Saturday 31 August 2013
Re 1 - 2 years of potentially moving sideways, we would be happy
to be wrong.
In a week of no news relevant to gold and silver, gold slipped under
the 1400 level, for some "unknown" reason, while silver just slipped a little. Friday marked the close of the week and month, for charting
purposes. A look at the Quarterly, in progress, seemed a good idea, as well.
Almost everyone has an opinion on any given market, but especially
for gold, with the exception of financial news networks which never
have an opinion on gold, unless it is to point out how poorly it is doing. Opinions, however, do not move markets, only executed
trades matter, a topic covered a few weeks ago, [Only Votes Cast
In Elections Count, Same For Markets, http://bit.ly/15mjhKP, if you
The only opinion that matters is what the market is saying about
those who are actually participating, and that shows up as fact
when viewed on the charts. Opinion, sentiment, belief,
expectation, none lead the market but are more reflective of one's
mindset, and in the end, it is the market that always has the last
word. From our perspective, it is better to follow the market's
lead. If you have a consistent game plan, profitable results will
A shorter version of the above is simply, do not fight the tape!
[We just saw that a part of the chart comments was cut off. It
pertained to dealing with patterns that consistently repeat in
behavior, and they act as a reliable guide for making trade
decisions, re first paragraph on chart.]
Stand-out wide range bars tend to capture market behavior for the
next several time periods, so for a Quarterly, it can be a few years. In the 2011 wide range bar, gold traded sideways for 6 more
quarters, before being "driven" lower. The 2nd Q bar, second from
the end, is almost equal in size to the range that formed the high.
Using past history of how price responds, it is likely that gold, [and
silver], will move sideways for another year or two. This flies in the
face of so many current, mostly expert opinions.
As noted on the chart, only some highly unexpected news event
could "shock" price out of normal pattern behavior, which is what it
would take to get the price of gold and silver to move higher, in line
with "expectations" of the PMs community. A collapse of the fiat
Federal Reserve Note would be such a catalyst example. There is
history for that kind of event, taken from the Federal Reserve's
model, the Weimar Republic banking system from Germany, which
ultimately went wildly amok from its infinite printing binge. Still, it
took some time for it to unravel, as it is for today's criminal bankers
Given that the New World Order's central bankers have a stronghold, literally, on the Western banking system, that power will not easily
be ceded, and that faction will destroy currencies in the process
before ever acknowledging their [historically proven to be] doomed
policies are not working...except in transferring the Western world's
wealth into their greedy hands. On that score, things are working
beautifully, if you happen to be a part of the NWO.
The two most important bars are April, 5 bars ago, and June, 3 bars
ago. Both are wide range bars lower when JPMorgan made its
[illegal] naked short selling takedown attempts to suppress that
central banker nemesis. While relatively high, volume for June was
the lowest of all 2013 months. It is the market's way of showing us
that sellers were less in number. Even though June's close was
weak, there was no further follow through to the downside. In fact, July and August just erased the central bank effort from June.
An August close over the June high would have been a more bullish
statement, but it takes time to turn a trend, and these two higher
time frames suggest it will take more time to get gold higher, as in
It is most pertinent to let first impressions develop into more
considered thought for they tend to be the most reliable. The
upside rally in gold seems to be legitimate in viewing the activity as
a possible bottom, but that needs more time to be confirmed. Once the weekly close posted on the lower end, it gave rise to expect the potential of additional downside. The two high volume bars from the end of May made their presence more clearly.
Volume shows the effort extended, and for these two weeks the
effort was much higher than recent showings. It is the result that
give importance to the effort. The result, after two weeks of
buying, [higher closes], was opposite, and it was cued by the poor
closings, especially on the higher volume 2nd of the two bars.
Sellers were stronger, and it becomes so vividly apparent in
understanding why last week failed to extend higher. It will take
time for buyers to successfully absorb the effort of sellers primarily
from the end of May.
The higher time frames give color to reading the daily. The ability
for gold to rally from recent lows has been positive. The more
negative trend aspects from the higher time frames act as reminders that it will take more time and effort to succeed in overcoming
prevailing seller efforts.
The message is presented as mixed due to the positive manner in
which the market has unfolded since the end of June. Price
continues to hold the up-sloping trend line, but the poor location of
the close tells us its breach may occur, and that event would be a
part of normal activity, even in an up trend. Yet, the lower box,
just under last week, shows the potential for support that could
buffer any possible decline.
The higher time frames are a reminder to be very select when
approaching gold from the long side. We remain long.
Silver was identified in several previous commentaries as being
closer to support than gold, while gold has an overall stronger
chart. We continue to adhere to that notion.
Silver was also designated as more compelling than gold, even back
in early July, [see: It Is Silver Sending A Message, click on
http://bit.ly/10EW8FO]. Unlike gold, August's strong rally close not only obliterated June's high, it challenged May's high, at the same
time. The so-called lesser metal is making a better showing,
Observations lead to perceptions on what developing market activity may be signaling. Taking note of the protracted trading range, as
everyone who follows gold and silver is keenly aware, a trading
range formation is akin to a stored energy build-up from which price
will more directionally. Here, price broke to the downside, but there
has been very little further progress. In fact, the upside reaction
from the lows has been impressive.
Last week's poor close may lead to more downside, but there are no signs of supply coming onto the market that will deter this currently
The highest volume occurred on Thursday, but the close was in the
upper half of the bar. Actually, when reviewing the daily chart
activity, we did not keep in mind the rollover from Sep into Dec, so
that discussion is scratched.
Price did stop on high volume, irrespective of any rollover activity,
and silver has retraced back to the previous box trading range,
and that may act as a buffer against further declines.
One can attribute activity to the Syria situation, where the Nobel
Peace Prize winner who is solely leading the charge to attack that
nation, despite world-wide opinion coming to a different conclusion
as to who was responsible for any purported chemical attack, but
by simply following the developing market activity, forming outside
"opinions" is not needed.
The where price stops and how, next week, will give additional
information on how to be handling this market. We remain long.