Wednesday , 26 July 2017


Noonan on Gold & Silver: “Odds favor retesting lower from here”

Every bottom undergoes a process of retesting but none is yet apparent in gold & silver.171686-gold-silver-bars In the early part of 2014 we said that the second half could likely be more of the same as it was in 2013, and with just a few weeks away from the end of the year, prospects for 2015 can equally be brought into question regarding the price appreciation of gold and silver.

The above introductory comments are edited excerpts from an article* by Michael Noonan (edgetraderplus.com) entitled Gold And Silver – Gold-Backed Currency? Not Any Time Soon, But Be Prepared.

Noonan goes on to say in further edited excerpts:

Silver

Silver is not in a strong up-trending market, and that makes the likelihood of further retesting under 16 a greater possibility.  It may not happen, but odds favor retesting lower from here.

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Once there has been some confirming indication of a low, it would still take time for the bottoming process to develop before considering the long side from a futures perspective. Being first in – in an unconfirmed bottom – can be expensive, and one need only look to the left of either of the charts below to see where anyone who had previously thought a bottom had formed had formed a premature “opinion.”  Better to trade on established facts than fleeting opinions.

Weekly Chart

SI W 6 Dec14 Daily Chart

SI D 6 Dec 14 Gold: Weekly Chart

While trying to assess last week’s surprising sell-off and equally surprising recovery within several trading hours, after a few years of price decline for context, the “look” of how gold has developed  since the July swing high stands out in the 4-step process as outlined on the weekly chart below.

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It is but one way to view this market because it shows an inability of buyers to make a stronger show of strength.  How the market develops next week and beyond may alter that view, but until it does, the risk of saying gold has put in a bottom could prove costly.

GC W 6 Dec 14

Gold: Daily Chart

The daily activity as shown in the chart below echoes the weekly assessment when noting how price is struggling as it has rallied from the November low.   The bars have been overlapping since the strong rally bar in mid-November, and last Friday’s close is just about $6 higher after 14 more TDs (Trading Days).  So much for the “argument” that gold was at its seasonal low starting in the Fall and a rally should ensue.

GC D 6 Dec 14

The above analysis is light on making a more positive assessment because there is not much that argues for a stronger stance.  More developing market activity is needed before drawing a more definitive conclusion…

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Conclusion
The gold:silver ratio remains around the 73 area, and we are still of the belief that silver will outperform gold once the next rally phase gets underway.  There is  no substitute for buying physical silver and gold, and  the reason for doing so are even  more compelling at current price levels.
Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://edgetraderplus.com/market-commentaries/gold-and-silver-gold-backed-system-not-any-time-soon-but-be-prepared

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