013

    The trend being down, and combined with bearish spacing, we know
    that silver has a lot of overhear resistance that will likely stop initial
    rally efforts from current levels. Until price moves out of the box, up
    or down, the TR remains intact. Last week's reversal from lows, with
    a strong close, did not rally much above the previous week's close.
    This is a small red flag that the rally could be meeting resistance.

    There is a cluster of closes over the last 7 weeks. This signals either
    continuation lower or a reversal of the immediate trend. Until price
    rallies and closes above the high of the box or declines and closes
    under, there is no confirmation to be positioned, either way.

    SI W 4 Jan 14

    In the first box, left, it looked like price would rally higher toward the
    end of October. Price gapped lower, instead, and created a lower box
    TR, the current one. This is why we said there needs to be
    confirmation, even though the weekly close in the above chart
    "appears" as though the rally will continue. The daily chart, below, is
    an example of why one needs to wait and let the market be the best
    guide, eliminating guesswork and having to predict.

    The conclusion we reach from the gold and silver charts is that price
    may be forming a bottom, but it will take more time before a change
    will take place, and that could take weeks, months, even Quarters.

    SI D 4 Jan 14

    Jan 04 11:44 PM | Link | Comment!
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