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

Thanks Gothic and yup7676

Prices on the gold chart are testing a triple bottom....and triple bottoms can/do fail, - the present price pattern also appears to be printing a bear flag, so currently I'm still expecting lower. Perhaps between $1125 - $1050 as next area.

I would prefer the solidity of a PM against a piece of worthless paper in a crisis. Doug Noland sums it up.....


...........silver and gold? Neither have any counter-party risk. An ounce of gold or silver will always be the same ounce. The only factor that will change is how that ounce is "valued" by a different medium of exchange, almost always some form of fiat that has no intrinsic worth. The insanity of ongoing central bank suppression of gold and silver to levels that defy the unprecedented demand world-wide will come to an end, which always comes back to the "When" factor. When it happens and not a day before, is the best answer we know.

http://www.safehaven.com/article/36...ructive-coup

Hey Northerncoins,

What you have is a failure to understand supply and demand. Apparently, fictitious supply in the open market per gothic's post dictate prices.

Any who, Conspiracy theories are such that.. a lot of fluff and noise that fill up the void.

Hey Bas,
I am waiting to see if gold breaks 1080 or to the upside and then I decide.

BTW, Silver can break down to 8 to 12 area per a friends analysis. I wait it out and then decide and in the 8 area or 24 area. In the meantime it's a heart attack special in between.

Take Care

Edit below,
Bas, Puttin and Co are desperate and have massive reserves. Ergo, they can liquidate.
Supposedly / allegedly they have started selling off in order to import essentials (food).
Just another thought.

I concur with Ceylon's correct statement that commodities are all based on the simple law of supply and demand. Nothing more, nothing less. This has been the case since the 1800s.. and yes futures go that far back. Futures markets are nothing new and are as old as the hills.


I dont have the time to go step by step here with all the various myths that are spread about the commodities market, especially in regards to gold and silver. But as an active participant, I have heard them all and they all have been wrong and many times they have been used to confuse both the public and professional trades, who again, ignore price action, and end up losing their shirts.

I will say this- its very silly and absurd to twist the purpose of the future's market and insist that supply is created by the contracts. Ugh, it is no different than saying that aliens from Mars are controlling our government, I mean it is really out of line, wild, crazy and so so so so SO incorrect. Believe in what the conspiracy theorists publish but do so at your own peril.

No one is driving down silver or gold prices on the futures market because there are X amount of contracts out there. It simply doesn't work that way.

For starters, those conspiracy blogs and talkers are NOT, I am sure, not betting AGAINST the price action. They know no matter what they say and publish, they will NEVER EVER beat the market. Those same people who are saying "buy gold now" or "never a better time to buy silver" are not buying it, no rather, they are unloading. Eric Sprott is a perfect example of that. but i'll save that for a later time.

Now let me get back to the futures market.

All I ever see from the uninformed public.. and even some fellow traders about the futures market is about how its run by this bank or that bank. I also always see folks incorrectly talking about how the contracts hold the price back. Which as a side point, I never saw anyone "complain" about this when prices were rising but thats for another time. But to me, hey believe what you want, I could care less. There is a more important fact and point I want to make about the futures market with this posting.

The main purpose of the futures market has been and remains to allow manufacturers, producers and companies that have exposure to raw commodities, whether they use them, sell them, buy them or have any sort of tie to the commodity complex, that they can HEDGE their exposure. In many cases, this is an additional form of "insurance" for them. Additionally, besides being active in that particular commodity or commodities that affect them, they also tie in hedging of currencies along with that, some other day I'll share that. But beware that gold and silver miners are very active in the currency markets.

The futures market is not just represented by speculators such as myself, no, in fact we are dwarfed by the other groups that are very active. Anyone from steel makers, oil companies, agricultural companies, chemical manufacturers, airlines, foreign governments, gold/silver miners and even mom and pop farmers are active in the markets. Which is funny, are we to accuse the smaller farmers who have learned to be savvy by hedging their crops with the futures market as "evil" or trying to run up prices, or accuse them of manipulating prices?.. or keep them down/up? Of course not. They are simply trying to protect themselves from the unknowns and stay profitable, to be competitive.

I know for a FACT farmers from across the country run their books constantly to hedge. Its also no surprise that gold and silver miners constantly hedge their books and are active participants in the futures market. All miners either have in-house trading desks or assign brokerages to represent them. Many of the big oil firms have trading desks that carry out trades in the energy complex to either allow them to sell their products or to hedge their exposure. Airlines are constantly in the energy market. Even food producers that make cereals, breads, meats, they are very very very active in the futures markets.

It is from these suppliers who are selling these raw commodities that the market arrives at prices, based on the INPUT from the producers of the raw commodities that hit the market.They have the best pulse as to what is happening. In turn this information is communicated to the market place and there are MANY market forces at work. We have no CLUE at all in the whos, whats, whys that are in play everyday. You have to remember this is all dictated by constant change in the supply and demand that is coming into the market everyday. At the end of the day, the market place decides what is the value, both present and future of prices. The price, the price action is the markets message on exactly what is going on with that specific commodity.

Now, I hear all the stories all the time. "oh there is a shortage of this, so this is going higher". This sort of story making of shortages or the usual "someone is keeping prices down to buy it cheaper",, which is a classic line, is one I hear ALL the time for all sorts of assets. I laugh my heart out when I hear that one, as prices go contrary to the "supposed story". Let me tell you, this same line that I have seen used about gold and silver, I have seen it used even in the grain complex.

As an recent example- Grain prices in the spring started to really unravel. In the form of price action, they were breaking important trend lines. They were making the usual lower highs followed with lower lows. All the mean time, fellow trades in the grain complex were saying "oh just wait till China buys X amount". Then the announcement would come out that China bought X amount of grain. Guess what, the grains continued to fall. Then rumors would circulate, "Egypt is putting out a HUGEEEE bid since these are bargain prices!!" ... the market would have a knee jerk reaction and once again,, prices would fall...

This continued for months. Then there was talk that "oh we are going to get a drought and this going to stop the falling prices". As you might know, the USDA releases regular and various reports on the status of crops. Well, despite the crop reports coming saying there was drought conditions,prices kept falling. It got to the point that grains prices started to hit yearly lows, thereby confirming the downtrend and its strength.

Soon after, reports with data started coming out that farmers across the country had to much grain that they couldnt even store it, and that in fact demand was done. Well, now if anyone had paid attention to price, and there were many many many traders that had, this was no surprise. The grain price action had been speaking VOLUMES way before these reports came out. It did not matter how much grain China bought or any other country. It didnt matter if there was bad weather in certain parts. The fact was that grains were growing in supply and the demand did not exceed it.

I had heard it all too, besides those other examples I gave, I heard that the numbers did not reflect properly other countries needs, the "someone" else was stepping up to buy behind the scenes,, you name it, I heard "why" it had too or was going up. Well, it didnt.

One will never ever be able to front run or outsmart the marketplace. The price is always right, period. I have yet to see ANYONE who bucked the price action and didnt pay very dearly with a blown up account or getting fired. Price never lies. The commodity is no different from any other traded asset. If prices rise or drop, in the commodity market, it is due to supply or demand, and that is coming from the producers of the raw commodity. Who to know best about their business and situation other than the actual producer? As I said earlier, the biggest chunk of participants in the futures market are the commodity producers themselves.

In the end, again, price dictates everything. Very simple concept and sometimes it sounds better to think of reasons why the price of a certain asset are going lower and then counter that with why one feels it is going higher. Remember, the market doesn't care about anyone's opinion. It is ALWAYS right and will always be right. In the commodity market, the major participants are NOT the speculators but rather those who are using it to hedge. Those who are hedging are benefiting as prices drop in the commodity they make.

Specifically in our interests on this forum, the silver and gold miners behind the scenes are not stressing the drop in gold and silver because they are hedged in many cases and they are making profits as prices drop. If you dont believe me head over to the SEC web site and pull up their 10Q reports and other filings and you can see exactly their hedging operations.


Sorry for the long winded post but these are the facts of the futures markets. Prices go up, go down in the commodity markets- every single time I hear someone putting or attributing a reason why prices are low or high, its either a story or wrong. But hey again,as I say, you dont have to believe me, I dont care. I won't be losing my shirt, I can only tell you what works and doesn't and denying that supply and demand are not the main forces at work in the commodity market place is very very very unwise.

Gold Miners 'Don't Think Price Will Fall', Hedging 'Still Isolated'

Quoted--GOLD MINERS are still not hedging their future production despite the recent price-drop to new 4.5-year lows, says the latest expert analysis, as zero interest rates and falling energy prices are deterring forward sales to lock in current prices.

"There is not yet compelling evidence to indicate an extended rise in the volume of hedging by gold miners," says Matthew Piggott, senior precious metals analyst at Thomson Reuters GFMS, introducing the consultancy's Q3 2014 report for French investment bank and bullion market maker Societe Generale on Tuesday.

Growing 57 tonnes by weight in the first 9 months of 2014, the global gold mining hedgebook â€" the amount of unmined production effectively sold in advance to lock in prices â€" fell between July and October, says GFMS, dropping some 6 tonnes as new output was delivered to meet existing contracts...

Low rates mean there is no "attractive premium" to current prices offered by forwards rates â€" the price-curve calculated from storage and interest charges on future deliveries of gold, known as "contango".

"To hedge in the absence of premium [would] signify that a producer believes the price will fall," says Piggott at GFMS. So "while we may see some isolated instances of companies entering into [hedging] positions, we maintain our view that conditions in the market are not yet aligned for a return to producer hedging en masse." END QUOTED

https://www.bullionvaultaffiliate.c...rs-121720143

Well do we really know for sure they are not? Most likely not from Mars though ..

TIMBER!

Just think if Gold/silver crash to like $200oz /$5oz and oil hits $10 a barrel...

I smell a "New World currency" or maybe a "New World Order"