Commodity Trade Mantra

A Reality Check of the Gold and Silver Market

A Reality Check of the Gold and Silver Market

A Reality Check of the Gold and Silver Market

The suppression of gold and silver by the globalist’s central banks are another example of how much power and influence is being exerted to preserve the fiat US Federal Reserve “dollar,” which is nothing more than a debt instrument, and debt cannot be money. 

Where is the effective opposition to the globalists?  There is none. They control the world, to include China, to a limited degree, and even Russia, in a way no one can really determine, but Putin, with all of his Western opposition and fighting the Western bankers to the teeth, still wants to be a part of the UN, IMF, and other globalist-controlled organizations used as their tools for world dominance.

Despite all the talk and coverage of massive gold buying from China and Russia, the never-ending coverage of critical shortages of gold and silver (especially more in silver), there is absolutely no correlation between the natural forces of Supply and Demand v the unnatural forces of globalist suppression, and the latter continues to prevail.  If you want realistic answers as to why gold and silver have not rallied to reflect the huge demand for their limited supply, look no further than the ongoing events unfolding around the world as diversions to keep the elite’s theft-of-the-world’s-wealth-by-fiat under control.  That is reality in a nut shell.

As we look to the charts, they continue to support suppression prevailing over-supply and demand.

The average person uses daily and intraday charts to assess what is going on.  This is somewhat akin to “looking at the trees instead of the forest.”  The larger time frames are the equivalent of the forest for they depict a truer picture, and smart money references them without regard to the lower time frames used by most everyone else.

The Quarterly chart, on the left within the monthly chart provided, shows that recent support was broken.  Price is now at its lowest level in five years.  Ask yourself a simple question.  Does this look like a market responding to unprecedented lack of supply and unprecedented demand?  One need not be proficient in reading charts, but logic can certainly be put to use in drawing a conclusion in what is presented in them.

The best that can be said about the Quarterly is that the location of the close, mid-range the bar, says buyers are present, otherwise, the close would have been lower.  However, each bar represents three months of activity, so it takes a much longer time and effort to effect change on this time frame.  Any change, as it develops, will show up on the lower time frames, first.

The monthly chart is in sync with the Quarterly by noting where price is within the down channel.  Price is nearer the bottom of the channel, relatively far away from challenging the top of the channel.  The conclusion to be drawn is gold remains in a weak position with no ability to even challenge the down trend scenario, let alone mount a meaningful rally.

Change remains slow in coming, and it would be more than difficult for the most ardent bull in gold to argue otherwise, as many have ineffectively done over the last 5 years.

GC Q, M 3 Oct 15

Price is more advantageously positioned on this smaller weekly time frame, being closer to challenging the down trend channel resistance line.  Even at that, note that price is also well below a 50% retracement of the last swing high to swing low.  While not an absolute guide, whenever price cannot retrace back to half-way of the last move, it indicates overall weakness is still in effect.

We often mention how the market is the best and most reliable source of information. You can readily see that the message is not positive and shows no immediate sign for any meaningful change.  The last three bars have strong closes, on the upper end of the range, yet, what has been their net effect?  The down channel remains intact.  Again, the message from the market says more work needs to be done, and that will take more time.  Time works in favor of the central bankers, doing everything possible to disappoint those who are long gold and silver.

They are winning the battle, to which the charts and we admit.  The outcome of the war, however, is not on the side of the globalists, or so it seems.  There remains the possibility that the globalists will not be able to stop a turnaround in the price for PMs, but they may be able to control the rally and prevent the pie-in-the-sky prices, $10,000 the ounce gold, and $400 the ounce silver, from being realized.

This is not a defeatist attitude toward owning physical gold and silver, always recommended and endorsed on this site, but it is a nod to recognizing that which is, and one has to always consider all sides of a situation.  Supply and demand factors are not what is driving the PMs market.  To ignore the reality of the situation plays into the hands of the elites who want to discredit the ownership of gold and silver as much as possible.

GC W 3 Oct

If one’s assessment starts with a daily chart, the strong rally of last Friday would be heartening.  When placed in context of the more controlling higher time frames, such an assessment would be misplaced, and it is why we always start with higher time frames in our analysis and work toward the lower, less controlling time frames.

The strong rally on Friday notwithstanding, even the daily chart does not indicate a breakthrough to the upside as a reward for all the effort.  Gold needs to continue its rally and close above current resistance with wide range bars to the upside on strong volume in support and then exhibit small range correction bars on decreased volume to demonstrate that selling is drying up.  Until that happens, expect more of the same.

GC D 3 Oct

The decline in silver is even more pronounced than in gold, and the gold-to-silver ratio reflects this reality.  Where gold showed evidence of buyers by the location of the close, silver shows evidence of buyers being present by the smaller range of the bar.  If sellers had more control, the range would have extended lower.  Here, buyers are meeting efforts of sellers to prevent more of a decline.

A few more comments are in order to keep these observations in context.  When we say there are buyers present, it means just that.  It does not imply an imminent change in trend, for to effect a change takes more effort and results that are taking place, at this time.  Always remember, in a down trend, sellers are a proven factor.  The burden for change remains with buyers, and to date, that burden is not being met.  The presence of buyers can lead to a change, but more is needed to effect change than mere presence.

Again, look at where price is, relative to the entire chart, and the question of change to the upside remains a nonissue, regardless of sentiment.

SI Q, M 3 Oct 15

As with gold, the rallies of the past three weeks have closed strongly, at the upper range of the bar, but it begs the question, to what effect?  The closes are clustered and the bars overlap.  The clustering of closes demonstrates price has stalled.  If buyers are absorbing the efforts of sellers, price will rally.  If sellers are absorbing the efforts of buyers, price will resume its trading range influence.

The overlapping of bars indicates balance between sellers and buyers, and that will soon lead to imbalance created by this tension of opposing forces.  As has already been expressed, sellers are a proven factor in a down trend, so the onus is on buyers to effect a change.  The outcome of the current tension between the two forces will provide a clue as to the immediate next direction for price movement.

SI W 3 Oct 15

What could that outcome be?  Even with what “appears” to have been strength, the rally on Friday may fizzle out this coming week, taking into consideration all of the factors presented, so far.  You can see how the rally did not threaten a potential breakout of the current TR [Trading Range].  Price is well below the TR high and even further below a half-way retracement of the last swing high to low, covered in gold as to explanation.

Where will price go, either to the upside or downside, near term and far?  We never make “predictions.”  If we had, over the past 5 years, they would all have been wrong.  This is why we say to follow the market’s direction.  Never try to lead it.

A reality check of the market, as viewed from the market’s own information, provided in chart form, strongly suggests change to the upside is not in the cards.  Anything else you believe or “feel” [as in opinion], is contrary to existing reality.  We favor reality.  It hardly ever fails.

SI D 3 Oct


Courtesy: Edgetraderplus

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