Written by Michael Noonan
All politicians and bankers lie. Charts do not. One can take the facts from charts and draw their own conclusions and not have to rely on others, including what we see. Charts help read the manipulated lies that are forced into the markets to keep them suppressed. One problem with charts, however, is that many do not understand them, including a lot of technical analysts who misuse them, and as a result, the message gets lost because of incompetents and many choose not to put any weight on their reliability.
Gold Chart: Annual
For the first time since the 2011 top in gold, the annual chart shows a higher high, higher low, and a higher close in 2016. This adds to support the growing reliability that 2015 is the low of the correction. There is still work to do, but it is a factual message from that time frame.
Gold Chart: Quarterly
On the Quarterly chart, since the free fall of prices in 2013, price has moved sideways. [We market the 4th Q low as 2016 when it should read 2015.] There was every opportunity and likelihood that price would move lower after the low close of 2015. Yet, price did the opposite. This is another fact worth considering. What happened to the momentum of the sellers in control since the 2011 highs? This is an important change in market behavior. It does not mean a bull market is underway, but it tells us price stopped going lower.
Gold Chart: Monthly
The monthly chart amplifies the importance of the 2015 low. It did not fill the gap from the rally high back in 2008. The low of 2015 left a small space that did not fully retrace that important high. The space is referenced as Bullish Spacing. You can also see how small the December 20125 bar was. Sellers could not extend the bar lower. Why? Buyers were present and showing an ability to stop the downside momentum.
Price has since been moving sideways, actually continuing the sideways decline that started in 2013. Has the gold market been manipulated since the highs. Consensus overwhelmingly says yes. Still, one can read the overall manipulation and see how it has changed. Price is still being suppressed, but with less and less success.
Look at the two volume bars marked 1 and 2 on the monthly chart. The downside effort was greater for bar 2, but the lack of downside movement tells you that buyers were more than meeting the effort of sellers. Large volume almost always indicates smart money is controlling the activity.
While there is no reason to say a bull market in gold is underway, we can conclude that the character of the market has changed and continues to change, and that change has become more positive.
The September rally retested and ultimately failed to hold the sell-off from the high volume November decline. Sellers were defending their position from that level. It appears that the steadily higher selling volume starting in September has been unable to push price lower.
A few months ago, and before then, sellers could push price lower with impunity dumping massive amount of paper contracts during overnight hours when trading was relatively thin. These days, sharp drops do less damage and are more quickly recovered.
It is not so obvious, but it appears that sellers are being absorbed by buyers who are not yet sufficiently strong enough to totally reverse the downward, now sideways, momentum.
Gold: Weekly Chart
Gold: Daily Chart
When a change in trend occurs, it shows up on the lower times frames first. We could be seeing such a shift on the daily chart that is not yet apparent on the higher time frames. The explanation of the October trading is such an example.
Silver is much weaker than gold, and the chart makes that very clear. We tend to favor silver over gold, at present, mostly because the gold:silver ratio is very high favoring gold.
Many times, silver will lead gold in an up market. When that happens, the gold:silver ratio retracts. Currently, it is running around 76:1. It takes 76 ounces of silver to buy one ounce of gold. That ratio can come back into the 40s or 30s in a strong up move where it takes less ounces of silver to buy the same ounce of gold.
Silver: Monthly Chart
For now, the most positive chart development on these higher time frames is the labored correction of the last five Quarters as seen in the oval below. However, silver remains in a relatively weak condition, fundamentals notwithstanding.
Silver: Weekly Chart
As is presented on the weekly, lower lows and lower highs are not conducive to a sustained move to the upside. Simple facts lead to the same conclusion. Many may tout silver as being a huge upside potential. The charts do not support that premise, at present.
Silver: Daily Chart
As already mentioned, changes in trend show up on the lower time frames first. The weekly shows a weak formation. The daily is giving a different read, for the near term and not yet confirmed.
While the paper market remains under pressure, this is a massive gift for those buying and accumulating physical gold and silver. Both metals have no third-party counter risk, and both are the only true form of money in existence. Always remember, fiat currencies are a form of debt, and debt can never be money. That is one fact that should be preeminent in one’s mind.
Buy the physical, and do not keep it in a bank or safe deposit box. It will be confiscated. If you do not hold it, you do not own it, and owning paper substitute means nothing.
munKNEE should be in everybody’s inbox and MONEY in everybody’s wallet!
If you want more articles like the one above sign up in the top right hand corner of this page and receive our FREE bi-weekly newsletter (see sample here).