Last fall, we said the rally in PMs would take longer than most expected. Expectations were unmet in 2013, and it is possible that 2014 may be no different… gold gives no indication of beginning a strong rally that will change the trend, any time soon and, while the next sustained bull market may well favor silver outperforming gold, silver may have to go lower before it can go higher. Let me explain why this is the case.
So says Michael Noonan (edgetraderplus.com) in edited excerpts from his original article* entitled Gold And Silver – NWO “Problem-Reaction” Ploy Stronger Than Fundamentals.
[The following is presented by Lorimer Wilson, editor of www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Noonan goes on to say in further edited excerpts:
Gold is well under a 50% retracement between the last swing high and low. This is just a general guide to indicate the strength or weakness of a market. The farther away price is under the half-way area, the weaker the market. More of an issue is the bearish spacing. Whenever there is a space between the last swing low and the next swing high that fails to close that space, it indicates that sellers are more aggressively in control.
Gold – Weekly Chart
Based on the weekly chart, gold gives no indication of beginning a strong rally that will change the trend, any time soon.
The trend is always treated with respect as the most important first piece of information because it captures the prevailing price momentum. The best way to trade successfully is in harmony with the trend. Regardless of whatever information that portrays the reality of dwindling supply for gold, the reality of the charts takes preference because the charts are more driven as to timing, and now is not the time to be long futures, just yet.
The reading of charts is always in opposition to the ongoing purchase of the physical metal. Given the circumstances driven by central bankers, at some point, reality will rear itself onto center stage, and the physical will outperform almost every other asset class, and just as importantly, availability may not exist. Keep on buying the physical.
The charts keep the paper market in context. At some point, the price expectation that actually reflects true supply and demand will align, but now is not that time. For as long as the trend remains down and price is well under a 50% retracement, the market is weak.
There has been a series of overlapping bars as seen in the box. Overlapping bars indicate a struggle between buys and sellers for control. There is a temporary balance, and it will eventually lead to an imbalance as price next moves directionally.
The lack of downside follow-through, after the highest volume bar 7 TDs ago, has been an anchor for the current rally, of sorts. The caveat as to which way price will move from here is the trend, which favors lower price behavior until there is an indication of change. Right now, such an indication is absent. Of minor concern is the location of the closes for the 3 bars at the end, tending toward the lower range of each bar. The offset is the fact that despite apparent weakness, price did not move lower.
Gold – Daily Chart
If gold trades higher next week, the daily trend will turn up, and confirmation will come from a lower swing high on the next correction.
The same applies to the buying and accumulation of physical silver. Based on the ratio for gold/silver [which is] strongly in gold’s favor, the next sustained bull market may well favor silver outperforming gold. We strongly advocate the buying of physical silver.
The silver chart below is similar to gold but more compact, and weaker, in general. Comments on the chart explain our view of that developing market.
Silver – Daily Chart
Silver has been “looking” like it could be forming a bottom, but the…price is, so far, not showing any ability to rally, and the continual hugging of this low area may mean that there is insufficient demand. In order to find demand, silver may have to go lower before it can go higher. We will just have to wait until supply and demand are resolved.
[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.]
Other Noonan Articles:
No matter what you hear or read about gold and the prospects for substantially higher price levels, the trend is down, exactly opposite of what you know. When you compare what you know, an opinion, with what the market is telling you, the market is a more accurate measure, however counter-intuitive it may be to your opinion, [and THIS is what the markets are saying]. Read More »
We are starting to see some subtle changes in market behavior but the trend currently remains down for both gold and silver. For those who want to grow their capital, the best time to make a market commitment is with the trend and given how no one knows how the market will correct, it is best to wait and see first what the market reveals. Below are some daily and weekly charts on gold & silver charts to show you how things are developing. Read More »
Do not mess with Mother Nature! The natural law of supply and demand will always rise up from under the distorted efforts to contain it. The good news is that each passing week brings silver closer to its inevitable resolve: a powerful rally that will surpass all others. Read More »
If your perception is focused solely on where the price of gold is, as opposed to where you think or believe it ought to be, the elites would like to sell you a renewable subscription to their “Fiat Is Better” newsletter. Read More »
Because the natural laws of supply and demand do not apply to gold and silver, the only way we can track the influence of endless paper supply on the market is through the most reliable source, the market itself, and the best way to track the market is through charts.Let’s take a look at what they are conveying today. Read More »