Wednesday Evening 14 December 2011
For the past few articles, we have been optimistically cautious,
viewing the trading range as more likely reaccumulation than
distribution that would drive price lower. Plus, we questioned,
where are the sellers? Wednesday provided and answer to that.
The trend in gold is unquestionably up, but that does not mean things
cannot change...[which is why we said to always remember: ANYTHING
CAN HAPPEN]. There is no change in trend for gold, at this point, but
that does not mean price will automatically rebound. Gold can go from
a strong up trend to more of a trading range, or sideways trend. We
are of the mind that it is the power of the central bankers that are
destroying the currency of each country by offering the only solution
of fixing the debt problem with even more debt.
The reality is that none of the existing debt for ANY country can/will
ever be repaid. Saddling weaker countries with greater debt simply
ensures default, the end game plan for the New World Order to take
over the world, literally. What was seen in the metals market today was a clear message of how powerful central bankers are in their
greed and zeal to control everything, even if it means destroying
everything in their path. M F Global is another example. The
sanctity of segregated customer funds, or so it was PRESUMED by
most everyone, was destroyed for the NWO greater good, or evil in
There are no large speculators in the precious metals that have
been looking for a bear raid, but there have been a few large
financial bankers, naked short, with a vested interest in driving price
lower and denigrating the "value" of precious metals as a safe haven
or monetary alternative. Their argument would be, "If gold and silver
are so valuable, why are prices dropping?" Because you, central
bankers, have the game rigged, with cooperation from exchanges
and regulators, plain and simple.
The M F Global fiasco was a clear message that NO customer funds
are safe, ANYWHERE. Brokerage accounts, savings accounts,
pensions, [ask the Portuguese], 401ks, et al. Everyone with money
in any financial institution is at risk. The driving down in gold and
silver prices is just another example of how powerful these forces are.
For anyone who thinks "conspiracy theory" to these expressed ideas
need only ask, what other explanation is there? Have there been
ANY banking/institutional executives either indicted or arrested?
There have been over 5,170 arrests of Occupy Wall Streeters,
around the country. Apparently, they are more threatening to the
powers that be.
The charts say, as we indicated in our last article, more time is
needed for this trading range to resolve itself, and Wednesday's
activity just put a more negative twist in that outlook. We now have
additional market activity that did not exist just the day before, and
we all get to deal with it.
With what has happened, we now know that gold and silver are not
going to the stratosphere as so many have been expecting, a lot in
response to the stratospheric "printing" of money. [Money is now
"created" into existence via a computer blip. Need trillion of some
currency? Presto! Done. The bigger question is, who is authorizing
all of this?]. Back to the metals. With this latest added information,
what is important now is to see HOW price responds to potential
In out last article, we mentioned the $1,600 level as potential
support. HOW did price respond to it? It blew right through it, that's
how. Okay, now there is confirmation of how weak these metals are,
and that information determines what kind of trading strategy to
employ. Would anyone want to be a buyer in the face of this
weakness? Smart money, not wanting to take undue risk, says
absolutely not. If you want to be a buyer, you now need more
concrete reason[s] to take a long position. If dealing in physical
gold and/or silver, which is all we recommend, holding on to previous
purchases is fine. For anyone dealing in futures, if no stops were in
place, that could be a problem. From our perspective, there was no
reason to be long during this trading range, anyway.
On the monthly chart, the September low was 1532. The equivalent
low for the Feb contract is 1532, from 26 September. We can see
that in the horizontal line off that low, and there is also the up trend
demand line off the 2008 low coming in around that same price level
as potential support. EVERYONE knows this, so HOW price reacts to
this potential support will be very revealing.
We often state to observe HOW price responds to support/resistance
areas, and here is a perfect example of why. It provides important
information. Is support entering the market to defend that price level,
or is supply continue to drive right through it. This is also why we say
to be a follower of the market and not try to be ahead of it. Let the
market declare itself, and develop a strategy based upon factual
Right now, the facts do not support taking new long positions. Let
the proverbial dust settle and see how price develops. Then, and
only then can an informed decision be made.
We already declared the daily charts to be trading ranges, and the
level of information when price is in a trading range is very low. This
gets back to knowledge of the trend. On a daily chart, there is no
trend. How can you make an informed decision based on a market
that is clearly demonstrating indecision?
While the first several trading days in December showed lower end
closes, saying sellers were winning the daily battle on those days,
we kept asking where was the downside follow-through? There was
none, prior to Wednesday, but that did not mean one should be
going long. The Ease of Downward Movement, [EDM], is the
market's message saying it is so much easier to go lower, and sellers
are in control. Do NOT be long in that kind of environment. That is
not a hindsight conclusion. The market activity had been sending
this message once the trading range established.
There was a sharp increase in volume on Wednesday. Can it be
stopping volume? Possibly, BUT, the on-balance information says
to stay out of the way until there is proof of that lower quality
potential, and let the market momentum demonstrate a turn is
coming. Right now, sellers are in control, and there is no evidence
of a change. Could the message from the market be any clearer?
We previously pointed out the equality of the decline from the high
to low at A was equal when the retest high to low ending at B ended.
Sometimes, that equality can be the end of a move. As always, that
needs to be proven, and so far, market activity in silver has not
confirmed, nor disproved it, but the momentum is on the side of
disproof, yet to be confirmed.
As with gold, everyone sees the potential support from the September
low, so it will be quite a tell to learn how price reacts to it...hold, or more weakness?
Silver is now at a second retest of the September low. Each time
a market retests a previous support or resistance, it weakens that
support or resistance. A second retest can usually hold, but price
went to that support in a fast decline, so the HOW support was
reached suggests it is more vulnerable than if that level was reached
on small ranges.
The larger time frame trend in both gold and silver remains intact.
For the short term, there is no reason to be buying, [except at
attractive prices for physical]. Let the market activity lead your
decision-making instead of making a decision and hoping the
market will follow.