Wednesday Evening 21 December 2011
The last article on gold and silver focused on the near term outlook,
concluding that there was more room for the downside. It remains to
be seen how far down, maybe very little to sideways, but weakness
has the edge, for now. [See Gold And Silver - More Downside Likely,
click on http://bit.ly/swLXrP]. This time, a look at the larger time
frames that few traders ever consider. We acknowledge that the end
of the year is still a few weeks away, but given the larger time frames,
other than adjusting the close location, the bar structure is already
Starting with silver...What is most striking is the location of the
close, at the lower end of the bar, an indication that sellers totally
dominated, and buyers were pretty much absent or unable to mount
a counter-attack rally. Given what has been going on with one, or a
few, institutions heavily involved in manipulating the paper market,
with exchange complicity, there is a degree of doubt about the
entirety of what the chart says, but let us deal with what is.
The low closing price suggests that 2012 has a lot of selling activity
to overcome, and it will take quite a lot of effort and time to reverse
the selling pressure environment. Clearly, there is no evidence of
buyers entering the market at year end.
On a small plus, this is the third highest annual close for silver ever.
There is a higher high and a higher low. The close is near the 2010
close, by contrast to the 1980 sharp decline. In 1980, the close was
also very low end, but note that year's close compared to 1979...a
considerably lower close from the previous year. This is part of the
context of the overall market condition that is much slower in
changing, relative to weekly and daily charts.
Here we see the third consecutive quarterly lower close, not knowing
where 2011 will close, yet. It is an inside quarter on considerably less
volume, with most of the small specs driven out of the market via
forced liquidation by exchange margins increasing to ridiculous levels,
and making day traders pay overnight margins. Consequently,
volume has decreased, normally a sign of less selling pressure, but
with the overt market manipulation, getting a true read is questionable.
Changing the focus from the last few quarters to include the entire
chart, silver remains in a strong bull market. The details of this chart
are more constructive than what was viewed on the annual chart, but
for both, there remains a lot of overhead selling that has to be
absorbed, and for 2012, it will be a tough struggle for the buyers.
As a final thought here, anything can happen, and if countries
continue to collapse and fiat currency continues to be dumped into he insolvent world banks, including this country, no analysis can
account for that kind of unknown, at this point.
We started with silver to make a few contrasts to gold. the current
mid-range close on the year is a standoff between buyers and sellers,
and this is in sharp contrast to silver where the closes are on the
lower extreme. The Comex is much easier to manipulate the silver
market, as opposed to the much broader gold market. This annual
bar says sellers were at the top and buyers were at the bottom, and
they met in the middle. From that, one could conclude it was not a
bad close for gold, considering.
The low of the year is the highest location relative to where lows
were on previous years relative to the prior year's range, and from
that, the conclusion is continued strength evidenced in this, one of
the strongest bull markets. This is also the 10th consecutive annual
higher close. The range for 2011 is the widest bar ever, in gold.
With the standoff close in the middle of the range, 2012 is likely to
be range-bound by the high and low. This bar is telling us not to
expect much on the upside, until all that selling has been absorbed.
Unlike silver, where the quarterly chart looked more promising than
the annual, the quarterly chart in gold shows two consecutive lower
range closes. We can see how sellers have been more dominant
for the past two quarters. That said, the final quarter for the year is
an inside bar, and the close nearer to 2010 than not. This would
suggest selling made less progress in the final three months.
We also see 11 consecutively higher lows, and almost 11
consecutive higher closes, with a few more weeks still to go. [We
just noticed the misspelling of "saying" on the chart. Apologies for
not catching the error prior to posting it]. As was concluded for
silver, the overall trend remains bullish, and even more so for gold
v silver. It appears one may have an opportunity to be more
selective in any buying strategy[s] for 2012.
These higher time frames are not for market timing. Rather, they
put the lower time frames into a context deciding one's buy/sell
strategy for entry and exit, in both markets.
May 2012 be a better year for all.