What Happens To Gold And Silver Next? Look Out Below?

@CTguy

This is kind of a two parter here to answer.

First of all lets tackle the gaps in price.

We find gaps in either upward or downward price movement. They happen right at the opening session for whatever asset we are talking about, in this case commodities, tho gaps happen in currencies, stocks, bonds etc. These gaps usually happen during some sort of price movement thats already been happening or sometimes they happen suddenly. In any case, they happen right at the beginning of the trading session.

As an example, XYZ stock has been rising for a good week, from Monday to Thursday. Friday AM rolls around and before the open, in the pre-market XYX is indicated to open up say, 5 pts from its last closing price on Thursday. This is a gap up in price. The closing price on Thursday was 50 dollars. The 5 dollar move up is the gap up. On a normal day, XYX stock would be up a mere .60 cents, yet Friday morning we see it opens right up at 55 dollars. That is a gap up. This same illustration could be done in the reverse, as the prices moves lower.


These gaps as I said, go in either direction, up or down. In a gap, there is sizable selling or buying. Many times and depending on market conditions, gaps are unstable, that is they don't hold. Other times, gaps hold and don't get filled. Again, this can work whether the gap is down or up in price.

So gaps are a very important time line in an asset. It must be either overcome with buying or selling. Filling gaps can give us clues as to how strong or weak an asset is. Therefore, if you are looking for higher prices, you want to see gaps filled and closed. If you are looking for lower prices, you want gaps to unravel and not fill. Just as a gap produces technical damage in price it can also help set the stage for further price appreciation.

So the context is also important as to where in time and price this gap happens. Some assets gap higher and never look back, making yearly highs. That is an extremely strong asset that's being bought up and has excellent support from buyers.

Some assets gap down and proceed to make fresh yearly lows. Thats telling us its being dumped wholesale and no fund wants it.

Now, some gaps get filled within an assets move, and they dont happen or cause yearly lows or yearly highs. Thats what we are seeing in gold and silver. These gaps it had are being retraced and filled. The gaps were filled on rather light volume. ... and I will get to volume in a bit and its importance.

So gaps are key to getting some sort of stabilizing in an asset. getting them to stick and hold is important, it gives us clues as to whats happening or could happen.

Now lets talk about volume. This is a tricky tricky tricky subject. To me, volume IS super important. I prefer to see moves done, either in buying or selling, with a ton of volume. That volume represents the buyers and sellers and the commitment that they are showing. It tells us how strong they want or dont want an asset.

Major inflection points happen with volume. Yet, and to confuse everyone completely, I will say I have partaken in major moves solely by going with price and not volume. There are times when assets either go higher or lower without volume, all you see is the price action and you guide yourself by it.

Why is this? I really have no clue. I don't dwell much time on asking or looking at why. I have a set of rules and scenarios that are really way too lengthy and complex to discuss here but those I have learned from years of observing. Basically however, I always go with price FIRST. Then I go with volume as a secondary measure. I also take into consideration what time of the year it is, what kind of asset it is I am trading and its behavior in the past and present.

So this rise we saw in filling the gaps in gold and silver, first I respect the price action. Clearly its moving up. It has filled some gaps, and done it with low volume. Low volume, to me, doesn't really give a lot of confidence but I do respect the price action which has been strong enough to fill the gaps and keep moving. Thus far, its held and not rolled over.

Lets wrap up since this was rather lengthy and just highlight again the key points. In an updated post I'll discuss the current price action

1- Gaps are important points in an asset

2- Gaps occur either in an upward or downward fashion. They can occur at highly years, yearly lows.

3- Gaps can be filled, or unravel, that is the gap doesn't get filled and the price action goes below the initial gap.

4- A retracement of price can include filling the gaps. Sometimes seeing gaps get filled as price rises can give us clues as to whether an asset is trying to stablize.

5- Volume is important. However-
a- what type asset is this
b- how has it acted in the past
c- what period in time are we, when this asset is moving.
d- for some time now as of recent, moves in the market have happened on lower volume.
e- volume is important because it tells us how much or how little funds want an certain asset.
f- volume can help in determining if an assets move is crediable and if it will stick or if its weak and will give up its move later on.

I hope that answers the guestions on gaps and a little on volume.

I totally agree with you JSH, except for one thing. Corn can be planted year after year and is not a commodity that is finite. I hope I made sense there....I usually get yelled at on this forum for my opinions but I truly believe that Silver prices are being manipulated for some reason and that Silver is totally undervalued for some reason. I know that a commodity is worth what the going price is but I'm just sayin'....

Usually when people try to complicate things and make it complex, its because they are having a hard time understanding how things work.

In the case of commodities, all of them from silver, to corn, to cocoa to cotton, commodities are all about supply and demand.

So obvious, no matter what anyone ways, right now, supply of silver and gold are overwhelming any sort of demand.

There is no manipulation.

Most people make that point, that to hit the ratio silver has to go up...

or... Gold has to come down. Silver could just stay put.

Silver might not be hard to find right now but IF you're to trust the USGS who claims silver will be the 1st element in the periodic table to go extinct in about 7 years,
silver is looking pretty good to me. I don't believe there's only 7 years left but even if its 20 years, that's like tomorrow...

And the fact that the silver markets aren't reacting to this in any way, fuels the conspiracy theorists that much more. Maybe they're saving it for some near future panic buying?
I fantasize of the day when algorithms and HFT won't be a factor in the (true) price discovery of silver because a real free commodity market is all about supply and demand.

My issue with the gold/silver ratio is solely based on the actual "mining" ratio which is 9 to 1.

Although I like gold, I love silver much more. Practically all the gold ever mined is still just sitting somewhere. Where as silver is being used up endlessly by industries
and not efficiently or completely recycled yet. I drink colloidal silver everyday and that's gone forever (and no, I'm not blue in the face lol)

Again IF you're to believe the USGS, silver reserves are dwindling fast, they're at their lowest levels in the last 200 years. If that's a conspiracy theory, it's not coming from the usual sources.

I dont believe them at all. Between oil running out, the next ice age coming, the whole in the o zone going to burn us all up, then global warming ect theres a very long history for whatever reason of these were running out or life and we know it is completely changed predictions. The hype around that was supposedly from 2008 but theres nothing on the actual USGS website about it. http://minerals.usgs.gov/minerals/p...13-silve.pdf thats their 2013 report and my skimming didnt see anything about it either.

Max Keiser seems to be the driving force behind this rumor, the guy isn't someone I would want to be associated with. Hes made a career off trying to destroy companies profiting off them. More specifically shorting stock for companies susceptible to environmental groups like McDonalds and using some of the profit to fund the protests in an attempt to drive the stock price lower. His newest project is he seems to think hes going to crash JP Morgan telling people to buy silver. When hes the only source of some supposed secret I couldnt care less what it supposedly is.

Regardless of all of that the simplest way to know what may or may not be true is just watch the government. They arent going to get caught with their pants down needing it for electronics still which makes it national security. If we were down to the last drops they would take mines for themselves, they havent. As for everyone else there would still be a massive above ground supply being turned over from what gets smelted every year

couple of items-

notice gold and silver getting rejected here. Nothing really big and to be expected. There is a fair amount of price resistnace in this area so I would expect a lot of chop and bump in the coming days.

I also want to state this- if you are fearing that gold and silver left without you, please dont. They are STILL in a downtrend. They are not blasting off to the moon. We still have a long way to find out what happens with gold and silver and August will not be the kind of month that will give us straight forward answers.

I see this price action as a retracement and thats it. It should be expected. There will be trades to be made on this move. If you were fretting about not selling some gold and silver months ago after it dumped, this is a probably a good place to think about it and raise cash if you had remorse over not making some cash. Sell some into rising prices, never hurts to make some money and profit.

As far as silver shortage. If there was such a thing, the market would have sniffed that out a longgggg time ago. Silver would go crazy price wise. But that hasnt happened because we have a glut of silver.

I wasnt sure if you were or not Keiser just kept popping up left and right when I was trying to google it to find out more, maybe I had the wrong search term but everything I clicked was him. There arent a lot of financial people that really tick me off since usually its just business but what he does isn't business. I hate people that try and actively profit on others theyre actively trying to create.




I dont think Bolivia will have a snowball effect just like there wasnt one when Venezuela nationalized their oil industry. Some other small or dictatorship type countries may do the same but countries like that are just going to do what they want to do. I suspect their desire is much more profit driven than anything after they saw the profit flowing in the last few years.




The scientific one seems more reason for silver at least saying decades left. It was a bit doom and gloom overall and seemed to be focusing on the scientists who were from a singular ideological sect of the community. My problem with predictions that are decades away is theres to many variables and 99 percent of the past ones have proven to be wrong. I dont doubt that one day we will run out, I dont think it will be any time soon though. Technology is constantly improving allowing us to get more and find more of things. I'm not even talking about asteroid mining or anything like that but just what we can get from the mines themselves or finding new mines we didnt know about.

Personally I hate how scientists sometimes pretend like they know everything with these predictions. It just reeks of hubris when theres so much about the earth and what it contains we dont know. With their track record I need to see more than just their prediction and be closer to the date to buy into. For all we know 40 years from now well be making silver in labs like we can with diamonds or prices will come down and people will lose some interest lessening demand. At some point I'm sure silver in band-aids and even electronics will start to get replaced by something newer and cheaper especially if we do start to run low on supply. Theres just to many variables for me at this point.