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

Thanks for the update Yup! The charts are very helpful!

"Gold has a lot of supply overhead. It wont be easy for gold and silver to overcome that supply ."

Paper or physical overhead? Just curious.

an update....

so after much hype over yesterday, we can clearly see it was nothing more than a short squeeze. Today gold and put in a lower high and lower low, pretty much giving up all its gains.

that is not behavior of an asset that is in demand or wanted.

For now we could be seeing a battle or consolidation on the lower end. We still need more time to see what happens. Perhaps even indecision, since we are seeing such volatility.

so just another mid-afternoon update-

gold has bounced off its lows and is climbing higher. It appears that we are getting another range bound trade in gold.

charts later tonight

We started last week with gold and silver gaping down. It appeared as we would see a re-test of yearly lows. Midweek we saw a complete rip your face bounce in both silver rand gold, followed by no follow through and then a bounce on Friday. What are we to make of this price action?

One camp feels that the price action that happened on 12/4 is the making of a bottom in the PMs. Some are saying that sentiment is is way too negative in gold and silver and thus that will contribute to a rebound in prices. Who are we to believe and what are we to think?

In my opinion and experience, attempting to speculate on bottoms or tops is a fools game and waste of time. Rather it is better to focus on current price action to get clues from that.

For that reason I continue with the same stance and statement- gold and silver are in strong downtrends. It is on gold and silver to prove that they are capable of breaking out of their downtrends. Let us refresh what we know about our current situation-

1- Price action is always king and doesn't lie.

2- trends in either direction, up or down, can be very strong.

3- Trends tend to carry on and don't reverse overnight.

Those should be the key things to focus on and remember. Allow price action to talk to you, it should be your only guide. In the case of gold and silver, if they are to reverse and get out of this downtrend, they will show it. They will stop trading in ranges. They will hold their gains and push higher.

Thus far tho, we have not seen this. Instead, we have seen a steady dribble of false moves, ranges and chop. Any bounces that gold and silver put in either get faded or result days and weeks later in a move much lower. If you are looking for higher prices, this sort of price action has to stop.

So lets look at were we stand currently with gold and silver.







First we turn our attention to our proxy, SLV, for silver. Monday brought us a gap down with some downside follow through on Tuesday. Middle of the week on 12/4 it really ripped, followed by a gap down on Thursday and a small bounce on Friday.

Can you spot what we have in one weeks worth of price action? If you take a look where the red arrow is, between our two blue lines you can once again see another range or level that has developed. Notice also how on 12/4, while price was able to briefly pop its head above that range, it settled below it.

Why is that? Well, if you back up and look at the range from the previous week, where the white arrow is, the low of the day repeated many times that week was around the 19 price area. That is were we get overhead resistance in the form of price. That is why on 12/4 silver settled below that upper dark blue line. Remember, price has memory, and for silver and gold to move higher, they will have to find a way to overcome those areas of supply with steady buying. When they can climb and hold, that will be a major clue that silver and gold, are attempting to put in some sort of floor.

GLD






Now we look at gold via our proxy GLD. Guess what. EXACT same price action. Take a look at the red arrow. The same range has developed here as well. Gold attempted several times last week to pop out of that range, and yet again it settled below the range. Why? Because once again, last weeks price action acted as resistance overhead for gold.

So everything we said about silver applies to gold. Ranges and levels. Question is- are they going to move over these levels or under them? At this stage, silver and gold are much closer to their yearly lows. However, we are coming into areas of support as well. This could result in more ranges and bounces.

What gives a clue if prices want to move lower. Keep an eye on whether gold and silver can hold the levels from last week. If those are breached, a retest of yearly lows is possible. On the flip side, if gold and silver can over come these levels and hold them then perhaps we have a change in character.

There is one thing I want to add here. Lately, sentiment has become negative on gold and silver. In fact it seems like everyone and his brother is saying to sell gold. Fellow traders have recounted stories about how relatives are telling them how its time to now sell gold, I have had family also tell me the same.

As a trader, and while this is not a rule, but when it seems like everyone is focused on one thing and the general public is talking about, it doesn't happen. So while price is always king, I cant help but think we get some sort of counter trend move that surprises everyone thats been talking about lower prices in gold and silver. So that is something else to watch.

Alright lets take a quick look at gold and silver.

After a big bounce and several days of rising, we can see silver and gold rose into the upper end of the range that started back in 11/20. However, today, we saw both of them stall at the upper end of this range.

Why did this happen? Is this just some random happenings? No. What we saw was CLEAR RESISTANCE in PRICE. Yes I am using all capital so emphasis a point I keep making. None of this action in the metals is random. Rather, they are reacting to price levels from previous points in time. In this case, this same area where gold and silver stalled today have been areas where they bounced higher from. However, these points which had become SUPPORT.... now turn into RESISTANCE.

In other words, there is supply in terms of price. This must be worked through and the buyers must jump over the amount of sellers of gold and silver at these points. Until gold and silver can keep their gains and stop trading in these ranges, expect them to remain weak. Lets look closer at what they did today

SLV- higher high, higher low

GLD- lower high, lower low.

We do see a bit of a divergence between silver and gold. However, silver also failed at the upper end of the range today.

At best then, we have a range bound choppy market. Enough push has been seen to get silver and gold near their yearly lows....and yet every time it gets near its yearly lows it finds an area to bounce from.

Eventually, we will get a resolution. As I always state, allow the price action talk to you. If you are itching to buy a lot of silver and gold, resist the urge. If you want to nibble, heck I dont think it hurts. I myself am seeing some great deals out there on coins I want to add to my collection. Just I dont think tho, this is not the time to be plunking down a ton of cash on major purchases.

Lets all be patient and safe out there and let the element of time work this out.

Just a quick update and something I want to point out-

Gold and silver have given just about all their gains from the 3 day bounce. This is NOT healthy behavior of an asset that is trying to find a floor.

Anyone who told you for a certainty that gold and silver were being bought aggressively was lying to you.